How to place a trade: the order book, and the two ways to use it
Every price you see is somebody's standing offer. Understanding whose, and at what size, is the difference between the price you read and the price you pay.
The book is a list of offers, not a price
A prediction market does not have a price the way a shop does. It has a list: people willing to buy at various prices on one side, people willing to sell at various prices on the other, each with an amount attached. The best buy offer and the best sell offer sit closest together in the middle, and the gap between them is the spread.
What gets quoted as 'the price' is usually the midpoint of that gap or the last completed trade. Neither is a price you can trade at. If the best sell offer is 63 cents and the best buy offer is 61, a market quoted at 62 will cost you 63 to buy and pay you 61 to sell.
There is no single price. There is a price to buy, a price to sell, and a gap between them that you pay in both directions.
Taking a price versus naming one
A market order takes whatever is currently offered. It fills immediately and you accept the price the book gives you - which is the best available offer, then the next best if your order is larger than the first, and so on. Immediacy is the product and the spread is the fee.
A limit order names your price and waits. You specify the worst price you will accept, and the order sits in the book until someone trades against it or you cancel. You may get a better price than a market order would have given you, and you may get nothing at all.
The choice is not about sophistication, it is about which risk you prefer. A market order guarantees a fill at an uncertain price. A limit order guarantees a price at an uncertain fill. On a thin market the second is usually right, because the uncertain price in the first case can be much worse than it looks.
- Market order: certain fill, uncertain price. You pay the spread.
- Limit order: certain price, uncertain fill. You may earn the spread.
- On a thin book the difference between the two is large.
Slippage is what happens when your order is bigger than the book
If there is only 200 dollars resting at 63 cents and you buy 1,000 dollars' worth, the first part fills at 63 and the rest walks up to whatever comes next - 64, 66, 70. Your average price is worse than the one displayed, and on a quiet market it can be much worse.
This is the single most common unpleasant surprise for someone arriving from a sportsbook, where the quoted odds apply to your whole stake. Here the quoted price applies to the size resting behind it, and nothing more.
The fix is to look at depth before size. If the amount you want to trade is a large fraction of what is resting at the current price, either use a limit order and wait, or accept a smaller position.
Buying No is the same trade as selling Yes
A binary market has two sides that always add to one. Buying No at 37 cents and selling Yes at 63 cents are the same position with the same payoff, arrived at from different directions. Which one is available at a better price depends on where the resting orders happen to be.
That equivalence is worth internalising because it doubles the number of ways to express any view, and because the two sides of the same market do not always have equally good prices. Checking both before trading costs nothing and occasionally saves several cents.
Yes and No always sum to one. If Yes costs 63, No should cost 37 - and when it does not, one side is the better trade.
The costs that are not the spread
Beyond the spread there may be trading fees, settlement fees on winnings, and on chain-settled venues a network cost to move funds. None of these are large individually and together they set a floor on how small an edge is worth acting on.
The practical test before any trade: is the gap between my estimate and the price larger than the spread plus the fees plus the slippage my size will cause? If not, the trade is a donation with extra steps, however correct the view turns out to be.
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Open the dashboardFrequently asked questions
- What is the difference between a market order and a limit order?
- A market order fills immediately at whatever the book offers, so you get certainty of execution and uncertainty of price. A limit order names your worst acceptable price and waits, so you get certainty of price and uncertainty of execution.
- Why did I pay more than the price I saw?
- Because your order was larger than the amount resting at that price. The remainder filled at the next levels up, giving you a worse average. That is slippage, and it is largest on thin markets.
- Is buying No the same as selling Yes?
- Yes — the two sides of a binary market always sum to one, so the positions are identical in payoff. Which is cheaper depends on where the resting orders happen to sit, so it is worth checking both.
- How do I avoid paying the spread?
- Use a limit order at or inside the current best price and wait for someone to trade against you. You give up certainty of getting filled in exchange for not paying for immediacy.
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Prediction markets carry real risk of loss. Nothing on Market Guy is financial advice — it is research tooling to help you think, not a signal to trade.