You do not have to hold to the end

The mental model most people arrive with comes from betting: you stake money, you wait, you win or you lose. Prediction markets do not work like that. What you hold after buying is a contract that trades continuously, and its price moves as the market's view of the outcome changes.

That means there are two completely different ways to make money. One is to be right about the outcome and hold to settlement. The other is to buy at 40, watch the price rise to 60 on news, and sell - without ever finding out what happens. The second requires no view about the final result at all, only a view about what the price does before then.

If you must hold to settlement, the only question is whether the probability is wrong. If you can exit, a second question opens: will the price move toward my view before the deadline, and can I still get out at a reasonable price when it does?

That second question makes timing matter. A market that is genuinely mispriced but only resolves in eighteen months ties up money for eighteen months. The same mispricing in a market resolving next month is worth far more per unit of capital, even though the edge is identical.

It also makes liquidity a first-order concern rather than a detail. An exit requires someone on the other side, and a position you cannot leave is functionally a position you must hold to settlement - which returns you to the first model whether you intended it or not.

Selling at 60 what you bought at 40 realises the gain. Selling at 25 what you bought at 40 realises the loss. Both are the same action, and both are available at any point - which is precisely what a bet slip does not offer.

The discipline this enables is worth stating plainly, because it is the main practical benefit: you can decide in advance the price at which you would no longer want the position, and act on it. A holder who cannot exit has no such option and must simply endure whatever happens.

The corresponding trap is that being able to act constantly invites acting constantly, and every action pays the spread. The ability to exit is valuable; using it on every twitch converts an edge into transaction costs.

Occasionally a position moves far enough that selling guarantees more than holding could reasonably deliver. If you bought at 20 and the market is now 90, holding risks the remaining 10 cents of upside against a 90-cent loss. Selling converts an uncertain 100 into a certain 90.

Whether that is right depends on whether you still think 90 understates the true probability. If you do, hold. If you are simply reluctant to close a winning position, that is not analysis - and the market has no memory of what you paid.

Sometimes the exit is worse than the wait. On a thin market, selling can cost several cents in spread and slippage, which on a position close to settlement is a large fraction of what remains to be gained. If a market resolves in a week and the exit costs four cents, holding is usually cheaper.

The general rule: exit early when the price has moved to reflect your view and there is still meaningful time and cost to be saved. Hold when the remaining time is short, the exit is expensive, or your view has not actually been vindicated yet.