From prices to probabilities
If a share pays 100 when an outcome happens and 0 otherwise, someone paying 70 believes the chance is above 70%. When many participants trade, the price settles where buyers and sellers balance, a crowd estimate that updates every time new information arrives.
How it differs from futures and options
Futures give exposure to a price level and options to a price range. A prediction market can ask about anything with a clear answer, for example whether USDA will cut the Brazilian soybean estimate, which no exchange contract covers. Each market has a fixed resolution source and date.
Why analysts use them
- Turn a qualitative view into a number and track your calls over time
- See how the crowd's expectation for a report shifts before it is out
- Compare your read of weather and news with everyone else's
Prediction markets in Kommody
Kommody runs prediction markets on agricultural outcomes with a virtual balance, a live order book, a portfolio and a scoreboard, next to the weather, news and positioning data you would use to form a view.
Frequently asked questions
- What does a price of 40 mean in a prediction market?
- That the market puts the chance of that outcome near 40%, because a winning share pays 100.
- Do I need a brokerage account to use Kommody's markets?
- No. Kommody's markets use a virtual balance; you only need a Kommody account.