How to Read Prediction-Market Fair Value
Implied probability, spread, liquidity, and decision quality — how to read what a prediction-market price is really telling you, and when to distrust it.
Price is a probability
On a prediction market, a contract that pays $1 if an event happens and trades at 62¢ is the crowd's implied probability: about 62%. That's the first thing to read off any price.
Adjust for spread and liquidity
The headline price hides two costs. The bid/ask spread is what you pay to enter and exit — a wide spread means it's easy to overpay. Liquidity (book depth) tells you whether the quote survives size or moves the moment you act. Tickrr combines these into a liquidity-adjusted fair range and a decision-quality rating for each market.
Spot the dislocation
When a price sits *outside* its fair range — or moves sharply without news, or barely moves despite big news — that's a dislocation. It's a flag that the number may be fragile, not a signal to trade.
Reading it in practice
- Implied probability: the crowd's odds, in percent.
- Fair range: where the price should sit given spread and liquidity.
- Decision quality: good / fair / poor — how much to trust the quote.
- 1-week move: is conviction strengthening or softening?
Intel only. These are informational reads, not advice to bet, buy, or sell.
FAQ
What does a 62¢ contract price mean?
It maps to roughly a 62% implied probability that the event resolves 'Yes' — before adjusting for spread and liquidity.