beginner
6 min readTrading on Outcomes
How to buy and sell yes/no contracts.
BonusBell Team
Prediction market trading lets you buy and sell contracts on real-world outcomes. Unlike traditional betting, you can exit positions before events resolve— taking profits or cutting losses as probabilities shift.
How Contracts Work
Each contract represents a Yes or No position:
- Yes shares pay $1.00 if the event happens
- No shares pay $1.00 if the event doesn't happen
- Yes + No prices always sum to approximately $1.00
Contract Pricing
If Yes = $0.62, then No ≈ $0.38=Market implies 62% probability event occurs
The spread between bid/ask is where the platform makes money.
Reading the Order Book
Like stock trading, prediction markets have bid/ask spreads:
- Bid – Highest price someone will buy at
- Ask – Lowest price someone will sell at
- Spread – Difference between bid and ask
Good to Know
Liquidity matters. Popular markets have tight spreads ($0.01-$0.02). Obscure markets might have $0.05+ spreads, eating into profits.
Buying to Open
To enter a position:
- Decide if you believe Yes or No is more likely
- Buy the shares at the ask price (or place limit order)
- Pay the contract price per share
- Hold until resolution or sell to exit
Buy Example
Buy 100 Yes shares at $0.40=Cost: $40 | Max Profit: $60 | Max Loss: $40
If event happens, shares pay $1.00 each = $100 return.
Selling to Close
The key difference from traditional betting—you can exit early:
Exit Scenarios
| Situation | Action | Result |
|---|---|---|
| Price rose to $0.70 | Sell at bid | Lock in $0.30 profit/share |
| Price dropped to $0.25 | Sell at bid | Cut loss at -$0.15/share |
| Wait for resolution | Hold | Get $1.00 or $0.00 |
Strategy Insight
Think of contracts like stocks. You don't have to hold to expiration— take profits when the market moves in your favor.
Short Selling
To bet against an outcome, you can:
- Buy No shares – Pay for "it won't happen"
- Sell Yes shares short – Borrow and sell, buy back later (if supported)
Pro Tip
Most platforms simply let you buy No shares rather than complex shorting. The math is the same—you profit when the event doesn't occur.
Limit Orders vs Market Orders
Order Types
| Order Type | Fills At | Best For |
|---|---|---|
| Market | Current ask (buy) or bid (sell) | Speed, liquid markets |
| Limit | Your specified price or better | Patience, volatile markets |
Trading Strategies
Momentum Trading
Buy when probability is trending in one direction:
- News breaks that increases likelihood
- Ride the wave as market reprices
- Exit before full resolution for guaranteed profit
Mean Reversion
Fade overreactions:
- Market panics on rumors or partial information
- Buy the overreaction if you believe it's excessive
- Profit as market normalizes
Arbitrage
Look for price discrepancies:
- Yes + No combined price differs from $1.00 significantly
- Same event priced differently across platforms
- Rare but risk-free when found
Platform Considerations
- Fees – Trading fees and withdrawal fees vary
- Settlement – How quickly events are resolved
- Disputes – What happens if outcome is ambiguous?
- Liquidity – Can you exit at fair prices?
Key Takeaways
- 1Contracts are Yes/No shares that pay $1 or $0 at resolution
- 2You can sell before resolution to lock in profits or cut losses
- 3Bid/ask spread is the cost of trading—liquidity matters
- 4Use limit orders in volatile or low-liquidity markets
- 5Think like a trader: momentum, mean reversion, arbitrage