Forecasting basics
How Accurate Are Prediction Markets?
Prediction markets can be useful probability signals, but they are not magic forecasts. This guide explains calibration, liquidity, incentives and common failure modes.
Educational note: This guide explains probability and market structure. It is not a recommendation to trade, and availability depends on local rules.
Accuracy depends on calibration
A market is better evaluated over many resolved events than by one dramatic example. If events priced around 60% happen about six times out of ten, the market is reasonably calibrated in that range.
What can reduce accuracy
- Low liquidity and wide spreads.
- Ambiguous resolution criteria.
- Unexpected rule changes or delayed settlement.
- Participant herding around headlines.
- Regional availability and position constraints.
How to use market probabilities responsibly
Treat prices as one signal among many. Compare them with polls, expert models, primary documents and your own base-rate assumptions. Avoid treating any single price as a guarantee.
Next step: compare a market price with your own estimate, then read the rules before opening any external market.
Use the calculatorOpen Polymarket