How to Trade Prediction Markets
Step-by-step guide to trading prediction markets. Learn account setup, order types, risk management, and winning strategies for event trading.
Step 1: Choose a Platform
The first step is selecting a prediction market platform. Your choice depends on:
- Your location - US residents should use CFTC-regulated platforms like Kalshi
- Payment preference - Do you want to use USD or cryptocurrency?
- Market types - Different platforms specialize in politics, sports, or crypto events
Step 2: Create an Account
Sign up on your chosen platform. Regulated platforms require identity verification (KYC), which typically takes a few minutes to a few hours. Crypto platforms may not require KYC.
Step 3: Fund Your Account
Add funds to start trading:
- Regulated platforms: Bank transfer, debit card, or ACH
- Crypto platforms: USDC, ETH, or other cryptocurrencies
- Minimum deposits: Often as low as $5-$25
Step 4: Understand the Odds
Prediction market prices represent probabilities:
A Yes share at 70¢ means the market thinks there's a 70% chance the event happens. If you buy Yes and the event occurs, you get $1. If not, you get $0.
Your profit = $1 - purchase price (if correct). Your loss = purchase price (if wrong).
Step 5: Place Your First Trade
Find a market you understand and have an opinion on. Then:
- Click on the market to see details
- Choose Yes (you think it will happen) or No (you think it won't)
- Enter the amount you want to buy
- Review and confirm your trade
Risk Management Tips
- Never invest more than you can afford to lose
- Diversify across multiple markets
- Start with small positions while learning
- Set a budget and stick to it
- Understand that even "sure things" can be wrong