How Are Prices Calculated?

The prices probabilities displayed on Xmarket are the midpoint of the bid-ask spread in the orderbook.

Initial Price

• When a market is created, there are initially zero shares and no pre-defined prices or odds.

• Market makers (a fancy term for traders placing limit orders) interested in buying YES or NO shares can place Limit Orders at the price they’re willing to pay

• When offers for the YES and NO side equal $1.00, the order is “matched” and that $1.00 is converted into 1 YES and 1 NO share, each going to their respective buyers.

For example, if you place a limit order at $0.60 for YES, that order is matched when someone places a NO order at $0.40. This becomes the initial market price.

Future Price

The prices displayed on Xmarket are the midpoint of the bid-ask spread in the orderbook — unless that spread is over $0.10, in which case the last traded price is used. Like the stock market, prices on Xmarket are a function of realtime supply & demand.

Prices = Probabilities

In the market below, the displayed probability is 38%, based on current market pricing. The highest buy price is 36¢ and the lowest sell price is 43¢, resulting in a 7¢ bid–ask spread.

You may not be able to buy shares at the displayed probability because of the bid–ask spread. In the example above, a trader who wants to buy YES shares would pay 43¢ for up to 175.4 shares (the lowest sell order). Once those shares are filled, the next available price rises to 45¢, and higher prices thereafter.