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====== Prediction Markets ======

Prediction markets on the T4 platform are binary-outcome instruments that settle at either **0** or **1** (expressed as a price). This page explains how to interpret settlement messages so your application can correctly determine the outcome of a prediction market trade.

===== Overview =====

Unlike traditional futures contracts, prediction market instruments resolve to one of two discrete values at expiration:

  * **1** -- The event occurred; the "Yes" side wins.
  * **0** -- The event did not occur; the "No" side wins.

When a prediction market settles, the T4 platform generates a synthetic order update on the **opposite side** of your position at the settlement price. Your application should watch for this message to determine whether a held position resolved in or out of the money.

===== Settlement Mechanics =====

==== How Settlement Works ====

At market expiration, T4 will evaluate the outcome and issue a closing order update for each open position. The message will always be:

  * **Side** -- Opposite of your open position (long positions receive a sell; short positions receive a buy).
  * **Price** -- Either **0** (lost) or **1** (won), expressed in the instrument's native price format. See [[developers:systempricing|System Price Format]].
  * **Order Type** -- ''[TBD -- settlement order type tag/value]''
  * **Quantity** -- Equal to your open position size.

==== Outcome Matrix ====

^ Your Position ^ Settlement Price ^ Outcome ^
| Long           | 1                | Won -- event occurred |
| Long           | 0                | Lost -- event did not occur |
| Short          | 1                | Lost -- event occurred |
| Short          | 0                | Won -- event did not occur |

===== Identifying a Settlement Message =====

Your application should identify a settlement message by checking for the following combination of fields in an order update:

  - The instrument is a prediction market type. See [[developers:websocket:markets|Market Data & Definitions]] for how to identify prediction market instruments.
  - The order update represents a closing fill (opposite side of the open position).
  - Price is exactly **0** or **1**.
  - Order type is ''[TBD]''.

<WRAP callout>
**Note:** Settlement messages are generated by the platform and do not represent a resting order in the book. They will not appear in the order book feed and should be treated as system-generated close events.
</WRAP>

===== WebSocket API =====

Settlement is communicated via the standard order update message on the Trading API WebSocket feed. Subscribe to the account feed and watch for order updates matching the criteria above.

For full message field definitions see [[developers:websocket:messages|Message Reference]] and [[developers:websocket:orders|Order Routing]].

==== Example: Won (Long Position, Settles at 1) ====

The following is an example order update received when a long position of 1 contract settles in the money.

<code javascript>
// [TBD -- WebSocket order update JSON/Protobuf example]
// Fields to highlight:
//   side:       Sell
//   price:      1
//   order_type: [TBD settlement type]
//   qty:        1
//   status:     [TBD]
</code>

==== Example: Lost (Long Position, Settles at 0) ====

<code javascript>
// [TBD -- WebSocket order update JSON/Protobuf example]
// Fields to highlight:
//   side:       Sell
//   price:      0
//   order_type: [TBD settlement type]
//   qty:        1
//   status:     [TBD]
</code>

==== Example: Won (Short Position, Settles at 0) ====

<code javascript>
// [TBD -- WebSocket order update JSON/Protobuf example]
// Fields to highlight:
//   side:       Buy
//   price:      0
//   order_type: [TBD settlement type]
//   qty:        1
//   status:     [TBD]
</code>

===== FIX API =====

Settlement is communicated via an **Execution Report (tag 35=8)** on the FIX session. The report will reflect the closing fill at the settlement price.

For full FIX tag definitions see [[developers:fixapi:start|FIX API]].

==== Key FIX Tags ====

^ Tag ^ Field Name   ^ Settlement Value ^
| 35  | MsgType      | 8 (Execution Report) |
| 39  | OrdStatus    | [TBD] |
| 54  | Side         | Opposite of open position (1=Buy, 2=Sell) |
| 44  | Price        | 0 or 1 |
| 40  | OrdType      | [TBD -- settlement order type] |
| 32  | LastQty      | Position size being closed |
| 150 | ExecType     | [TBD] |
| 55  | Symbol       | Prediction market instrument identifier |

==== Example: Won (Long Position, Settles at 1) ====

<code>
[TBD -- FIX Execution Report example message]
8=FIX.4.2|35=8|49=[SenderCompID]|56=[TargetCompID]|
54=2|44=1|40=[TBD]|32=1|39=[TBD]|150=[TBD]|55=[Symbol]|10=[checksum]
</code>

==== Example: Lost (Long Position, Settles at 0) ====

<code>
[TBD -- FIX Execution Report example message]
8=FIX.4.2|35=8|49=[SenderCompID]|56=[TargetCompID]|
54=2|44=0|40=[TBD]|32=1|39=[TBD]|150=[TBD]|55=[Symbol]|10=[checksum]
</code>

==== Example: Won (Short Position, Settles at 0) ====

<code>
[TBD -- FIX Execution Report example message]
8=FIX.4.2|35=8|49=[SenderCompID]|56=[TargetCompID]|
54=1|44=0|40=[TBD]|32=1|39=[TBD]|150=[TBD]|55=[Symbol]|10=[checksum]
</code>

===== P&L Calculation =====

Settlement P&L for a prediction market position is straightforward:

  * **P&L per contract** = (Settlement Price - Entry Price) * Contract Multiplier * Quantity
  * For a long at entry price 0.60 settling at 1: (1 - 0.60) * [multiplier] * qty = profit
  * For a long at entry price 0.60 settling at 0: (0 - 0.60) * [multiplier] * qty = loss

<WRAP callout>
**Note:** Confirm the contract multiplier for each prediction market instrument via the [[developers:markets|Instruments API]].
</WRAP>