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Polymarket Glossary
Complete terminology reference for Polymarket prediction markets.
Core Concepts
Prediction Market
A market where participants trade contracts based on the outcome of future events. Prices represent the market's collective probability assessment.
Market
A specific question with binary or multiple outcomes. Each market resolves to one outcome based on real-world events.
Event
A collection of related markets. For example, an election event may contain multiple markets for different races.
Outcome
A possible result of a market. Binary markets have two outcomes: "Yes" and "No".
Token
A conditional token representing a position in a specific outcome. Each outcome has its own token (e.g., "Yes Token", "No Token").
CLOB Token ID
A unique identifier for a conditional token in the CLOB (Central Limit Order Book) system. Used for trading and order placement.
Trading Terms
Bid
An offer to buy tokens at a specified price. The highest bid is the best bid.
Ask
An offer to sell tokens at a specified price. The lowest ask is the best ask.
Spread
The difference between the best ask and best bid prices. Represents the cost of immediate execution.
Mid Price
The average of the best bid and best ask: (bid + ask) / 2. Often used as a fair value estimate.
Order Book
A list of all open buy (bids) and sell (asks) orders for a token, sorted by price and time.
Market Depth
The total volume available at each price level in the order book. Indicates liquidity.
Price Impact
The change in price caused by executing a trade of a given size. Larger trades typically have higher price impact.
Slippage
The difference between expected execution price and actual execution price. Caused by consuming multiple order book levels.
Liquidity
The ease with which tokens can be bought or sold without significantly affecting the price. High liquidity = tight spreads and deep order books.
Position Management
Position
An open trade holding tokens in a specific outcome. Can be long (holding Yes tokens) or short (holding No tokens).
Entry Price
The average price at which a position was opened.
Exit Price
The price at which a position is closed.
Unrealized PnL
Profit or loss on an open position, calculated from current market price.
Realized PnL
Profit or loss from a closed position.
Equity
Total account value: balance + unrealized_pnl
Balance
Available USDC (USD Coin) for trading.
Market Resolution
Resolution Date
The date and time when a market resolves based on the outcome of the event.
Resolution Source
The authoritative source used to determine the outcome (e.g., official election results, sports league data).
Disputed Resolution
A market resolution that is challenged by participants. May require manual review.
Settlement
The process of distributing payouts to winning positions after market resolution.
Performance Metrics
Win Rate
Percentage of profitable trades: (winning_trades / total_trades) * 100
Profit Factor
Ratio of total profit to total loss: abs(total_profit / total_loss). Values > 1 indicate profitability.
Sharpe Ratio
Risk-adjusted return metric. Higher values indicate better risk-adjusted performance.
Sortino Ratio
Similar to Sharpe ratio but only considers downside volatility.
Maximum Drawdown
The largest peak-to-trough decline in equity during a trading period. Expressed as a percentage.
Calmar Ratio
Return divided by maximum drawdown. Higher values indicate better risk-adjusted returns.
Expectancy
Expected profit per trade: (win_rate * avg_win) - ((1 - win_rate) * avg_loss)
API Terms
Rate Limit
Maximum number of API requests allowed per time period. Exceeding limits results in 429 errors.
API Key
Authentication credential for accessing authenticated endpoints.
Signature Type
Method of authentication:
0: EOA (Externally Owned Account) - standard wallet1: POLY_PROXY - proxy contract2: GNOSIS_SAFE - Gnosis Safe multisig
Funder Address
Wallet address used to fund trades and pay gas fees.
Chain ID
Blockchain network identifier:
137: Polygon mainnet (production)80001: Mumbai testnet (testing)
Strategy Terms
Signal
A trading recommendation generated by a strategy, including:
- Action: BUY, SELL, or HOLD
- Token ID: Which outcome to trade
- Size: Position size
- Confidence: Strategy's confidence level (0.0 to 1.0)
Confidence
A strategy's assessment of signal quality, typically between 0.0 (low) and 1.0 (high). Used to filter trades.
Risk Management
Rules and limits to protect capital:
- Maximum position size
- Maximum total exposure
- Stop losses
- Position limits
Backtesting
Simulating strategy performance on historical data to evaluate profitability before live trading.
Paper Trading
Trading with simulated funds to test strategies without financial risk.
Market Types
Binary Market
A market with exactly two outcomes: Yes and No. Most common market type.
Scalar Market
A market with a range of possible outcomes (e.g., "Bitcoin price will be between $50k-$60k").
Multi-Outcome Market
A market with more than two discrete outcomes (e.g., "Which team will win?" with multiple teams).
Tag Categories
Common market categories identified by tag IDs:
- Crypto (tag_id: 21): Cryptocurrency-related markets
- Politics (tag_id: varies): Political events and elections
- Sports (tag_id: varies): Sports betting markets
- Economics (tag_id: varies): Economic indicators and events
- Technology (tag_id: varies): Tech industry events
Common Abbreviations
- CLOB: Central Limit Order Book
- PnL: Profit and Loss
- USDC: USD Coin (stablecoin)
- EOA: Externally Owned Account
- API: Application Programming Interface
- REST: Representational State Transfer (API protocol)
- WebSocket: Real-time communication protocol
- JSON: JavaScript Object Notation (data format)
Price Notation
Prices in Polymarket are represented as probabilities between 0.0 and 1.0:
0.50= 50% probability = $0.50 per share0.75= 75% probability = $0.75 per share1.00= 100% probability = $1.00 per share (guaranteed outcome)
For binary markets, Yes + No prices should sum to approximately 1.0 (accounting for spread).