Prediction markets are exploding in popularity—but most people still don't understand how they actually work.

In today's episode, we break down the surge in predictive markets, what they are, how they function, and the big questions traders are asking: Are prediction markets legal? How do they differ from traditional markets? And what risks do they carry for you as a participant?

We'll cut through the hype and explain the mechanics behind event-based trading, how pricing reflects probability, and why regulators are paying closer attention. Whether you're looking at political prediction markets, economic-event contracts, or blockchain-based platforms, you need to understand the structure before you risk capital.

I'll also answer several viewer questions—including a (slightly delayed!) response to Ed in San Jose about my recent Tesla trade and what was going through my mind during that position.

If you're curious about alternative markets and evolving financial structures, this episode is a must-listen.

Listen now:👉 What Are Predictive Markets?

Inside the episode:

• How prediction markets actually work
• Are predictive markets legal in the U.S.?
• Risks and regulatory considerations
• How probabilities get priced into contracts
• Viewer Q&A, including Tesla trade follow-up

Hit like, subscribe, and drop your questions for the next TraderMerlin show.

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Trading Applications used:

- Tradingview