Liquidity
Definition
How easily you can buy or sell a contract without significantly moving the price. Higher liquidity means tighter spreads and less slippage.
Example
Presidential election markets on Polymarket have deep liquidity; niche weather markets may not.
Related terms
Order Book
A list of open buy and sell orders for a contract, organized by price. The depth of the order book indicates liquidity and how easily you can enter or exit a position.
Spread (Bid-Ask)
The difference between the best bid and best ask price for a contract. Tighter spreads indicate higher liquidity and lower trading costs.
Resolution / Settlement
The process of determining the outcome of a prediction market event and paying out contracts. Yes contracts pay $1, No contracts pay $0.
CFTC
The Commodity Futures Trading Commission — the US regulatory body that oversees prediction markets like Kalshi. CFTC regulation provides legal certainty for US traders.
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