CandleFocus

Understanding Polymarket And Prediction Markets

Author: Content Editor
Prediction markets, such as Polymarket, allow traders to estimate the likelihood of future events based on available information. These markets measure the crowd's current estimation of probability, similar to how a thermometer measures temperature. The accuracy of prediction markets is difficult to measure, as evaluating accuracy before an event is impossible and measuring it afterward raises fundamental issues. However, prediction markets remain valuable tools for combining diverse perspectives and quickly adapting to new information. Traders on Polymarket can bet against their initial views to exploit profit opportunities and may bet against outcomes they personally support if they believe the market probability is inflated. Psychological and social factors can also influence traders' decisions in prediction markets.

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