In prediction markets you don't make money by being "right". You make money by being right when the price is wrong. Buying Yes at 90¢ on something that happens 90% of the time is break-even forever.
So the whole game is finding mispriced markets. Here's a simple checklist.
1. Put your own number on it first
Before you look at the price, ask: what are the real odds? Use past results, polls, stats, schedules. Write a number down. Then look at the market. If you say 45% and the market says 30%, you've found something worth digging into.
2. Check the base rate
How often does this kind of thing usually happen? Favorites winning, incumbents holding on, a stat beating its average. People overreact to stories and underreact to base rates. That's where a lot of mispricing lives.
3. Look for overreactions
Big news hits and the price jumps 20 points in an hour. Sometimes that's right. Often the crowd overshoots and it drifts back. Ask yourself: did the real probability change that much, or just the vibes?
4. Watch the deadline
Markets with a deadline ("by December 31") lose value every day nothing happens. Lots of traders forget that time is working against Yes.
5. Read the resolution rules
Some of the best trades come from reading the fine print. If the rules say the market resolves on a specific source or wording, the crowd might be pricing a slightly different question.
6. Check liquidity and fees
A 3¢ edge means nothing if the spread is 4¢ or the fees eat it. Thin markets also move against you when you buy.
Red flags that it's NOT an edge
- "I just have a feeling."
- You only read one source.
- You want it to happen.
The bottom line
Mispriced markets show up every day, but you need a process, not a hunch: your number, the base rate, the rules, the deadline, the costs. Do that consistently and you stop gambling and start trading.