> For the complete documentation index, see [llms.txt](https://docs.parlayit.gg/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.parlayit.gg/concepts/prediction-markets.md).

# Prediction Markets

A prediction market is a market for the outcome of a future event.

Instead of trading a company or token, users trade positions tied to a question, for example *"Will Bitcoin close above $100,000 on December 31?"* Anyone in the market can buy YES shares or NO shares on that question.

Each ParlayIt market has exactly two outcomes: **YES** and **NO**. When the market is resolved, the winning outcome is determined and positions settle based on whether the user held the winning side.

## Prices

Prices reflect how much it costs to buy a share of an outcome, and how likely the market thinks that outcome is.

If a YES share is priced at $0.76, it costs 76 cents to buy a share that can settle for $1 if YES wins. The same idea applies to NO shares.

The cent price maps directly to probability: **the price of a YES share is the market's estimate of how likely YES is to win**. A YES priced at $0.76 means the market is pricing the event at about a 76% chance of happening. A NO priced at $0.24 means the market is pricing the same event at about a 24% chance of not happening.

Prices move as users trade, new information appears, and liquidity changes. The probabilities shift along with the prices.

## Positions

When you take a position, you are choosing an outcome in a market.

* If you hold **YES** and the event happens, your position settles as a winner.
* If you hold **NO** and the event does not happen, your position settles as a winner.
* If the other outcome wins, your position settles as a loser.

You do not have to hold a position until resolution. While a market is open, you can place a **market order** to sell at the current price, or a **limit order** to sell at a specific target price. Your profit or loss is the difference between your entry and exit.

In rare cases a market may resolve 50/50 when its outcome cannot be determined from the rules. See [Resolution](/concepts/resolution.md) for how that case is handled.

ParlayIt lists and settles its own markets, which means the markets used inside parlays are part of the same system as the parlay itself.