Read the resolution rules before you look at the price
· 7 MIN READ
Most settlement surprises are not forecasting failures. You were right about what happened and wrong about what the market counted — and every one of those losses is avoidable by reading a few hundred words first.
The painful losses in prediction markets are rarely the ones where you misjudged the world. They are the ones where the world did what you expected and the market settled the other way, because the rules meant something narrower than the title suggested.
A market title is a headline. The resolution criteria are the contract. When they disagree, the criteria win.
The title is not the question
Consider a market titled "Will the minister leave office by 30 June?" That reads as one question and contains at least four. Does a resignation count, or only a formal dismissal? What about announcing a departure in June that takes effect in August? Does moving to a different ministry count as leaving? If the government falls and every post is vacated at once, is that the same event?
Each of those has a defensible answer, and the criteria will pick one. If you buy YES because you are confident a resignation is coming, and the rules require the office to be formally vacated, you can be entirely correct and still hold a worthless share.
Which source, and whose clock
Two details cause more disputes than anything else.
The source. A market on an asset's price has to name where the price comes from — a specific exchange feed, an index, a closing print at a stated time. Those disagree with each other constantly. A market resolving on one venue's close can settle NO while the number on your screen, from a different venue, printed above the threshold minutes earlier.
The timezone. "By 31 December" is not a date, it is a date plus a clock. UTC, US Eastern and Tehran time can land an event on different sides of a deadline. If the criteria don't say, look for what they do say — and treat a genuinely ambiguous deadline as a reason to price the market lower, not as a detail to settle later.
What counts as the event
The third trap is the threshold itself. A market on "an official announcement" needs to define official — a press release, a filing, a confirmed report, a post on a personal account? A market on a company "acquiring" another might resolve on a signed agreement, or only on a completed deal, and those can be a year apart.
How to read the rules quickly
Open the resolution criteria before the price, every time, and look for four things: the exact wording of the condition, the named source of truth, the deadline with its timezone, and what happens if the source doesn't report. If any of the four is missing or vague, that is real risk in the position — often a bigger risk than the underlying event.
Then ask the question that separates careful traders from confident ones: what is the most annoying way this could resolve against me while I turn out to be right? If you can describe that scenario in one sentence, you have understood the market. If you can't, you haven't finished reading.