> ## Documentation Index
> Fetch the complete documentation index at: https://docs.kairos.trade/llms.txt
> Use this file to discover all available pages before exploring further.

# What Are Prediction Markets?

> A beginner-friendly intro to prediction markets and how trading works

This is chapter one of Learn Trading. It explains what a prediction market is, how a share price relates to probability, and how you actually make or lose money — no prior trading experience assumed.

## The Big Idea

A prediction market lets you trade on the outcome of real-world events. Think of it like a stock market, but instead of buying shares of a company, you're buying shares of **an outcome happening**.

<Note>
  "Will it rain tomorrow?" "Will Team A win the championship?" "Will the next iPhone have USB-C?"
</Note>

Every question has two sides: **Yes** and **No**.

## Shares and Prices

Each share is priced between **$0.00** and **$1.00**.

The price of a share reflects the crowd's belief in how likely that outcome is. A Yes share priced at **\$0.70** means the market thinks there's roughly a **70% chance** it happens.

| Share Price | What it Means |
| - | - |
| \$0.10 | Very unlikely (10%) |
| \$0.50 | Coin flip (50%) |
| \$0.75 | Likely (75%) |
| \$0.95 | Almost certain (95%) |

## How You Make Money

When the event resolves, every share settles to either **$1.00** (it happened) or **$0.00** (it didn't).

**Example:** You think it's going to rain tomorrow, but the market says there's only a 30% chance (Yes shares cost \$0.30).

* You buy 10 Yes shares for \*\*$0.30 each** = $3.00 total
* It rains! Each share is now worth **\$1.00**
* You get **$10.00** back. Profit: **$7.00**

If it doesn't rain, your shares go to $0.00 and you lose the $3.00.

## Yes and No — Two Sides of Every Market

For every market, you can buy **Yes** shares or **No** shares. They always add up to \$1.00.

| If Yes is... | Then No is... |
| - | - |
| \$0.30 | \$0.70 |
| \$0.55 | \$0.45 |
| \$0.80 | \$0.20 |

Buying **No** at $0.30 is the same as saying "I don't think this will happen." If the event doesn't happen, your No shares settle to $1.00.

## You Don't Have to Wait

You can sell your shares at any time before the market resolves. If you bought Yes at $0.30 and the price moves to $0.60, you can sell and pocket the difference without waiting for the outcome.

![Confused monkey staring at trading screens](https://imagedelivery.net/Hias1rvxalFDFzbgXzaBJg/c85d19f1-8f15-4a20-6f4b-fdb113f09100/public)

## Why Do People Trade?

* **You think the market is wrong.** If you believe something is more likely than the price suggests, you buy.
* **You want to hedge.** If rain would ruin your outdoor event, buying Yes on rain acts like insurance.
* **You follow the news.** New information moves prices. Fast traders profit from being early.

## Key Takeaway

Prediction markets are just questions turned into tradeable prices. If you have an opinion about the future, you can put it to work.

**Next:** [The Order Book](/learn/order-book) — where those prices actually come from.


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