What Are Prediction Markets? How to Profit from Yes/No Bets on Real Events
By Forexiz Team
Traditional CFD trading rewards directional accuracy and timing simultaneously. Prediction Markets are simpler: you pick a side (YES or NO) on a specific event, and you win or lose at expiry based on the outcome. No position management. No margin calls. Defined risk from the start.
How Prediction Markets Work on Forexiz
Each prediction is a question with a binary outcome. Examples:
- Will Bitcoin close above $70,000 today?
- Will Gold hit $2,500 by end of week?
- Will EUR/USD close above 1.0900 this session?
- Will Tesla close above $200 by Friday?
You buy YES or NO shares. The price of each share reflects the implied probability of that outcome. A YES share priced at $0.35 implies a 35% probability. If you're right at expiry, each share pays out $1.00. If you're wrong, it pays $0.00.
Understanding the Math
Say Bitcoin is at $68,000 and the question is "Will BTC close above $70,000 today?" YES shares are priced at $0.30 (30% implied probability). You buy 50 YES shares for $15.
- If Bitcoin closes above $70,000: your 50 shares × $1.00 = $50. Profit: $35.
- If Bitcoin closes at or below $70,000: your 50 shares pay $0.00. Loss: $15.
Your maximum loss on any prediction is exactly what you stake. There are no margin calls and no liquidations. This makes Prediction Markets ideal for traders who want defined risk.
Prediction Markets vs CFD Trading
- CFDs: unlimited upside and unlimited downside (to zero). Requires active management.
- Predictions: capped upside (pays $1 max per share), capped downside (you lose your stake). No management required after entry.
- CFDs: you profit proportionally to how much price moves.
- Predictions: you only care if the outcome is YES or NO at expiry — not by how much.
Strategies for Prediction Markets
Fade the crowd
When YES shares are very cheap (e.g., $0.15), it means the market thinks the event is unlikely. Sometimes the crowd is wrong. If you've done your analysis and believe the event is more likely than 15%, buying YES at $0.15 offers strong value.
Trade the trend
If a market is in a strong uptrend, the probability of it being "above X" at expiry is higher than the price might suggest in the morning. Intraday momentum often continues — especially around key sessions like the London or New York open.
Use as a hedge
If you have a long CFD position in Gold, buying a "Will Gold close below $X" prediction at low cost hedges your downside. If Gold drops, your prediction profits partially offset your CFD loss.
Reading the Probability
The price of YES shares is always between $0.00 and $1.00. A price of $0.50 means the market is 50/50. Above $0.50 means the market thinks YES is more likely. Below $0.50 means NO is more likely. Your job is to identify when the market's implied probability is wrong.
Finding Predictions on Forexiz
Tap "Predictions" in the Forexiz navigation. All active prediction markets are listed with their current YES price, expiry time, and the underlying asset. Markets are settled automatically at expiry based on the live price feed — no manual resolution required.
Prediction Markets are particularly useful for major economic events (NFP, CPI, Fed decisions) where you have a view on the direction but not the magnitude.