A prediction market screen looks technical until you notice how few words it actually uses. Strip away the charts and every label on it is answering one of three questions: what am I buying, what does it cost me, and how does it end. That is the whole vocabulary, and the losses that sting most are not bad forecasts but vocabulary errors: paying the spread without noticing, or holding a contract that settles on a thermometer you never looked up. This prediction market terms glossary defines the 36 terms you will meet most on Kalshi or any other event-contract exchange, in plain English and alphabetical order, with a link wherever we have a full article that goes deeper. Hold on to those three questions as you scroll, because at the bottom we will put the vocabulary to work: we will read a market screen together, every label that decides your cost, and it should feel easy by then.
The Quick Answer
A prediction market sells binary event contracts that settle at $1 if a named outcome happens and $0 if it does not, so a price in cents is a probability: 34¢ means the market puts the chance near 34%. The rest of the vocabulary describes either the order book you trade through (bid, ask, spread, depth, maker, taker) or the rules that end the trade (settlement, resolution source, expiration). All 36 definitions, and a worked example that reads a market screen with them, fees included, are below.
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The Glossary, A To Z
A To C
Arbitrage: buying and selling the same outcome in different places at prices that leave a gap in your favor on paper, a gap that shrinks fast once fees, thin fills, and each venue's fine print arrive; does prediction market arbitrage actually work is the honest audit. On the sportsbook side, where the same idea lives between books instead of venues, OddsShopper's arbitrage finder does the scanning.
Ask: the lowest price any seller will currently accept for a contract, and the price you pay if you want to buy instantly; on thin markets it can sit several cents above the last trade, which is the screen telling you the last trade is old news.
Basis risk: the gap between the thing you care about and the thing your contract actually settles on, like hedging a Houston heat wave with a contract that only reads the thermometer at one named station, and not always the one you would guess.
Bid: the highest price any buyer will currently pay, and what you receive if you sell instantly; on the deep bands of a weather ladder, the bid is often just a cent or two.
Binary: the all-or-nothing structure of these markets, where every contract finishes at exactly $1 or exactly $0 with nothing in between.
Calibration: the test of whether prices match reality over time, meaning outcomes priced at 30¢ should happen about 30% of the time; are prediction markets actually accurate walks through the evidence.
Cents: the native display unit of price on Kalshi, generally between 1¢ and 99¢, doubling as the market's probability estimate for the outcome; whether 30¢ really means a 30% chance deserves its own page, and has one.
Collateral: the money that leaves your account the moment you sell an outcome, because the exchange holds the rest of the dollar against you; selling YES at 8¢ posts 92¢ of collateral, which is mechanically the same trade as buying NO at 92¢, so the premium never arrives free.
Correlation: the degree to which separate positions win or lose together, and the reason a stack of weather positions under one heat dome is really one position.
D To H
Depth: how many contracts are actually resting at each price. It decides whether you can trade real size or just a handful, and it is the first number we check before trusting any screen price.
Designated contract market: the CFTC's formal label for a federally regulated exchange, which is what Kalshi is and what most offshore sites are not; where that leaves each U.S. state is answered state by state here.
Event contract: the instrument itself, a contract on a named real-world outcome that pays $1 if it happens and $0 if it does not, explained from scratch in how prediction markets work.
Exchange: a venue that matches buyers and sellers against each other rather than booking your bet itself, the whole difference from a sportsbook. The two names you will meet first are Kalshi and Polymarket, and since we carry a sign-up offer for Polymarket but have no relationship with Kalshi, our comparison of the two tells you that up front; the full platform rundown covers the rest of the field.
Expiration: the moment a market stops trading and waits for the real world to supply the answer.
Fees: the cut an exchange takes on trades rather than baking into the odds; Kalshi's structure rewards patience over urgency.
Fill: the moment your order actually matches with someone taking the other side of the same contract and becomes a position, and in these markets an instant fill usually means you paid for it.
Hedge: a position deliberately taken to offset a risk you already hold elsewhere, accepting a worse expected outcome in exchange for a narrower range of results; hedging with event contracts has its own traps, starting with basis risk above.
I To M
Implied probability: the rough chance of an outcome that a price asserts, which in cents is close to the number itself; use the ask for what an instant buy asserts, the bid for an instant sale, and the midpoint between them as the fair-value estimate. Converting it to sportsbook-style odds is covered in Kalshi odds explained.
Ladder: the full stack of adjacent outcome bands in one market, like every temperature range for one city on one day; it reads as a probability distribution once you know how to read it.
Limit order: an order that names your price and waits, filling only if the market comes to you; the full order-type menu is short, and this one does most of the work.
Liquidity: the overall ease of getting in and out at fair prices, the product of tight spreads and real depth; where Kalshi's liquidity actually lives varies more by market than newcomers expect.
Long shot: an unlikely outcome priced in single-digit cents, where the seller collects a small premium and carries almost the whole dollar of risk; the full arithmetic of that trade is worth reading before you ever sell one.
Maker: a trader whose resting limit order supplies the market's liquidity and waits to be matched; the maker-taker divide is worth understanding before your first order, because the exchange charges the two differently.
Market order: an order that takes whatever price is available right now, trading certainty of a fill for a worse number.
N To S
NO: the side of a contract that pays $1 if the named outcome does not happen.
Order book: the live list of every resting bid and ask. That list is the market's actual state; the chart is just its history.
Position: the contracts you currently hold, on either side, that have not yet settled. Buy the opposite side of the same market and Kalshi nets the pair automatically, crediting you the full $1 per matched contract rather than leaving you holding both; betting both sides on Kalshi walks through when that netting is a trap and when it is an exit.
Premium: what the seller of an unlikely outcome collects up front, small by construction, against the large loss they absorb if the outcome lands; it is collected while posting the rest of the dollar as collateral, so the money is committed the moment the trade fills.
Resolution source: the named, public data feed that decides the outcome, like the weather station whose reading decides whether it rained.
Settlement: the end of a contract's life, when every YES and NO is redeemed at $1 or $0 according to the resolution source; what actually happens at settlement, and how long it takes, is its own short story.
Settlement station: in weather markets, the specific instrument named in the rules, a line traders skip at real cost because it is never your weather app's city number.
Spread: the gap between the best bid and the best ask, the toll you pay for trading immediately in both directions.
T To Y
Taker: a trader who crosses the spread to fill against a resting order, paying for immediacy.
Tick: the minimum price increment on a market: one cent on most Kalshi boards, though some markets now step in tenths of a cent, and some venues go finer still; it sounds small until the whole question is worth six of them.
Vig: the margin a sportsbook builds into its odds; exchanges have no built-in odds margin, but their equivalent toll is the spread you cross plus fees, which is why the two need different math to compare.
YES: the side of a contract that pays $1 if the named outcome happens. YES and NO are two products, not one opinion: buying NO is the same trade as selling YES, which is why buying the other side is how a position gets exited before settlement.
Every term on this list slots into one of the three questions from the top. What am I buying: event contract, binary, YES, NO, ladder. What does it cost: bid, ask, spread, depth, maker, taker, fees, collateral. How does it end: expiration, resolution source, settlement. The two entries we keep sending people back to are long shot and settlement station: one decides how much a mistake costs, the other decides whether you made one.
The risk shape behind "long shot" and "premium."Selling an unlikely outcome collects a small premium and risks most of a dollar: sell at 8¢ and you collect 8¢ against 92¢ of risk, so one loss erases the premiums from about 11 or 12 wins, and at 5¢ the ratio climbs toward 19. That arithmetic, not any hit rate, is why position sizing is the entire game in these markets, and why a red day that erases a green stretch is the strategy behaving as designed rather than breaking.
A Worked Example: Reading One Market Screen
Here is the payoff of the promise from the top. Take a daily high-temperature market for Houston, the kind of ladder these exchanges run every day, and read the band "Houston high today: 96-97°." The screen below is a teaching mock built from how these markets are laid out, so every number on it is illustrative, not a live quote. Say it shows YES with a best bid of 32¢ and a best ask of 34¢. Every label is now readable with the glossary:
| What The Screen Shows | The term | What it is telling you |
|---|---|---|
| YES / NO Buttons | YES, NO | Two separate products; you can buy either side, or both |
| 34¢ Ask | Ask, implied probability | Buying instantly costs 34¢; the market's fair-value estimate is the 33¢ midpoint, and the extra cent is toll |
| 32¢ Bid | Bid | Selling instantly collects 32¢ |
| The 2¢ Gap | Spread, tick | Two ticks of toll for demanding immediacy in both directions |
| The Taker Fee | Fees, taker | Crossing at 34¢ adds about 1.6¢ per contract, so the ticket, not the quote, is your true cost |
| "142 Contracts At 32¢" | Depth | The size resting on the bid, what you could sell into right now; the ask side carries its own number, and a buyer needs that one |
| The Rows Around Your Band | Ladder | 94-95°, 96-97°, 98° and up: one probability distribution in pieces |
| "Settles: See Market Rules" | Resolution source, settlement | One named station decides everything; your weather app does not |
The row that decides everything is the last one. Every other number on the screen is negotiable, but the resolution source is law, and the station named in the rules is not always the airport you would guess: Houston's market settles on the thermometer at Hobby, not Bush Intercontinental, so if Hobby tops out at 95°, the 96-97° YES pays zero no matter what the rest of Houston felt like. Your entry choice runs through the maker and taker rows: pay the 34¢ ask and you are a taker with an instant fill, plus about 1.6¢ of taker fee per contract at this price (the exchange rounds fees up, so a single contract pays a full 2¢), call it roughly 36¢ all-in. Rest a limit order at 32¢ and you trade the taker fee for a much smaller maker charge, but you are behind the 142 contracts already resting there, so waiting can mean not filling at all; bid 33¢ and you jump that queue, a cent better than the resting bid and still a cent under the ask. In a market where the whole question is worth a few cents, the 2¢ spread plus the fee is not a rounding error, it is a meaningful share of everything the trade can ever earn.
There is one more clock hiding in that screen. A daily high usually forms in mid-afternoon, and the running maximum can only climb: once it prints 96°, every band below 96° is already dead, no matter what the evening does. An overnight low works the opposite way, usually forming pre-dawn, with the running minimum only able to fall. The same glossary reads both screens, and confusing the two books is a vocabulary error with a bill attached.
One disclosure belongs right here rather than in the fine print: Stokastic trades these markets and holds positions in them, and where a settled position is described in this series, we were the seller. We keep an open log on our Kalshi weather markets hub, settled positions and losses included. The running tally lives there rather than here, because a permanent reference page is the wrong place to freeze a number that changes by the week; this page defines the words, the hub shows them in use.
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Where To Go From Here
Before we touch any market, we check three things in order: the exact contract being bought, the live bid and ask we can actually trade, and the settlement source that ends every argument. If you cannot name all three, you are not reading the market yet, and every one of the three is vocabulary this page just handed you. If prediction markets are new to you, start with how prediction markets work and let this page be the reference you return to when a term goes blurry. If you came from sports betting, the same fair-price habit transfers directly: a sportsbook line is just an implied probability wearing a costume, and OddsShopper's odds screen strips the costume off across the major sportsbooks, computing no-vig fair prices the way this page taught you to read cents. Our analysts also post free expert picks every day, open to everyone, if you would rather watch probability-first thinking applied before trying it. The deeper toolkit comes with a free week of OddsShopper Pro to try, and code GLOSSARY20 takes 20% off your first payment of OS Pro or OS Core if you stay.
Disclosure and fine print.Stokastic trades Kalshi weather markets and holds positions in them; where a settled position is described in this series, we were the seller. We have no affiliate or commercial relationship with Kalshi. We do carry sign-up offers for some other prediction-market and betting platforms, including Polymarket, and pages naming those platforms should be read with that incentive in mind. Kalshi event contracts are CFTC-regulated event derivatives traded on a designated contract market, not sportsbook wagers, and a position can lose its full value; selling an unlikely outcome collects a small premium while posting most of a dollar as collateral, and at an 8¢ sale price one loss can erase the premiums from about 11 or 12 wins. 18+, available where Kalshi operates; eligibility and availability are state-specific and change. Our own results log, settled positions and losses included, is published live on the hub rather than frozen here. Nothing on this page is trading advice, a pick, or a recommendation to enter any market, and no price shown here is a live quote.
Trade prediction markets on Polymarket too.Most readers here already have Kalshi — Polymarket is the other major venue, and code OS4 adds a $50 trading bonus on a $10 deposit: Get the Polymarket bonus →
Affiliate disclosure: OddsShopper earns a commission on signups through this link. Terms as stated by Polymarket; 18+, availability varies by state.
