Glossary term
Liquidity (Prediction Markets)
The depth available at given prices; usually thin in tail contracts, which limits executable size and widens effective spreads.
Liquidity in prediction markets is the depth of orders available at or near the current price, determining how large a position can be taken without moving the market. It is usually thin in long-tail and niche contracts, so a price that looks attractive may not be executable at meaningful size. Thin liquidity is a primary reason prediction-market edge is harder to monetize than it appears. See Prediction Market Risk 101.