Crypto Investing — Advanced: Prediction Markets II — Pricing, Probability & Resolution Risk

If 'Yes' trades at $0.70, the market thinks the event is ~70% likely; a disciplined trader buys only when they believe the true probability differs from the price (an edge). Expected value, not gut feeling, drives good decisions: compare your estimated probability to the implied one.

Key risks unique to these markets:

• Resolution risk: ambiguity in how 'the event' is judged or who decides.
• Liquidity risk: thin markets make entry/exit expensive.
• Time/capital lockup: funds are tied up until resolution.
• Regulatory/venue risk: rules differ by jurisdiction and platform.

Always read the exact resolution criteria before trading a market.

Key takeaways

• Trade only when your probability estimate differs from the price.
• Resolution criteria and liquidity are the make-or-break details.
• Capital is locked until the event resolves — factor that in.

Educational disclaimer: This material is provided by Nieto Engineering Inc. for internal education only. It is not investment, financial, legal, or tax advice and is not a recommendation to buy, sell, or hold any asset. Cryptocurrency, equities, and prediction markets carry substantial risk, including total loss of capital. Past performance does not indicate future results. Always do your own research and consult a licensed professional before investing.