> 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/markets/how-are-prices-calculated.md).
# How Are Prices Calculated
On **PRED**, prices represent **market probabilities**. They constantly update based on **real-time supply and demand** between traders buying and selling positions.
### Initial Price
When a market is first listed on **PRED**, it starts with **zero open positions** and **no pre-defined price**.
Once live, traders (and market makers) begin placing **limit orders** on either side of the market:
* A trader who believes price will rise can **buy YES**.
* A trader who believes the *opposite* can **buy NO**..
That initial order match effectively **sets the opening price** for that market.
> For example, if you place a limit order at $0.60 for YES, that order is matched when someone places a NO order at $0.40. This becomes the initial market price.
### Future Price
As trading continues, the **price updates dynamically** driven purely by **the orderbook**.\
Every new trade, bid, or ask slightly shifts the price to reflect changing sentiment.
The displayed price for an outcome on PRED is the **current yes price**
This ensures prices remain stable, accurate, and representative of real activity.
#### Prices = Probabilities
In the market below, the probability of **8%** is the current yes price. If the orderbook is empty, the probability is shown as the last traded price.
You may not be able to buy shares at the displayed probability / price because there is a bid-ask spread. In the above example, a trader wanting to buy Yes would pay **8.¢** for up to $**392.6**, after which the price would rise to 9**¢**.
