Prediction markets trade on simple yes/no questions called event contracts, like “Will the Chiefs win?” or “Will inflation be above 3%?” Each contract settles at $1 if the event happens. Until then, it trades between 0¢ and $1, representing the market's live probability.
That’s why prices usually look like cents. If a contract is 62¢, people usually read that as “about a 62% chance” right now. It isn't a guarantee—just the current price based on what buyers and sellers are willing to pay. As news hits and people trade, that price moves.
But when those prices spike, most traders make a critical mistake: they look at Volume and assume the market "knows" something. This can be a trap.
Volume measures attention, not belief. A market can churn millions in volume just because traders are confused or chasing hype. To know if the market actually trusts the move, you have to stop looking at the activity and start looking at the commitment. That is the difference between Volume and Open Interest.
Open Interest vs. Volume TL;DR
- Volume = how many trades happened in a time window (today, this hour, this week, et cetera).
- Open interest = how many contracts are still open right now (positions people haven’t closed yet).
If you remember one thing, let it be this: volume is activity, and open interest is how many people are still holding.
Key Glossary Terms
- Event Contract: a yes/no contract tied to a future outcome that settles at $1 or $0.
- Market Prices: the current price for yes or no, set by supply and demand.
- Trade: buying or selling a contract.
- Volume: the number of trades in a given time period.
- Open Interest: the number of contracts still open right now.
- Liquidity: how easy it is to trade without moving the price much.
- For instance, in low liquidity markets there aren’t many buy/sell offers sitting there, so one trade can move market prices more than you’d expect.
What Is Volume?
Volume is the number of trades made in a market during a set time period.
The time window depends on the platform (today, last 24 hours, this week), but the meaning is always the same: volume tells you how much trading happened recently.
What Volume Does and Doesn’t Tell You
Volume tells you people traded the contract, but it doesn't tell you the market is “more correct,” that everyone agrees, or that the outcome is locked.
A market can show high volume because:
- News hit and people rushed in
- The topic started trending
- A bunch of people made small trades
- The same group traded back and forth all day
For example, let’s say a contract is “Will the Chiefs win this weekend?” If lots of people buy and sell that contract today, volume will be high. That can happen even if many of those people close their position a few minutes later.
So volume is a clean read on action, not on who’s sticking around.
How to Read Volume Changes Without Overthinking It
- If volume rises during a price move, more people are actively trading that move.
- If volume is low, the market can still move, but it may be just a few trades moving the price.
- If volume spikes suddenly, it’s usually because new information hit (injury news, election results coming in, a data release, popular current events).
One caution: in low liquidity markets, volume can fool you. There might be only a few buy/sell offers available, so a single trade can “jump” to the next available price and pull the market prices with it.
What Is Open Interest?
Open interest is the number of contracts that are still open right now. In short, it's how many positions are still active because people haven’t closed them yet and the event outcome hasn’t officially settled.
If you bought Yes or No earlier and you’re still holding it, that position counts toward open interest.
What Open Interest Tells You
Open interest helps answer this: are people still holding this market, or did they trade it and move on? After the first news hit, did people stay in or close out?
How Open Interest Updates
Open interest changes when positions open or close.
- If more people open positions and keep them open, open interest rises.
- If people close positions, open interest falls.
- If one person exits and another person takes their spot, volume goes up, but open interest may stay the same.
For example
- Morning: 1,000 contracts are open. Open interest = 1,000.
- During the day: lots of trading happens, but it’s mostly people trading with each other without increasing the total number of open positions. Open interest can stay around 1,000 even though volume rises.
- Later: 300 people close their positions and aren’t replaced. Open interest drops to about 700.
So: open interest usually moves slower than volume because it reflects what’s still being held.
Open Interest vs. Volume
They answer different questions:
- Volume: how much trading happened recently?
- Open interest: how many contracts are still open right now?
If you only look at volume, it’s easy to mistake noise for confidence. And if you only look at open interest, you can miss that the market just started reacting to new information.
A Simpler Way to Read Them Together
High volume and rising open interest
- More people are trading, and more positions are being opened and held.
High volume and flat (or low) open interest
- Lots of trading, but not many people are holding positions for long.
Low volume and high open interest
- Not much is happening today, but a lot of positions are still open.
Why This Matters
If you’ve ever watched the stock market or followed betting markets, you know prices can move fast.
Prediction market prices can do the same, sometimes because a lot of people showed up, and sometimes because only a few trades hit a thin market.
Volume and open interest give you important context so you’re not guessing why market prices moved.
How This Looks Across Common Prediction Market Topics
Sports Events
Sports markets are usually the simplest to read because the trigger is obvious: something happened.
Say there’s a contract on a particular event like “Will the Patriots win Sunday?” and then the starting QB gets listed as questionable with an injury. You’ll usually see volume jump right after that news hits because people rush in to trade.
Then open interest tells you the second part: did people keep positions open into kickoff, or did they bail after the first reaction?
One thing to note: low liquidity can make the move look bigger than it “should” be. If there aren’t many buy and sell offers sitting there, one trade can hit a worse price and push market prices around.
Political Markets and Elections
Political markets move in bursts, because politics is basically scheduled chaos plus random chaos.
During a presidential election, you’ll see volume spike on debate nights, big news moments, and election results.
Then the quiet part matters more: open interest shows whether people stayed in between headlines, or whether everyone traded the moment and left.
This is also where people compare political markets to traditional polls or opinion polls.
Polls are people answering a question. Markets are people putting money behind a view on an unknown future outcome.
See our guide to the best political betting sites if you want to put this theory into action.
Financial Markets and Economic Indicators
Financial markets tied to economic indicators have a pretty predictable pattern.
Before the report, you usually see open interest build because people want to be positioned ahead of the number. When the data prints, volume usually spikes because everyone reacts at once.
After that, open interest is the tell: did people keep positions open because they think the first move was right, or did they close quickly and move on?
Pop Culture and Entertainment Awards
Pop culture markets are the king of “everyone shows up, then disappears.” A trailer drops, someone posts a messy quote, nominees get announced, Spotify top songs get announced, and volume pops because people want to trade the moment.
Open interest is usually smaller because fewer people want to hold for weeks until the event outcome is final, especially when the “news” is mostly vibes.
You’ll see the same thing around entertainment awards: lots of tweets, plenty of short-term trading, and then open interest tells you whether the market actually built staying power.
Company Performance
Some markets are about company performance and, as you'd expect, most days nothing big happens. No new data, no headline, basically no reason to change your mind.
So the screen can look quiet: volume stays low, but open interest stays up because people are still holding their positions and waiting.
For example: imagine Disney during earnings season. You’ll sometimes see contracts tied to the next quarterly report, like an EPS beat vs miss, or Disney+ subscriber growth landing above or below a set number.
Those markets can sit quiet for a week, then earnings drops and market prices jump because people finally have something real to trade off.
The real takeaway here? Quiet doesn’t always mean nobody cares. Sometimes it just means there’s nothing new to react to yet.
Different Platform Designs, Same Two Numbers
Some prediction market platforms use an order book where you post the price you want with a limit order and wait for someone to match it (this is the continuous double auction setup).
Other platforms show a quoted price from market makers, including automated ones, so you can trade right away.
Different market mechanism, same meaning on the screen: volume is the number of trades in a time window, and open interest is the number of contracts still open.
When To Use Volume and Open Interest
- The price moved a lot? Check volume first. Was there real trading behind that move, or did a few trades push it?
- Volume jumped suddenly? Check open interest next. Did people actually stay in, or did they trade it and leave?
- Open interest is high but volume is quiet? That usually means people already picked a side and are sitting on it.
- It’s a niche market and the price is changing a lot? Think low liquidity: there aren’t many buy/sell offers available, so one trade can hit a worse price and drag the price with it. If the platform shows it, look at the bid/ask spread too.
Learn More About Prediction Markets
This is one core lens for understanding prediction markets: volume tells you how active the market has been, open interest tells you how many positions are still open.
Want the next layer? Pair it with Liquidity ≠ Accuracy. Same market prices, very different context.
Open Interest vs. Volume FAQs
What's the difference between volume and open interest?
Volume is how many buys and sells happened in a time window, and open interest is how many contracts are still open right now. In most prediction markets, neither one guarantees accurate forecasts. They’re just context for what you’re seeing on the screen while people are predicting outcomes.
What does higher trading volume indicate?
Usually it's that more people showed up to trade that market during that window. Same idea as betting markets or the stock market; higher volume tends to mean more attention in that moment. However, though it can make prices react faster, it doesn’t prove the market “knows” something you don’t.
How can volume be high when open interest is low?
Because people can buy, sell, and close quickly. If a bunch of people open a position, then close it five minutes later, volume climbs (lots of activity) while open interest stays low (not many positions left open).
When does open interest change?
Open interest changes when positions are opened or closed. If one person closes and another person takes the other side, the contract can change hands and volume goes up, but open interest might not move.
Who determines market prices?
Participants do. Market prices move based on supply and demand: what buyers are willing to pay and what sellers are willing to accept. On some prediction market platforms, that price is formed in an order book (a continuous double auction) using limit order bids and asks. On others, market makers quote prices so there’s something to trade against.
Who regulates prediction markets in the U.S.?
For federally listed event contract markets on a licensed derivatives exchange, the Commodity Futures Trading Commission (CFTC) is the main federal regulator under the Commodity Exchange Act, since these contracts fall under the umbrella of financial derivatives. Separately, state regulators can still change how certain contracts are offered (especially sports-style questions), and you’ll sometimes see online gambling arguments show up in those disputes.
What prediction market platforms are available right now?
For real money prediction markets, you’ll mostly hear about Kalshi in the U.S. On the crypto side, Polymarket is the most popular one. You’ll also still see PredictIt for politics-style markets, and other options like sportsbook brands joining the fray.
