The last traded price is a record of what happened, not an offer you can take. A prediction market order book shows what you can actually buy, at what size and at which prices. This lesson covers the bid, the ask, the spread and depth, then runs a forty-share buy that walks through two price levels and costs more on average than the best ask suggests. That is slippage, and it can eat a modest edge entirely. You will see why limit orders trade certainty of price for the chance of no fill, how exit cost works, and how to record a timestamped snapshot so you know when to simply pass.
Learning objectives
- Understand the mechanics and assumptions of this technique.
- Reproduce a worked calculation or decision worksheet.
- Identify cases when the evidence supports passing rather than trading.
