How to interpret event contract market data

This document is for informational purposes only and does not constitute investment advice or a solicitation to trade. All trading involves risk and you could lose your entire investment.  Please see below for further disclosures. 

Market data in event contracts

Event contracts are simple ‘Yes/No’ trading products that allow you to speculate or hedge on the occurrence of real world events. Unlike conventional investing in traditional assets like shares or bonds, event contracts work more like prediction tools, where you make an informed bet on whether a specific event will or won’t happen. 

This format makes them highly accessible: all you need to do is decide whether the answer is ‘Yes’ (it will happen) or ‘No’ (it won’t) and then place your trade. And because these contracts are tied to prediction markets, they draw on the information discovery of traders to forecast future occurrences.

In the context of our Crypto.com Predict platform, where you can trade event contracts, market data refers to the live information generated by trading activity. You can get started after regulatory required onboarding.

Just like how a stock exchange will display the latest share prices, Predict provides real time insights into how users value the likelihood of future events. This data reflects the continuous interaction of buyers and sellers and forms the foundation for pricing, probabilities and potential profit expectations.

When you open an event market, you will be able to see live pricing that will change dynamically as new trades are made, where the quoted price represents the market’s consensus probability of the event occurring. 

For example, if a contract on ‘Green Bay Packers winning the next Super Bowl’ is trading at 65, it signals a 65% implied probability. Users can instantly calculate potential profits, because buying at 65 means a maximum profit of 100 if correct, yielding 35 profit per contract.

The key point is that this market data is real time and driven entirely by supply and demand, because as more participants buy, sell or adjust their positions, the data continuously updates. This ensures that our platform provides a constantly refreshed overview of market expectations.

How to read event contract pricing and probabilities

Event contracts work much like the equity market, but instead of trading shares, you trade the potential occurrence of real world events. Prices and probabilities provide direct insight into how the ‘crowd’ perceives the likelihood of an event happening, and understanding how to interpret these numbers is essential for making informed trading decisions.

Yes/No pricing – what it means when 'Yes' is priced at $0.67

Every event contract on our Predict platform is structured as a simple Yes/No question. 

For example: ‘Will Team A win their next match?’

If the ‘Yes’ contract is priced at $0.67, this means traders are currently willing to pay 67 cents for a contract that will pay out $1 if Team A wins.

Conversely, the ‘No’ contract would be priced at about $0.33 (since the two options typically add up to $1, excluding transaction fees).

So, if you buy ‘Yes’ at $0.67 and the Knicks win, you receive $1 back (your initial stake and a profit of $0.33). If the Knicks lose, your contract expires worthless.

Implied probability – estimating likelihood from price

Event contract prices directly translate into implied probability. In our Team A example, the $0.67 ‘Yes’ price means the market is assigning a 67% chance that they will win their next match. 

For more context:

• ‘Yes’ at $0.25 = 25% probability the event occurs.
• ‘No’ at $0.75 = 75% probability the event doesn’t occur.

This makes pricing intuitive because the higher the price, the more confident the market is that that event will occur.  

However, it’s worth noting that implied probability and actual probability are not identical. For example, crowd psychology can make more people back one team over another based on subjective criteria rather than objective analysis. In fact, this is often where a competitive edge can be found while trading.

Probabilities can also be expressed in betting terms (for example, $0.67 equates to decimal probabilities of about 1.49, calculated as 1 ÷ 0.67).

Market movement – how price changes reflect sentiment

Prices shift continuously based on supply and demand, such that if more traders buy ‘Yes’ contracts, the price rises, signaling stronger market belief in that occurrence. Conversely, if sellers are dominating the market, the price will fall, lowering the implied probability.

Take the Team A example:

• Before the game starts, ‘Yes’ on the Knicks winning might be trading at $0.65 (65% chance).
• If Team A  takes an early lead, buying pressure will usually push ‘Yes’ up to $0.75 (75% chance).
• If their opponent equalizes, confidence in the Knicks winning will likely drop, and the ‘Yes’ price might fall back to $0.65.

This constant movement makes event markets a real time reflection of sentiment. Just like how share prices move based on news like quarterly earnings reports or a media incident, event contract prices update to reflect breaking developments and changing expectations.

1. Open the Crypto.com App
2. Navigate to the Predict section
3. Choose an event and view its contract data
4. Use probabilities and volume to guide your strategy

Understanding payout and risk

Event contracts on Predict use a simple, transparent structure. Each contract always settles at $1 if the occurrence happens, and $0 if it doesn’t. 

This fixed maximum makes it easy to calculate both potential profit and event contract trading risks.

How settlement is calculated

When you buy a contract, the price you pay represents both the market’s implied probability and your upfront cost. Your profit is the difference between the $1 maximum payout and your entry price:

• If you buy a contract at $0.60 and the event occurs, you earn $1 - $0.60 = $0.40 profit per contract.
• If the event doesn't occur, you lose your full $0.60.

This structure ensures clarity as your exact upside and downside are known in advance.

Fixed maximum

Regardless of price, no event contract can ever pay out more than $1. This means that your risk and reward are symmetrical. The cheaper the contract, the higher your potential return if correct, but the lower the implied probability. Conversely, a higher priced contract offers a lower potential return, but the market sees it as more likely to pay out.

Balancing risk and reward

As cheaper contracts carry higher potential returns if your prediction is right, but a lower implied probability of success (and vice versa), you can choose the risk level you’re comfortable with along the lines of the market’s implied probability.

Understanding this trade-off can manage your risk while taking advantage of opportunities as sentiment shifts.

Imagine a market: ‘Will Team A  win the next NBA final?’

• At the start of the season, you buy ‘Yes’ at $0.10. If they pull off an upset, you receive $1 and make a $0.90 profit. If they lose, your initial $0.10 stake is gone.
• Another trader buys later in the season at $0.80, as Team A are on a big winning streak. If correct, they only gain $0.20, but if wrong, they lose $0.80.

This shows how payout and risk scale with price. Lower entry prices mean bigger rewards if proven right, while higher entry prices mean less risky bets but smaller returns.

What contract volume and liquidity reveal

In the prediction market, volume and liquidity are two important data points to judge activity, sentiment and risk.

Volume

Volume refers to the total number of contracts being traded in a given market. High volume indicates strong participation and interest, meaning many traders are actively speculating on the occurrence, non-occurrence, or extent of the occurrence of a specified event. 

For example, if a political election contract has 50,000 contracts traded, it suggests that a large number of people are engaged, and the price reflects a broad consensus. 

Conversely, low volume (for example, only a few hundred trades) may signal that the market has limited engagement, making prices less reliable as indicators of probability.

Liquidity

Liquidity measures how easily a trader can enter or exit a position without significantly affecting the contract price. A highly liquid market has many buy and sell offers at different price points, ensuring smooth transactions. 

In highly liquid markets, traders can place larger orders without worrying about distorting the price. By contrast, low liquidity markets have fewer participants and shallower order books, which can create wider contract price differences and greater price swings.

Using volume and liquidity

Both indicators can assess an opportunity and its risks:

• High volume + high liquidity = strong, stable markets with trustworthy pricing.
• High volume + low liquidity = active but potentially volatile trading.
• Low volume + low liquidity = higher risk, as it may be difficult to enter or exit positions at fair value.

Low liquidity risks include paying more than intended when buying, or receiving less than expected when selling. You can also be trapped in a position, if there is no buyer for your contract, or the buyer will only take a deep discount. 

For cautious traders, prioritizing markets with high volume and liquidity helps ensure smoother, arguably fairer trading experiences. However, it’s worth noting that illiquid, specialized events are often those where your information advantage is at its highest.

How to use market data to inform your decisions

Event market data provides a live snapshot of crowd expectations, but successful traders don’t rely on data alone. The most effective approach is often to combine market signals with your own knowledge and analysis.

• Combine probabilities with personal knowledge – contract prices show the market’s consensus probability, but they’re not always correct. For example, if a contract is priced at $0.65 (65% implied chance), you can compare this against your own research. If you predict that the true chance is closer to 75%, the $0.65 price could represent good value. This is particularly valuable in specialized contracts where the wider knowledge pool is weaker.
• Watch for sentiment shifts – price movements reflect changes in collective belief. A contract drifting toward $0.50 signals growing uncertainty because it means buyers and sellers are evenly split on the occurrence, non-occurrence, or extent of the occurrence. A sudden spike (for example, from $0.40 to $0.60) might mean breaking news or a shift in sentiment. Traders who notice these moves early can gain an edge.
• Look at volume for confirmation – if probabilities shift but trading volume is low, the move may be unreliable or driven by only a few participants. On the other hand, a price swing on high volume suggests strong conviction across the market and can be much more meaningful.

Do’s and don’ts for data-driven trading

In the end analysis, there are several factors to consider:

Do:

• Use the implied price as a probability guide, not a guarantee.
• Combine market data with your own research for stronger conviction.
• Watch liquidity to ensure you can enter and exit contracts at fair prices.
• Treat big volume backed moves as stronger signals of sentiment.

Don’t:

• Rely solely on the crowd as markets can be wrong. 
• Ignore sudden shifts, as they often reflect new information.
• Overcommit in low liquidity markets where trades can distort prices.
• Assume high prices equal certainty, because risk is always present.

Important information: This content is for informational purposes only and does not constitute financial advice. Event Contract markets are volatile and carry risk. Please consult a financial adviser before making investment decisions.

Prediction is an event contract that is a derivatives product offered by Crypto.com | Derivatives North America (CDNA), a CFTC-regulated exchange. Trading on CDNA involves risk and may not be appropriate for all. By trading you risk losing your cost to enter any transaction, including fees. You should carefully consider whether trading on CDNA is appropriate for you in light of your investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk.