What is event trading? It involves buying and selling event contracts based on your predictions for the outcome of a future real-world event. You can participate in this type of trading on CFTC-regulated prediction markets, like Kalshi or Polymarket.
For most events, you’ll find binary contracts with Yes/No outcomes, and you buy the ones that are tied to your prediction. For example, if you think the Boston Red Sox will win their next MLB game, you could buy the “Yes” contract. If the Red Sox win the game, you would win a profit, and if they didn’t, you’d lose the money.
- What is event trading? An explainer guide
- Event contract prices and probabilities
- How does event trading work? An example
- How to buy event contracts
- Live event trading and selling your position
- Pros and cons of event trading
- What types of event outcomes can you trade?
- Is event trading legal in the US?
- Getting started with event trading: A step-by-step guide
- Slippage and other event trading risks
- Final thoughts on event trading at prediction market platforms
- What is event trading? FAQ
What is event trading? An explainer guide
Basically, if you know what a prediction market is, then you already have an understanding of what event trading is. While the terms are used interchangeably, event trading is the activity that you can engage in on a prediction market site.
While the basic concept is very straightforward, there are complex nuances; moreover, it’s a highly risky activity where you can easily lose money.
On a prediction market site like Kalshi, you can trade event contracts based on the outcomes of sports games, political elections, and other future outcomes. You buy contracts that correlate with the outcome of the event that you speculate will happen.
If your prediction is correct, you win a profit, and if not, you lose your entire outlay.
Event contract prices and probabilities
The event contracts that you can buy and sell based on our speculations are always priced between $0.01 and $0.99. These prices reflect the real-time market probability of the outcome, or to put it more simply:
- $0.50 event contracts = 50% probability
Payouts, profits, and losses
You can profit by making an accurate prediction and holding your contracts until the event concludes. On the contrary, if you hold your position and make an incorrect prediction, you’ll make a loss.
Once a prediction market is resolved, the event contracts that are tethered to the correct outcome close at $1, and those tethered to the incorrect outcome(s) close at $0.
As we saw above, the contract prices are always set between $0.01 and $0.99 when you buy them. Therefore, you're guaranteed a profit if you are correct and a loss if you lose.
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How does event trading work? An example
To show you visually how these prediction markets work, here are some event contracts for an MLB game that we’ve pulled from Klashi at the time of writing:
| ⚾ Teams | 📈 Chance | ✅ Yes | ❌ No |
| Toronto Blue Jays | 47% | $0.47 | $0.46 |
| Boston Red Sox | 53% | $0.55 | $0.46 |
As you can see, the “Yes” contracts for each team roughly correlate with the probability percentage listed in the “Chance” column. The probabilities that you see when trading events are real-time market reflections, as the odds aren’t “juiced” or manipulated.
How to buy event contracts
When it comes to event trading, the first action you will likely take is to buy an event contract. Most prediction markets give you three ways to do this:
- Buy in shares: The first and simplest way is to enter the exact number of shares that you wish to purchase. For example, if you bought 100 Red Sox Yes shares at $0.55 each, you’d pay $55.00 plus any trading fees that apply.
- Buy in dollars: If you want to keep the numbers round and don’t mind holding fractional event contracts, you can enter the number of USD that you wish to spend. If you wanted to spend just $50 on Red Sox "Yes" contracts, you would get 90.9 shares ($50 / $0.55).
- Limit order: As with all forms of trading, event contract prices can move in either direction before your maker trade finds a taker and can be executed. To protect yourself against negative slippage, you can place a limit order, which involves providing a maximum share price that you’re willing to pay. If the executed price exceeds your limit, the trade will be canceled automatically.
Event contract trading fees
Besides the actual contract prices, there are other costs of event trading to consider. Prediction markets don’t juice the probabilities to take a profit, but instead charge trading fees for matching your trade with an equal counterpart. The trading fees differ between platforms but can be applied as a flat rate, an expected-profit fee, or a percentage based on the prediction market category.
On most sites, fees are lower or waived altogether for market “makers”, which is a term that refers to a trader who places the first order, and therefore “makes” the market. Taker trades are quicker and easier, and therefore usually incur higher fees.
Live event trading and selling your position
Once you have purchased event contracts, you are not obliged to hold them until the event’s conclusion. You can sell them for a profit when their value is higher, or to limit your losses if your prediction isn’t looking good.
Of course, you need buyers to sell your shares, which can be difficult depending on market conditions.
Pros and cons of event trading
Now that we’ve explained how event trading works, let’s pause to cover the pros and cons of this activity:
- Legal in most of the U.S.
- Financially trade on your predictions
- Sports, culture, and other events
- Relatively straightforward concept
- High risk of losing money
- Legality is being challenged in some states
What types of event outcomes can you trade?
Earlier in our guide, we used a sports game as an example of how prediction markets and event contracts work. However, prediction markets cover a very diverse range of global events, not limited to sports.
With that in mind, let’s take a look at the most popular event categories and future outcomes that you can trade on:
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As we’ve already covered, the outcomes of sports games are extremely popular to trade on. Besides games, you can also buy contracts for MVP awards and other sports-related outcomes, like player transfers and Super Bowl halftime shows.
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You can trade on the outcomes of major political events like the U.S. Presidential election, as well as regional elections, and geopolitical events like peace deals and ceasefires.
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These culture prediction markets include everything from the Oscars to reality TV series winners and IMDB scores for films. Additionally, you can speculate on the release date of forthcoming video games like GTA VI.
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Not to be mistaken with actual stocks and options trading, where you own the assets. This involves trading on economic outcomes, like gas price movements and U.S. Federal Reserve decisions.
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Again, you never own the crypto asset here; you only buy and sell event contracts based on the price rise and fall of a crypto coin within a certain time frame. An example market would be "Price of BTC by the end of the day". If you thought the price would rise, you’d buy “Yes” contracts.
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This category covers all events related to weather, including the number of tomatoes in the U.S. this year and what will be the highest temperature in NYC today.
Is event trading legal in the US?
While it is something of a legal battleground between federal and state laws, the bottom line is that event trading is legal in the U.S. Kalshi, Polymarket, and other prediction markets are legal, as long as they are regulated as financial exchanges by the Commodity Futures Trading Commission (CFTC).
To trade, you must be over 18 and a legal U.S. resident who is physically located in the United States. As part of CFTC compliance, you’ll need to complete full KYC by verifying your account using photo ID, your personal information, and the final four digits of your Social Security Number (SSN).
On some platforms, additional information may be required, including a live selfie, proof of address, proof of funds, or proof of ownership of a U.S. bank account.
The legal landscape is changing quickly, and some prediction market apps are banned or partially restricted in certain states. We therefore advise keeping up to date with the laws and legal challenges in your area.
Getting started with event trading: A step-by-step guide
If you’ve considered the risks involved and want to give event trading a try, follow this step-by-step guide to get started.
Just keep in mind that the exact process might be slightly different on the prediction market site that you choose:
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Check out our list of top-rated prediction market sites based on your expert ratings and PlayersBest community scores
- 2
Click the relevant banner to load your prediction market site of choice
- 3
Install the app if you prefer to trade on mobile
- 4
Hit the button to open the registration form and get started
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Enter your email address and U.S. phone number as requested
- 6
Create a password and any security questions that the site requires for security purposes
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Enter your full legal name, date of birth, and residential address
- 8
Provide the final four digits of your SSN for tax purposes
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Upload your photo ID, selfie, proof of address, and any other documents requested
- 10
Submit the sign-up form and wait for your account to get fully verified
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Once your account has been fully verified, you can deposit funds
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You can now use the prediction markets and trade on the outcome of future events
Slippage and other event trading risks
As we have reiterated throughout this guide, event trading is a high-risk activity where there’s as much chance of losing money as making a profit. Moreover, you never own any tangible assets, unlike with traditional stock, futures, and options trading.
As we mentioned earlier, the fast-moving nature of events often means that the expected price of an event contract differs drastically by the time the trade executes. This is known as “Slippage”, which can be both positive and negative:
- Negative slippage: The price moves higher than expected, but the probability of the outcome increases as well.
- Positive slippage: The executed trade price is lower than expected, but the probability is lower, meaning the risk is higher.
Final thoughts on event trading at prediction market platforms
In summary, event trading involves speculating on the outcomes of future events in sports, entertainment, and other categories. You can trade by purchasing or selling Yes/No event contracts that are tethered to your prediction.
You can find and access the best-rated prediction market sites via the banners on this page. Just remember that trading predictions carries risks, so stay responsible, and never spend money you can’t afford to lose on predictions.
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What is event trading? FAQ
Also known as prediction markets, event trading involves buying and selling contracts tied to the outcomes of future events. Usually, they come in a binary Yes/No format. For example, if you believe that the Democrats would win the next presidential election, you’d buy “Yes” contracts.
An event contract is what you can buy on a prediction market to back your prediction. Event contracts are priced between $0.01 and $0.99 throughout an event, and close at $1.00 or $0.00 after the event, depending on whether they’re tethered to the correct or incorrect outcome.
If you are over 18 and a U.S. resident, event trading is legal as long as you use a CFTC-regulated exchange, such as Kalshi or Polymarket. However, some sites have restrictions or bans in certain states, so check the T&Cs before you sign up.
