# How Prediction Markets Work

### Understanding Prediction Markets

A prediction market is a decentralized exchange where participants buy and sell shares based on their predictions of future events. In Predium Finance, the "event" is the price movement of a financial asset (crypto or Forex).

### The Prediction Cycle

**1. Market Selection**

* Browse available crypto and forex pairs
* View real-time price charts 

**2. Position Opening**

* Select prediction duration (1 minute - 6 hours)
* Set your stake amount ($1 - $100 per trade)
* Choose your predicted direction: UP ↑ or DOWN ↓
* Confirm your position

**3. Market Settlement**

* Position closes automatically at the specified time
* Price is verified via Pyth Network data
* Settlement is instant and transparent

**4. Results & Payout**

* Winning prediction: Your stake + returns are credited to your balance
* Losing prediction: Your stake is allocated to the liquidity pool used for payouts and settlement
* Draw: Your stake is returned back to your balance

### Leverage & Risk Model

* Each user can hold 1-5 open positions simultaneously
* Positions are isolated - loss on one position doesn't affect others
* Stake allocation is completely flexible - adjust per-trade stakes between $1-$100
* No liquidation risk - maximum loss per position equals your stake

### Real-time Price Feeds

Predium Finance uses [Pyth Network](https://www.pyth.network/) as the primary oracle for price data. Pyth provides:

* Ultra-low latency price feeds
* High precision (multiple decimal places)
* Consensus across professional market participants
* Tamper-proof settlement data

All price feeds update continuously, ensuring fair and accurate settlement at prediction expiration.

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