> For the complete documentation index, see [llms.txt](https://pred-1.gitbook.io/pred-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://pred-1.gitbook.io/pred-docs/getting-started/core-concepts/trading-probabilities-not-betting-odds.md).

# Trading Probabilities, Not Betting Odds

On **PRED**, each market represents a clearly defined sports outcome (for example, a team to win a match). Outcomes are expressed as shares priced between **0.00 and 1.00 USDC**, where the price directly represents the market’s implied probability.

A price of **0.25** implies a **25%** chance of the outcome occurring.\
A price of **0.70** implies a **70%** chance.

Shares are created when two traders agree on a price:

* One trader goes **and buy YES** (buying the outcome, expressing belief it will happen)
* Another trader goes **and buy NO** (buying the outcome, expressing belief it will not happen)

The total collateral between both sides always sums to **1.00 USDC**, ensuring full collateralization. When the event resolves:

* Shares tied to the correct outcome settle at **1.00 USDC**
* Shares tied to the incorrect outcome settle at **0.00 USDC**

This simple payoff structure makes prices intuitive, transparent, and directly interpretable as probabilities.

#### Example market

Let’s take a market as an example.

If a **YES** share for **Arsenal to win the 2026 EPL** trades at **$0.18**, the market is implying a **18%** chance of Arsenal winning.

Prices fluctuate with supply and demand, just like stocks or crypto tokens.\
When traders buy **YES** , they signal confidence; when they buy **NO**, they express doubt.

**We don’t set the odds on PRED — the crowd does.**\
The market’s collective belief becomes the odds.\
The orderbook becomes the pulse of prediction.

#### Making money on markets

Let’s continue with the Arsenal example.

If **we believe** their real odds of winning are higher than **18%**, we can buy **YES** at **$0.18**.

* If Arsenal wins, our shares settle at **$1.00 USDC each → profit = $0.82 per share**
* If Arsenal loses, those **YES** shares become worthless

Conversely, traders who buy's **NO** at **$0.82,** profit if Arsenal loses, as they effectively bet against the outcome.

The real advantage lies in flexibility: **we can close positions at any time**.

As news breaks, injuries occur, or odds shift, share prices move — reflecting the market’s constantly evolving perception of reality.

***