What are prediction markets?

What is a Prediction Market?

A prediction market is a platform where you can forecast the outcomes of real-world events. Instead of relying on polls or experts, you're trading contracts with other forecasters based on what you think will happen.

Think of it like a stock market, but for events instead of companies.

How It Works

Every prediction market has a simple question with a yes/no answer:

• "Will UAE GDP growth exceed 5% in 2026?"
• "Will Bitcoin reach $150,000 by December 2025?"
• "Will Manchester City win the Premier League?"

For each question, you can buy two types of contracts:

The price of a contract reflects the market's probability estimate. If YES shares trade at 58¢, the market believes there's a 58% chance the event will occur.

Why Prediction Markets Work

Prediction markets are remarkably accurate because they harness collective intelligence:

1. Financial incentive: Traders put money behind their beliefs, encouraging careful research
2. Diverse perspectives: Thousands of traders with different expertise contribute
3. Real-time updates: Prices adjust instantly as new information becomes available
4. No single point of failure: Unlike polls or expert opinions, no individual can skew the results

Research shows prediction markets often outperform polls, pundits, and even expert panels at forecasting events.

The Math: Why Prices = Probabilities

Here's the key insight: YES + NO prices always equal $1.00

If YES is 58¢ and NO is 42¢:

• 58¢ + 42¢ = $1.00 ✓

This works because exactly one outcome must happen. When the market resolves:

• Winning contracts pay $1.00
• Losing contracts pay $0.00

So if you buy YES at 58¢ and the event happens:

• You paid: 58¢
• You receive: $1.00
• Your profit: 42¢ (72% return)

Example: A Complete Trade

Let's walk through a real example:

Market: "Will the Fed cut interest rates in January 2026?"

1. You research and believe there's a 40% chance of a rate cut
2. The market shows YES at 22¢ (implying 22% probability)
3. You think YES is underpriced, so you buy 100 YES shares at 22¢
4. Your cost: 100 × $0.22 = $22.00

Scenario A: Fed cuts rates (you win)

• Your 100 YES shares pay out: 100 × $1.00 = $100.00
• Your profit: $100 - $22 = $78.00 (355% return)

Scenario B: Fed holds rates (you lose)

• Your 100 YES shares pay out: $0.00
• Your loss: $22.00

Why Trade on MANSHUR?

MANSHUR is the first prediction market platform designed for the MENA region:

• 100+ markets across economics, politics, sports, tech, crypto, and more
• Real-time trading with instant execution
• Zero trading fees - what you see is what you get
• Reasoning Capture - share and learn from why traders make predictions
• Designed for UAE GCGRA compliance from day one

Key Takeaways

1. Prediction markets let you trade on real-world events
2. Prices reflect probability - 65¢ means ~65% chance
3. Correct predictions pay $1.00 per contract
4. Markets aggregate collective intelligence for accurate forecasts
5. You can profit by finding mispriced probabilities

Ready to start? Learn how to create an account and make your first trade.