What are Prediction Markets?

Prediction markets, also known as predictive markets, information markets, decision markets, or virtual markets, are market-based mechanisms that allow individuals to buy and sell shares in the outcome of events.

In a prediction market, participants buy and sell shares in the possible outcome of an event, with the prices of the shares reflecting the collective belief about the likelihood of each outcome happening. These markets can be used to make predictions about a wide range of events, from weather to politics.

https://preview.redd.it/zs23m30uoj5a1.png?width=1045&format=png&auto=webp&s=27e7f1cc369219e670e8b234ed77f966aa98131a

Why Prediction Trading

Profitability:

• Kalshi is a young CFTC approved exchange, there are markets on the platform with large spreads and opportunities for arbitrage.

Direct exposure to what you care about:

• Event contracts allow you to trade directly on what you care about (changing interest rates, volatile MoM inflation, etc.) Unlike stocks, which can be moved by a tweet, sudden exit of a executive, etc. event contracts give you direct exposure to outcomes.

Hedging:

• A hurricane hitting the coast of Miami, rain in NYC, and student loan forgiveness, are just a few examples of events that you can hedge your risk against using Kalshi.