#Definition
Market States are the distinct operational phases a prediction market transitions through during its lifetime. Each state determines what actions traders can take and what's happening with the market. The standard progression is: Unopened → Open → Closed → Resolved → Settled.
#The Five Market States
#State 1: Unopened
Status: Created but not yet trading
What it means:
- Market exists and is visible
- Rules are set and published
- Cannot trade yet
- May show "Coming Soon" or start time
- Pre-market preparation phase
Example:
Nov 1: Market created for Dec 15 Fed meeting
Nov 1-14: UNOPENED (visible but no trading)
Nov 15: Opens for trading
What you can do: ✅ View market details ✅ Read rules ✅ Research the event ✅ Set alerts for opening ✅ Prepare trading strategy
What you cannot do: ❌ Trade ❌ Place orders ❌ Earn fees (no volume yet)
Why this state exists:
- Allows review of rules before trading starts
- Gives time for promotion and awareness
- Prevents front-running market creation
- Scheduled openings (e.g., "opens 1 month before event")
#State 2: Open
Status: Active trading
What it means:
- 🟢 Market is live
- Trading fully enabled
- Prices fluctuate based on orders
- Liquidity available
- Information being aggregated
Example:
Market: "Will Bitcoin reach $100k in 2025?"
Nov 15, 2024: Opens
Dec 31, 2025: Closes
Open duration: 13+ months
What you can do: ✅ Buy shares (YES or NO) ✅ Sell shares you own ✅ Place limit orders ✅ Cancel orders ✅ Add/remove liquidity (AMM markets) ✅ Monitor prices ✅ React to news
What you cannot do: ❌ Change market rules ❌ Redeem shares yet (event hasn't resolved) ❌ See final outcome (unknown)
Price dynamics:
Opening price: Often 50¢ (uncertain)
Mid-life: Prices fluctuate with news
Near close: Converges toward outcome (e.g., 95¢ or 5¢)
This is the core state where prediction markets serve their purpose:
- Aggregating information
- Price discovery
- Risk transfer
- Speculation and hedging
#State 3: Closed
Status: Trading stopped, awaiting outcome
What it means:
- 🔴 Trading disabled
- Positions frozen
- Event occurring or about to occur
- Outcome not yet official
- Waiting for resolution
Example:
Election market:
8:00 PM: Polls close → CLOSED
11:30 PM: Race called → Still CLOSED
Next morning: Official confirmation → Moves to RESOLVED
What you can do: ✅ View your frozen positions ✅ Monitor real-world event ✅ Wait for outcome ✅ Calculate potential returns ✅ Trade other markets
What you cannot do: ❌ Trade this market ❌ Modify positions ❌ Add/remove liquidity ❌ Place new orders ❌ Cancel existing orders (already canceled at close)
Why this state exists:
- Prevents manipulation during outcome determination
- Allows fair resolution process
- No last-second insider trading
- Clean break between trading and settlement
Duration: Minutes to weeks
- Sports: 10-60 minutes
- Elections: 2-24 hours
- Economic data: 1-7 days
- Disputed outcomes: Days to weeks
#State 4: Resolved
Status: Outcome determined, processing payouts
What it means:
- ✅ Winner declared
- Outcome official
- Oracle/platform confirmed result
- Payouts being processed
- May have dispute window
Example:
9:00 AM: BLS releases jobs data → Outcome known
9:15 AM: Platform confirms → RESOLVED to YES
9:30 AM: Payouts sent → Moves to SETTLED
What you can do: ✅ See resolution outcome ✅ Know your profit/loss ✅ File dispute (if allowed, time-limited) ✅ Await payout ✅ Plan next trades
What you cannot do: ❌ Trade ❌ Modify position ❌ Withdraw winnings yet (processing) ❌ Change outcome (too late)
Substates:
- Proposed: Outcome suggested, can be challenged
- Final: Dispute period passed, outcome confirmed
- Settling: Payouts being distributed
Duration: Minutes to days (usually <1 hour)
#State 5: Settled
Status: Complete, final, permanent
What it means:
- 🏁 Market finished
- Payouts distributed
- Winners got $1.00 per share
- Losers got $0.00
- Historical record preserved
- Cannot reopen
Example:
10:00 AM: Payouts hit accounts → SETTLED
Status: Permanently complete
What you can do: ✅ Withdraw funds ✅ Reinvest in other markets ✅ Review market history ✅ Check accuracy (price vs outcome) ✅ Update tax records ✅ Learn from results
What you cannot do: ❌ Trade (market closed forever) ❌ Dispute outcome (too late, rare exceptions) ❌ Reverse settlement (permanent)
This is the end state: Market will remain in this state forever, serving only as historical data.
#State Transition Diagram
#State Transition Diagram
#State-by-State Comparison
| State | Trading | Outcome Known | Payouts | Can Modify | Duration |
|---|---|---|---|---|---|
| Unopened | ❌ No | ❌ No | ❌ No | ❌ No | Hours-days |
| Open | ✅ Yes | ❌ No | ❌ No | ✅ Yes | Hours-months |
| Closed | ❌ No | ❌ No | ❌ No | ❌ No | Minutes-weeks |
| Resolved | ❌ No | ✅ Yes | ⏳ Processing | ❌ No | Minutes-hours |
| Settled | ❌ No | ✅ Yes | ✅ Complete | ❌ No | Permanent |
#Alternative State Progressions
#Fast-Track (Simple Markets)
UNOPENED → OPEN → CLOSED → SETTLED
(resolved + settled simultaneously)
Example: Play-money market resolves instantly
#Disputed Outcome
UNOPENED → OPEN → CLOSED → DISPUTED → RESOLVED → SETTLED
↑
(Extended review period)
Example: Contested election with recounts
#Voided Market
UNOPENED → OPEN → VOIDED → REFUNDED
↑
(Market canceled, all funds returned)
Example: Market had critical rule error, platform voids it
#Pre-Trading
Some platforms allow pre-market trading:
UNOPENED (with pre-trading) → OPEN (official) → CLOSED → RESOLVED → SETTLED
↑ ↑
(Limited trading) (Full trading)
#State Indicators
#Visual Indicators
Platforms typically show state with:
Unopened:
- 🔵 Blue or gray indicator
- "Opens in X days" countdown
- Grayed-out trade button
Open:
- 🟢 Green indicator
- "Trading Active" badge
- Live price updates
Closed:
- 🔴 Red indicator
- "Trading Closed" badge
- Frozen price display
Resolved:
- ⚠️ Yellow or orange indicator
- "Settled: YES" or "Settled: NO"
- Settlement processing message
Settled:
- ⚫ Gray or black indicator
- "Settled" badge
- Final outcome displayed
- Historical data view
#State and Strategy
#Best Time to Enter (Open State)
Early (just opened):
- Wide uncertainty
- Potentially mispriced
- Long time to expiry
- High risk/reward
Mid-life:
- More information available
- Narrower spreads
- Moderate risk/reward
Late (near close):
- Outcome becoming clear
- Converging to 0¢ or 100¢
- Low risk/reward
- Quick resolution
#Best Time to Exit (Before Close)
Exit strategies:
- Take profit early: Lock in gains, avoid risk
- Hold to close: Maximum profit if confident
- Partial exit: Sell some, hold rest
Consider exiting before close if:
- You've made good profit
- New information increases uncertainty
- You need capital for other trades
- Event risk is high
#State Transitions You Cannot Control
As a trader, you cannot:
- ❌ Force a market to open early
- ❌ Extend trading past close time
- ❌ Prevent market from closing
- ❌ Speed up resolution
- ❌ Delay settlement
You must work within the state system the platform provides.
#State Information Sources
#Where to Check State
✅ Market page: Shows current state prominently ✅ Portfolio view: Lists states of your positions ✅ Email notifications: Alerts on state changes ✅ API endpoints: Programmatic state checking ✅ Smart contract: On-chain state (crypto platforms)
#State Change Notifications
Good platforms notify you:
- "Market opening in 1 hour"
- "Market closing in 24 hours"
- "Market closed, awaiting resolution"
- "Market resolved: YES"
- "Settlement complete, funds available"
#State and Risk Management
#Unopened
- Risk: None (cannot trade yet)
- Action: Research and prepare
#Open
- Risk: High (price can move against you)
- Action: Active monitoring and management
#Closed
- Risk: Medium (outcome uncertain, capital locked)
- Action: Wait patiently, prepare dispute if needed
#Resolved
- Risk: Low (outcome known, just awaiting funds)
- Action: Verify correct resolution
#Settled
- Risk: None (complete)
- Action: Withdraw or reinvest
#The Importance of Understanding States
Knowing market states helps you:
✅ Time your trades: Enter/exit at optimal times ✅ Manage expectations: Know when you'll get paid ✅ Avoid errors: Don't expect to trade closed markets ✅ Plan capital: Account for locked periods ✅ Reduce stress: Understand what's happening ✅ Maximize returns: Strategic positioning across states
New traders often get confused because they don't understand states - seeing a market as "closed" and wondering why they can't trade, or expecting instant payment when a market "closes" not realizing they need to wait for resolved → settled transition.
Master the states, master the markets.