How to Use Prediction Markets for Financial Forecasting

The short answer: using prediction markets for finance

A prediction market turns many people's views on a future event into a price. On versus, prices run from 0p to 100p, and a price is the market's probability estimate. Say a market on an interest rate decision trades at 70p: the market puts the chance of that outcome at about 70%.

For financial forecasting, that price can be one input alongside your own research. You can compare it with your own view, watch how it moves when news breaks, and see where the market looks more or less confident. Research suggests markets can be well calibrated, but a price is an estimate, not a promise, and markets can be wrong.

versus has markets across politics, finance, sport, AI, crypto and entertainment. To use them for finance, pick a finance market, read its price and the source that settles it, and decide whether your view differs. Reading a price does not require you to trade.

If you do take a position, the only fee on a trade is a transaction fee of 2% of the stake, added on top and shown before you confirm. You can lose the whole amount you put into a position.

Understanding the situation: why use prediction markets?

Prediction markets bring the views of many participants together in one number. People who trade put money behind their views, and the price moves as new information arrives. That can make prices a useful signal for events that are hard to model, such as how markets might react to an election or a sudden policy change.

Participants trade contracts that settle on the outcome of an uncertain event. On versus, a winning contract settles at 100p and a losing one at 0p, so the price before the result shows how likely the market thinks each outcome is.

Before you rely on a market, weigh these factors:

• Market activity: prices in markets with little trading can move sharply on a single trade, so treat them with more caution.
• Fee structure: know the full cost before you trade. On versus, the only fee on a trade is 2% of the stake, added on top and shown before you confirm.
• Regulatory environment: operating these markets in Great Britain without a UK Gambling Commission licence is not legal. versus is licensed under account 101143, which you can look up on the Gambling Commission public register. Polymarket and Kalshi block UK users and are not licensed in the UK.
• User experience: the price, the fee and the settlement source should all be clear before you confirm a trade.

Prediction markets can add a useful view to your forecasting. Market prices are not financial advice, and neither is this article. Only put in money you can afford to lose. For the basics, see how versus works.

Step-by-step workflow: using versus for financial forecasting

Here is a simple way to approach a finance market on versus.

1. Learn how prices work. Read how it works. A price between 0p and 100p is the market's probability estimate. A winning contract settles at 100p and a losing one at 0p.
2. Set your limits first. Safer Play in the app includes deposit limits, loss limits, reality checks, time out, self exclusion and GAMSTOP.
3. Find a finance market and read how it settles. Browse the finance markets on the predictions page. Every market names the source that settles it before you trade, so you know what decides the result.
4. Compare the price with your own view. Say a market on whether a stock index ends the year higher trades at 55p. If your research points to a clearly different chance, think about why. If it does not, the price may already reflect what you know.
5. Check the full cost before you confirm. The only fee on a trade is 2% of the stake, added on top and shown before you confirm. A £10 stake has a 20p fee, so you pay £10.20. You can lose all of it.
6. Follow the market and review your forecasts. While a market is open you can sell your position at the current price, which may be higher or lower than what you paid. Keep a note of what you expected and what happened, so you can see how well calibrated your forecasts are.

What it costs: understanding fees and transactions

Know the costs before you trade. On versus, the only fee on a trade is a transaction fee of 2% of the stake. It is added on top of the stake, has no cap and is shown before you confirm. Deposits and withdrawals are free within normal limits.

A hypothetical example shows how the numbers work:

• The position: say a market trades at 40p and you put £10 into a position. At 40p a contract, £10 buys 25 contracts.
• The fee: 2% of the £10 stake is 20p, added on top, so you pay £10.20 in total.
• At the result: if the outcome happens, each contract settles at 100p. If it does not, each settles at 0p and you lose the £10.20 you paid.
• Selling early: while the market is open you can sell at the current price, which may be above or below 40p.

Your loss can never be more than what you put into a position. There is no leverage and no margin call. Before your first withdrawal you verify your identity with a photo of your government ID and a selfie, as anti money laundering law requires; this usually clears in minutes. Withdrawals go back to the method you deposited with, and timings depend on that method and are shown in the app.

The outcome: what good forecasting looks like

Good forecasting is about clear thinking over many forecasts, not about any single result. Here is a hypothetical example.

Say someone follows currency markets and wants a view on an upcoming election in a large economy. They find a market on the election and read its settlement source. One candidate trades at 45p, so the market puts that candidate's chance at about 45%.

They think the chance is higher, and they expect that result to strengthen the local currency. They decide to take a small position they can afford to lose. The fee of 2% of the stake is added on top and shown before they confirm.

As the campaign goes on, they watch how the price reacts to polls and news. While the market is open they can sell at the current price, which may be higher or lower than 45p. If they hold to the end, each contract settles at 100p if that candidate wins or at 0p if not, and in that case they lose what they put in.

A good outcome is a clear record: what they expected, what the market said and what happened. Over many forecasts, that record shows how well calibrated their views are, and the market price gives them a second view to test their currency forecast against. Only put in money you can afford to lose, and use Safer Play if trading stops feeling under your control.

FAQ

How do prediction markets work?

People trade on the outcome of future events, and prices show the market's probability estimate. On versus, prices run from 0p to 100p. A winning contract settles at 100p and a losing one at 0p.

Are prediction markets legal?

It depends on where you are. Operating these markets in Great Britain without a UK Gambling Commission licence is not legal. versus is licensed by the UK Gambling Commission under account 101143. Polymarket and Kalshi block UK users and are not licensed in the UK.

What are the benefits of using prediction markets for finance?

They combine many views into one price that updates as news arrives. Research suggests markets can be well calibrated, but prices can be wrong, so use them as one input among several. They are not financial advice.

How can I start using versus for financial forecasting?

Read how it works, set your limits in Safer Play, then open a finance market and check its settlement source and the fee before you confirm. You can lose the whole amount you put in.

18+ only. Trade responsibly. BeGambleAware.org and GAMSTOP.