A defined event
Event contracts pay according to an outcome and their rules. Many use a $1-or-$0 yes/no structure; others differ. Read the settlement source and deadline.
Ask: “What exact evidence would resolve this question?”
PREDICTION MARKETS / A FREE LEARNING GUIDE
A price is a perspective.
Not a promise.
What does a 60¢ “yes” really mean? Explore event contracts, practice the payout math and learn which questions a market price cannot answer.
Start with understanding. This page has no live odds, trading account, deposits or wallet connection.
Make sense of the basics ↓THREE IDEAS TO KEEP SEPARATE
The question. The price.
The outcome.
A market-implied view
For the simple $1 example, 60¢ suggests roughly 60% implied odds before costs. It is not a verified probability. Prices can reflect limited participation or wide spreads.
Ask: “Is this a recent executable price, or an old last trade?”
A payout under rules
A losing position can lose the entire purchase cost, plus fees. Selling before settlement depends on available buyers and prices.
Ask: “What if I cannot exit when I want to?”
Source: CFTC: understanding prediction markets and event contracts ↗
PRACTICE / FICTIONAL MATH ONLY
See both sides
of the outcome.
This exercise assumes a fully paid purchase of identical YES contracts, held until settlement. Each pays $1 if YES and $0 otherwise. The fee you enter is the total dollar cost for the whole position, assumed to apply in either outcome.
It excludes taxes, financing, slippage and platform-specific fee schedules. There are no live prices or trades. Your inputs stay on this device and are not saved.
Break-even is a mathematical threshold under these assumptions, not an estimate of whether YES will happen.
A DIFFERENT KIND OF EXPOSURE
Compare what you actually hold.
| Type | What are you studying? | A question to ask |
|---|---|---|
| Company stock | An ownership interest in a company. | What drives this business’s value? |
| Crypto asset | A token and its particular rights, use and risks. | What does holding this token actually provide? |
| Our fictional event contract | A defined yes/no payout at settlement. | How is the event resolved, and what could I lose? |
No category guarantees a return. Calling something a “market” does not make it suitable for your savings.
READ BEFORE RISKING MONEY
A five-question pause.
- Can I explain the rule? Write the question, cutoff time, time zone, settlement source and dispute process in your own words.
- Have I counted every cost? Add the spread and any trading, settlement or withdrawal charges to your worksheet.
- What am I assuming? Separate public evidence from rumors, copied opinions and your own forecast.
- What if this loses? Keep the possible loss visible beside the possible payout. A large payout is not evidence of a good opportunity.
- Have I checked current access rules? Verify the platform, contract, location and age requirements using official sources. This guide does not determine your eligibility.
For market-integrity context: CFTC staff prediction markets advisory (PDF) ↗. Manipulation and misuse of information are concerns to understand, not advantages to seek.
Keep asking good questions.
Does a high price mean an outcome is certain?
No. Try changing the practice price to 99¢: an incorrect outcome still loses the purchase cost. A price is not a guarantee.
Is the payout the same as profit?
No. In the default exercise, the winning payout is $100, but purchase cost is $60 and fees are $2. Net profit is $38. If YES does not occur, payout is $0 and loss is $62.
Can I trade or get predictions here?
No. FinanceFD provides this free explainer and practice math. We do not execute trades or recommend outcomes, platforms or positions. This section is separate from the planned paid research subscription.
Education, not investment advice.
This is general learning material, not individualized financial, investment, tax or legal advice. Speculation can cause substantial losses. No profit promises. Content and official links reviewed October 17, 2026; rules and availability can change.
Build your money foundations → · Read the free newsletter →