Prediction Market Index
A prediction market index works like a snapshot of collective belief across many markets at once. Instead of tracking a single event, it blends probabilities from multiple prediction markets into one indicator. This makes broad trends easier to see.
The index can focus on a theme, sector, or timeline. For example, it might track regulatory outcomes, economic risks, or election-related events together. In prediction markets, each underlying market contributes based on rules such as weighting, relevance, or liquidity. The result is a higher-level signal derived from prediction markets data.
Because it aggregates many signals, a prediction market index is usually more stable than any single market. Short-term noise in one event is often balanced by others, creating a clearer picture of overall expectations.
Why It Matters
A prediction market index turns many individual forecasts into one readable signal. It helps analysts and decision-makers interpret prediction markets data at a broader level.
How is a prediction market index constructed?
An index is built by selecting a group of related markets and defining how each one contributes. Some indexes weight markets equally, while others adjust for liquidity, confidence, or importance. Using prediction markets data ensures the index reflects real-time collective belief rather than fixed assumptions.
What does a prediction market index reveal that single markets do not?
It reveals trends, direction, and shifts in sentiment across an entire topic. While single markets can be volatile, an index smooths out extremes and highlights underlying movement. This makes prediction markets data easier to compare over time.
How can analysts use a prediction market index?
Analysts use indexes to monitor risk, track sentiment changes, and detect early shifts in expectations. An index can act as a benchmark for forecasting models or decision frameworks. It is especially useful when many related events influence the same outcome.
Real-World Example
An analyst builds an index from several Polymarket and Kalshi markets related to regulatory approvals. While individual markets fluctuate, the combined index shows a steady increase in confidence that regulatory conditions are improving overall.
Prediction Market Index and FinFeedAPI
Building a prediction market index requires consistent, structured inputs across many markets. FinFeed's Prediction Markets API provides unified prediction markets data that developers can use to construct indexes, apply weighting rules, and track aggregate belief over time.