> For the complete documentation index, see [llms.txt](https://docs.strixlab.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.strixlab.io/trading/how-markets-work.md).

# How Markets Work

### Outcome shares

Every market is built from **outcome shares**. In a simple market there are two: **Yes** and **No**. Each share:

* trades between **1¢ and 99¢**, and
* **settles at $1** if it's the correct outcome — or **$0** if not.

Because a correct share always settles at $1, the Yes price and the No price add up to roughly $1. If Yes trades at 70¢, No trades around 30¢. (Live prices sum to *roughly* rather than exactly $1 — the small gap is the market's spread, covered in [The Order Book](https://docs.strixlab.io/trading/order-book).)

This also means the two sides are mirror images: **buying No at 30¢ is the same position as selling Yes at 70¢.** Either way, you profit if the outcome doesn't happen.

### Binary vs. multi-outcome events

<table data-view="cards"><thead><tr><th></th><th></th></tr></thead><tbody><tr><td><strong>Binary market</strong></td><td>A single Yes/No question. <em>"Will BTC close above $100k on Friday?"</em></td></tr><tr><td><strong>Multi-outcome event</strong></td><td>Several related outcomes grouped together, each one its own Yes/No market. <em>"Who wins the World Cup?"</em> lists many teams — you take positions on each one independently.</td></tr></tbody></table>

In a multi-outcome event, each outcome is priced separately and shown in an expandable list, so you can take a Yes or No position on any single result.

One thing you may notice: across a large multi-outcome event, the displayed prices can add up to slightly more than 100%. That's normal — each outcome is its own live market with its own spread, so the sum drifts a little above the theoretical total. It's not an error.

### Where prices come from

Prices are set entirely by **supply and demand** on the order book — the live list of buy and sell orders from all traders. **Strix Lab doesn't set prices and never takes the other side of your position** — every trade is between users. When more people buy Yes, its price rises; when they sell, it falls. That's what makes the price a real-time crowd forecast rather than anyone's official estimate.

{% hint style="info" %}
Prices move in fixed increments called the **tick size** — either 1¢ (0.01) or 0.1¢ (0.001), depending on the market. Tighter ticks allow finer pricing on high-volume markets.
{% endhint %}

### How markets settle

Every market defines, up front, exactly what counts as Yes: the specific outcome, the source used to confirm it, and the deadline. When the real-world result is confirmed, the market **settles** — correct shares are redeemed at $1 each, automatically credited in USDC to holders' wallets, and incorrect shares expire at $0.

You never need to claim anything manually — settlement happens on-chain and your balance updates automatically.

{% hint style="info" %}
Remember: you don't have to hold to settlement. You can [sell your position](https://docs.strixlab.io/getting-started/place-your-first-trade#selling-and-closing-out) at the market price any time before the outcome is confirmed.
{% endhint %}

### Minimum order size

Every order must be worth at least **$1** (price × quantity ≥ $1.00). For example, at 50¢ per share you must buy at least 2 shares.


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