Predictive Market

AAA

DEFINITION of 'Predictive Market '

A speculative market that is based on speculations regarding events, such as who will win an election or whether a sports player will be resigned to a team. All of the "trades" involve a prediction with an unambiguous outcome.

INVESTOPEDIA EXPLAINS 'Predictive Market '

Many predictive markets are available to the public, and encompass predictions from who will win an Oscar, to trends in the video gaming industry. A predictive market is structured as a betting exchange, and participants bet (trade) on how they expect an event to unfold.

RELATED TERMS
  1. Hollywood Stock Exchange - HSX

    An online prediction market where "investors" bet on the performance ...
  2. Speculation

    The act of trading in an asset, or conducting a financial transaction, ...
  3. Speculator

    A person who trades derivatives, commodities, bonds, equities ...
  4. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  5. Speculative Capital

    The funds earmarked by an investor for the sole purpose of speculation. ...
  6. Dividend

    A distribution of a portion of a company's earnings, decided ...
Related Articles
  1. Investing Basics

    An Introduction To Stock Market Indexes

    Investopedia explains the five most talked about indexes and what makes them all different.
  2. Active Trading Fundamentals

    Forces That Move Stock Prices

    You can't predict exactly how stocks will behave, but knowing what affects prices will put you ahead of the pack.
  3. Retirement

    Stock Ratings: The Good, The Bad And The Ugly

    Stock ratings are both loved and reviled. Find out why they deserve equal measures of both.
  4. Forex Strategies

    The 10 Riskiest Investments

    Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available.
  5. Options & Futures

    Was Buffet Right about Derivatives as WMDs?

    Why Warren Buffet described derivatives as weapons of mass destruction, and when can they be helpful or harmful?
  6. Investing Basics

    Explaining Market Value of Equity

    Market value of equity is the total value of all the outstanding stock as measured in the stock market at a particular time.
  7. Investing Basics

    What is Spread?

    Spread has several slightly different meanings depending on the context. Generally, spread refers to the difference between two comparable measures.
  8. Economics

    What is the Breakeven Point?

    In general, when gains or revenue earned equals the money spent to earn the gains or revenue, you’ve hit the breakeven point.
  9. Stock Analysis

    What is the Price-to-Sales Ratio?

    The price-to-sales ratio is an indicator of the value placed on each dollar of a company’s sales or revenues.
  10. Options & Futures

    Examples Of Exchange-Traded Derivatives

    We look at some of the most common exchange-traded derivatives.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center