Implied probability

The probability of an outcome implied by a contract's price. On Kalshi, a price of 65 cents implies roughly a 65 percent chance the event resolves yes, before fees and edge.

Reading price as probability is the core skill of prediction-market trading. Your edge exists only when your own estimate of the true probability differs enough from the implied price to overcome fees, which is what an expected-value calculation measures.

Implied probability is the chance of an outcome as expressed by its price. On Kalshi, because a contract pays $1 if it resolves YES, its price in cents is a direct read of the market's implied probability: a contract at 65 cents implies a 65 percent chance. This is the single most useful lens for evaluating a trade.

The reason it matters is that profit comes from disagreeing with the price correctly. If you believe an outcome is 75 percent likely and the market prices it at 65 cents, you have a positive expected edge: you are paying 65 for something you think is worth 75. If you think it is only 55 percent likely, buying at 65 is a losing proposition over time even if this particular contract happens to win.

Implied probability also lets you compare a Kalshi price to other sources, like a model, a poll, or a sportsbook line converted to probability. Persistent gaps between your estimate and the market's are where edge lives, but be honest about whether your estimate is genuinely better-informed or just different.