HOW PRICES MOVE BEFORE & DURING EVENTS
Plain English
Prediction market prices move as new information arrives. Before a scheduled event (like a jobs report), prices drift based on related data and commentary. During events, prices can move violently as real-time data comes in. After resolution, prices snap to $1.00 or $0.00. Understanding this lifecycle helps you decide when to enter and exit.
Going deeper
Prediction market contract price lifecycle: (1) Far from resolution: Prices reflect baseline probability based on historical base rates, initial survey data, and expert opinion. Liquidity is often thinner. (2) Approaching resolution: Prices update as related data flows — economic releases, political polls, company reports. The contract becomes more liquid as resolution nears and uncertainty focuses. (3) During the event: If it's a live event (election night, Fed announcement), prices move in real time as partial results emerge. (4) Resolution: Price snaps to $1.00 or $0.00. Prices never stay at extremes for long if the outcome is clear — they converge to 95%+ and 5%- quickly when one outcome becomes likely. Strategic entry timing matters: buying after a price dip on temporary noise vs. buying early when a contract is underpriced both have merit.
Examples
Election Night Live
A contract 'Will Candidate X win State Y?' starts at 55% on election day. Early returns show Candidate X underperforming. Price drops to 30%. Then a large, expected county reports — X outperforms. Price spikes to 80%. If you understand the county-level dynamics better than the market, you can trade these swings profitably.
Pre-Data Positioning
One week before the CPI release, the contract 'Will CPI be above 3%?' trades at 40%. Then a PPI report (a leading CPI indicator) comes in hotter than expected. Before the next market session, you buy Yes at 40% — reasoning that the PPI data should push CPI higher too. By the CPI release, the market has updated to 58%. You exit early, locking in the move.