What Are Prediction Markets?

Prediction markets are platforms where participants buy and sell contracts based on the probability of future events. The price of a contract reflects the market's collective belief that an event will occur.

For example:

  • "Fed Rate Cut in July 2026" trading at 72% means the market believes there is a 72% chance of a cut
  • "S&P 500 New High by September" at 70% signals strong bullish consensus

Why Macro Traders Use Prediction Markets

Traditional technical analysis tells you where price has been. Prediction markets tell you where institutional money thinks it is going.

Key advantages:

  • Real-time consensus — reflects aggregated smart money positioning
  • Event-driven signals — anticipate market moves before they happen
  • Risk calibration — adjust position size based on probability conviction

How MarketBiasCode Uses Prediction Markets

Our Prediction Markets section derives probabilities directly from the daily macro bias score. When the bias score is high (Risk-On), probabilities for bullish outcomes increase. When the score drops (Risk-Off), defensive scenarios gain probability.

Current model-implied scenarios include:

  • Fed rate decisions and their market impact
  • Recession probability by quarter
  • Major index price targets
  • Bitcoin and Gold macro targets

How to Trade Using Prediction Probabilities

Above 70% probability: Position in the direction of the predicted outcome. High conviction, full size.

50–70% probability: Lean in the direction but reduce size. Wait for confirmation from price action.

Below 50% probability: The outcome is uncertain. Avoid directional bias and focus on range strategies.

Combining Bias Score + Prediction Markets

The most powerful setup is when the daily bias score and prediction market probabilities align:

  • Risk-On score + High probability of S&P new high → Strong long signal on equities
  • Risk-Off score + High recession probability → Defensive positioning in Gold and bonds
  • Neutral score + Mixed probabilities → Stay flat, wait for clarity

Check today's prediction market probabilities on the MarketBiasCode Terminal alongside the live bias score.

Execute Your Positions

Once you identify your directional bias using prediction markets:

  • Trade equities and forex with AvaTrade — Tier-1 regulated broker
  • Trade crypto with Bybit — up to $5,030 in new user rewards
  • Get funded up to $100k with Funding Pips