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Spot Trading vs. Prediction Markets: Key Differences Explained
Gate Blog explains the fundamental differences between spot trading and prediction markets. Spot trading involves the underlying asset, with prices reflecting supply and demand. Prediction markets trade contracts tied to specific outcomes, with prices reflecting the collective view of an outcome's probability. Spot positions have no fixed expiry, while event contracts settle based on a predefined outcome. Spot exposure changes with the asset's price, whereas event contracts have a predefined maximum loss based on the amount committed.