#The Lifecycle Flow
[Open] -> [Closed] -> [Resolved] -> [Settled]
| | | |
Trading Trading Winner Payouts
Active Stops Known Distributed
#Lifecycle Flowchart
Key Distinction:
- Closed: "Game over, no more bets."
- Settled: "Cash out, money moves."
#Definition
Closed vs. Settled refers to the important distinction between two sequential stages in a market's lifecycle:
- Closed: Trading has stopped, positions are frozen, awaiting outcome
- Settled: Outcome determined, payouts distributed, market complete
Many new traders confuse these states, expecting immediate payment when a market "closes." Understanding the difference is crucial for managing expectations and capital.
#The Key Difference
#Closed
What it means: "No more trading allowed"
✅ Trading stopped
❌ Positions frozen (cannot buy/sell)
❌ Outcome NOT yet final
❌ No payouts yet
⏳ Waiting for [event](/wiki/event) and [resolution](/wiki/resolution)
Example:
Election [market](/wiki/market) closes at 8 PM when polls close
→ You cannot [trade](/wiki/trade) anymore
→ But you don't know who won yet
→ No money distributed yet
→ Market is CLOSED but not SETTLED
#Settled
What it means: "Winners paid, market complete"
✅ Outcome officially determined
✅ Winners received $1.00/share
✅ Losers received $0.00
✅ Market permanently complete
🔒 Cannot reopen
Example:
Next morning at 10 AM, race is called
→ Outcome: Candidate A wins
→ [YES](/wiki/yes) shares pay $1.00
→ NO shares worth $0.00
→ Money in your account
→ Market is SETTLED
#Timeline Comparison
#Typical Sequence
Time Status Your Shares Your Money
─────────────────────────────────────────────────────
8:00 PM CLOSED Frozen Locked
8:30 PM CLOSED Frozen Locked
9:00 PM CLOSED Frozen Locked
10:00 PM [RESOLVED](/wiki/resolved) Winners known Processing
10:15 AM SETTLED Redeemed Available!
#The Gap
The "closed to settled" gap is when:
- You cannot trade
- You don't have your money yet
- Outcome may or may not be known
- You're waiting
Duration varies:
- Sports: 15 minutes to 2 hours
- Elections: 2 hours to 2 days
- Economic data: 1 hour to 1 week
- Contentious outcomes: Days to weeks
#Why Both Stages Exist
#Why Have "Closed"?
Prevents manipulation:
- Can't trade based on insider knowledge of outcome
- No last-second front-running
- Fair for all participants
Allows verification:
- Platform checks multiple sources
- Dispute period for challenges
- Quality control on resolution
Example without "Closed":
Bad scenario: Trading open during vote counting
→ Insiders see results first
→ Trade before public knows
→ Unfair advantage
→ Market integrity destroyed
#Why Delay Until "Settled"?
Verification needed:
- Confirm outcome from official source
- Cross-check multiple data points
- Allow dispute window
- Process payments
Example:
Sports game ends at 9:00 PM
→ Refs reviewing final play
→ Could change outcome
→ Wait for official confirmation
→ THEN settle
#Common Confusion
#Mistake #1: "Closed = Paid"
❌ Wrong thinking: "Market closed, where's my money?"
✅ Correct understanding: "Market closed, now waiting for outcome to be determined and settlement to process"
#Mistake #2: "Outcome Clear = Settled"
❌ Wrong thinking: "Election was called on TV, why isn't market settled?"
✅ Correct understanding: "Platform needs to verify via official source and process payouts"
#Mistake #3: "Resolved = Settled"
❌ Wrong thinking: "Outcome was determined, should have my money now"
✅ Correct understanding: "Outcome determined (resolved), but payouts still processing (not settled until you receive funds)"
#Real-World Examples
#Example 1: Fast Settlement
Sports game:
6:00 PM: Game ends → CLOSED
6:10 PM: Official score confirmed → RESOLVED
6:15 PM: Payouts sent → SETTLED
Gap: 15 minutes (closed to settled)
Why so fast?:
- Clear, objective outcome
- Immediate data source
- Automated settlement
- No disputes expected
#Example 2: Standard Settlement
Presidential election:
Tuesday 8 PM: Polls close → CLOSED
Wednesday 2 AM: Networks call race → RESOLVED
Wednesday 10 AM: Payouts sent → SETTLED
Gap: 14 hours (closed to settled)
Why delay?:
- Wait for official calls
- Verify multiple sources
- Allow dispute window
- Process payouts during business hours
#Example 3: Extended Settlement
Disputed election 2000:
Nov 7: Polls close → CLOSED
Dec 13: Supreme Court decides → RESOLVED
Dec 14: Payouts sent → SETTLED
Gap: 37 days (closed to settled)
Why so long?:
- Outcome genuinely uncertain
- Recounts and court cases
- Platform waited for official determination
- Extraordinary circumstances
#Platform Differences
#Kalshi (Centralized)
Closed:
- Automatic at contract expiry time
- Announced days/weeks in advance
- Precise to the second
Settled:
- Staff verify outcome
- Usually within hours
- Sometimes same day as close
- Email notification sent
Gap: Usually hours, rarely >24 hours
#Polymarket (Decentralized)
Closed:
- Smart contract enforced timestamp
- Or event-triggered (e.g., price hits target)
- Automated, no human intervention
Settled:
- UMA Oracle determines outcome
- 2-hour dispute window
- Users must manually redeem tokens
- Gas fee required
Gap: Minimum 2 hours (dispute window), plus user redemption time
#Manifold Markets (Play Money)
Closed:
- Creator closes manually
- Or automatic at set time
- Very flexible
Settled:
- Often simultaneous with close
- Creator resolves
- Instant Mana distribution
- No separate settlement step
Gap: Often zero (instant settlement)
#Managing the Closed-to-Settled Period
#What You Can Do
During the gap:
✅ Monitor outcome: Watch event unfold ✅ Prepare dispute: Gather evidence if outcome seems wrong ✅ Calculate returns: Estimate profits/losses ✅ Review other markets: Research new opportunities ✅ Plan reinvestment: Decide how to use winnings
#What You Cannot Do
During the gap:
❌ Trade this market: Positions frozen ❌ Withdraw locked funds: Money still tied up ❌ Modify positions: Cannot change your holdings ❌ Transfer shares: Locked until settlement
#Capital Management
Problem: Funds locked during gap
Solutions:
- Keep reserve capital for other opportunities
- Plan around known settlement timelines
- Don't put all capital in markets closing same day
- Accept locked period as cost of trading
Example:
You have $1,000 total
Market A closes Monday, settles Tuesday: $400 locked
Market B closes Tuesday, settles Wednesday: $300 locked
Market C closes Wednesday, settles Thursday: $300 locked
Result: Always have SOME capital locked, but not all
→ Can still trade with remaining funds
→ Staggered exposure
#When Things Go Wrong
#Extended Closed Period
If settlement delayed longer than expected:
Your options:
- Wait patiently (usually it resolves)
- Contact platform support
- File dispute if outcome is wrong
- Accept that complex outcomes take time
Platform's obligation:
- Communicate delays
- Provide updated timelines
- Resolve as quickly as reasonably possible
- Compensate only in extreme cases (rare)
#Incorrect Settlement
If market settles to wrong outcome:
Immediate action:
- Document the error
- File dispute ASAP (time-limited)
- Provide evidence
- Reference resolution rules
Possible outcomes:
- Re-settlement to correct outcome
- Market voided, all refunded
- Dispute rejected, original settlement stands
Example:
Market: "Will Fed raise rates?"
[Resolution source](/wiki/resolution-source): Fed announcement at 2 PM
Platform settles: YES at 2:05 PM
Problem: Fed actually held rates steady (NO)
→ File dispute with screenshot of Fed statement
→ Platform reviews
→ Re-settles to NO
→ Payouts reversed and corrected
#The Psychology of Waiting
#Trader Impatience
Common feelings during closed-to-settled gap:
- "Where's my money?"
- "Why is this taking so long?"
- "Did something go wrong?"
- "I want to trade other markets!"
Managing expectations:
- Know typical settlement timelines before trading
- Read platform FAQs on settlement
- Set realistic expectations
- Use the time productively (research other markets)
#Platform Communication
Good platforms:
✅ Announce expected settlement timeline ✅ Update if delays occur ✅ Notify when settlement completes ✅ Explain any issues clearly
Poor platforms:
❌ No communication ❌ Unexplained delays ❌ Surprise settlements ❌ Silent on problems
#Summary Table
| Aspect | CLOSED | SETTLED |
|---|---|---|
| Trading | Stopped | Stopped (permanently) |
| Outcome | Unknown or pending verification | Official and final |
| Your Shares | Frozen | Redeemed (paid out) |
| Your Money | Locked | Available |
| Can Dispute? | Yes (some platforms) | No (very rare exceptions) |
| Duration | Temporary (mins to weeks) | Permanent |
| Next Step | Wait for resolution | Market complete |
#Best Practices
#For Traders
- Read market rules: Know expected settlement timeline
- Don't count on instant payment: Factor in locked period
- Monitor after close: Watch for settlement notification
- Verify payouts: Confirm you received correct amount
- File disputes quickly: Time-sensitive if outcome wrong
#For Platforms
- Communicate clearly: "Closed" vs. "Settled" in UI
- Set expectations: Display expected settlement date
- Notify users: Email when settlement completes
- Be transparent: Explain any delays
- Settle promptly: Faster is better (when accurate)
#The Bottom Line
Closed = "Game over, no more bets" Settled = "Dealer pays the winners"
There's always a gap between these states. Understanding and accepting this gap is part of being a successful prediction market trader.