Glossary
Polymarket & Prediction
Market Glossary
43+ terms defined. Everything you need to know about prediction markets, copy trading, and Polymarket — from basics to advanced metrics.
Prediction Market Fundamentals
- Prediction Market
- An exchange where participants buy and sell shares whose payoff depends on the outcome of future events. Prices reflect the crowd's implied probability of each outcome.
- Polymarket
- The largest prediction market platform, built on the Polygon blockchain. Users trade binary and multi-outcome event contracts covering politics, sports, crypto, finance, and more.
- Binary Market
- A market with exactly two outcomes—YES and NO. Shares of the winning outcome pay $1; the losing side pays $0.
- Multi-Outcome Market
- A market with three or more possible outcomes (e.g., "Who will win the election?"). Only shares of the correct outcome pay out.
- Implied Probability
- The probability of an outcome as implied by the current share price. A share trading at $0.65 implies a 65% probability.
- Resolution
- The process by which a market is settled after the real-world event occurs. Winning shares pay $1; losing shares pay $0.
- CLOB (Central Limit Order Book)
- The order book model used by Polymarket where buy and sell orders are matched by price-time priority, similar to traditional stock exchanges.
- Liquidity
- The ease of buying or selling shares without significantly moving the price. High-volume markets with tight spreads have good liquidity.
- Spread
- The difference between the best bid (highest buy offer) and the best ask (lowest sell offer) in the order book.
Trading & Orders
- Limit Order
- An order to buy or sell shares at a specific price or better. It sits in the order book until filled or cancelled.
- Market Order
- An order that executes immediately at the best available price in the order book. Trades faster but may get worse prices in thin markets.
- Position
- Your holdings in a specific market outcome. A "long YES" position profits if the event occurs; a "long NO" position profits if it does not.
- Volume
- Total USD value of shares traded in a market or by a trader. Higher volume generally means better liquidity and more reliable pricing.
- Slippage
- The difference between the expected price when you place an order and the actual execution price. More common in low-liquidity markets.
- Hedge / Hedging
- Holding positions on both sides of a market (YES and NO) to reduce risk. Common among market makers and arbitrageurs.
- Arbitrage
- Exploiting price differences between related markets or platforms. For example, buying YES at $0.40 on one market while selling equivalent exposure elsewhere at $0.45.
- Market Making
- Providing liquidity by placing both buy and sell orders. Market makers profit from the bid-ask spread rather than directional bets.
Performance Metrics
- P&L (Profit and Loss)
- The net profit or loss from trading activity. Realized P&L comes from settled positions; unrealized P&L is the mark-to-market value of open positions.
- Realized P&L
- Profit or loss from positions that have been closed or resolved. This is the definitive measure of trading performance.
- Unrealized P&L
- The paper profit or loss on open positions based on current market prices. Not final until the position is closed or the market resolves.
- ROI (Return on Investment)
- Realized P&L divided by total capital invested in resolved positions, expressed as a percentage. A 25% ROI means $25 profit for every $100 invested.
- Win Rate
- The percentage of resolved positions that resulted in a profit. Should be evaluated alongside average win/loss size for a complete picture.
- Profit Factor
- Gross winning dollars divided by gross losing dollars on resolved positions. Above 1.0 means profits exceed losses overall.
- Max Drawdown
- The largest peak-to-trough decline in cumulative P&L. Measures the worst losing streak a trader has experienced.
- Win/Loss Asymmetry
- The ratio of average winning trade size to average losing trade size. Above 1.0 means typical wins are larger than typical losses.
Copy Trading
- Copy Trading
- Automatically mirroring the trades of another trader. When a leader opens or closes a position, the same trade is executed in the copier's account.
- Copy Score
- A composite rating on Polycopy that evaluates how suitable a trader is for copy trading. Factors include consistency, risk management, and historical returns.
- Leader / Signal Trader
- A trader whose positions are followed and copied by other users. Leaders are ranked by performance metrics like P&L, ROI, and win rate.
- Auto-Copy
- A feature that automatically executes trades in your wallet whenever a followed trader makes a trade, with configurable position sizing.
- Turnkey Wallet
- A secure, non-custodial wallet infrastructure used by Polycopy for executing copy trades. Private keys are stored in secure hardware enclaves.
- Position Sizing
- The amount of capital allocated to each copied trade. Can be set as a fixed dollar amount or a percentage of available balance.
Blockchain & Infrastructure
- Polygon
- The Layer 2 Ethereum scaling solution on which Polymarket operates. Provides faster and cheaper transactions than Ethereum mainnet.
- USDC
- USD Coin, a stablecoin pegged 1:1 to the US dollar. The settlement currency for all Polymarket trades.
- Wallet
- A blockchain address that holds funds and interacts with Polymarket. Each trader has a unique wallet address that can be tracked publicly.
- Non-Custodial
- A setup where the user retains control of their private keys and funds. Polycopy uses non-custodial infrastructure—your keys, your coins.
- Gas Fees
- Transaction fees paid to the Polygon network for processing trades. On Polygon, gas fees are typically fractions of a cent.
Market Categories
- Politics Markets
- Prediction markets on political events: elections, legislation, appointments, and geopolitical developments. Historically the highest-volume category on Polymarket.
- Sports Markets
- Markets on sporting events including NFL, NBA, MLB, soccer, UFC, and more. Covers game outcomes, MVPs, championships, and season-long predictions.
- Crypto Markets
- Markets on cryptocurrency price milestones, ETF approvals, protocol events, and regulatory decisions affecting digital assets.
- Finance / Economics Markets
- Markets on Fed rate decisions, inflation data, GDP, recession odds, stock price targets, and commodity prices.
- Pop Culture Markets
- Markets on entertainment events including the Oscars, Grammys, Eurovision, Nobel Prize, and viral cultural moments.
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