How Kalshi Works

The Instrument: Event Contracts

Everything on Kalshi reduces to one decision: will this defined event happen, or not? You buy a Yes contract or a No contract. The side that resolves correct receives the payout; the other side receives nothing.

Kalshi describes this as an event contract — a binary instrument rather than a share or a future. Its documentation frames the platform as an exchange for outcomes, where the tradable commodity is the result of an event rather than a token or a commodity delivery.

How Prices Become Probabilities

Kalshi uses a dynamic pricing model in which the contract price tracks the market's perceived probability of the event. The documentation describes the price as an expression of collective sentiment, running from 0% (certain not to happen) to 100% (certain to happen). As the perceived likelihood of a Yes outcome rises, the Yes price rises and the No price falls, and vice versa.

Kalshi's own worked example: if the market consensus is a 70% chance of an event, the Yes contract prices at 70¢ and the No contract at 30¢. The two add to $1.00.

Because the two sides always sum to $1.00, the price is directly readable as a probability — and the maximum loss on a long contract is the price you paid, while the maximum gain is the distance to $1.00. That is the same payoff geometry as a Polymarket position, arrived at through a different settlement rail.

Price discovery comes from order matching. Kalshi's documentation describes the platform pairing a trader who wants Yes with a trader who wants No, which is why depth and quoted spreads vary market by market. For why that matters to execution, see our guide to liquidity and spread.

The Two Closure Types

A market does not necessarily stop trading when its event happens. Kalshi documents two distinct closure types, and every market carries one of them:

• Closure when the outcome occurs — the market closes on the event itself.
• Closure at a listed date and time — the market closes at a scheduled moment, which may be before or after the underlying event.

The full description of a specific market's closing time appears in the grey text beneath the “Pays out” line inside that market's Timeline and Payout section. Kalshi explicitly advises determining which closure type a market has before trading it — a scheduled-close market can keep trading after the news is already public, which changes the risk profile entirely.

Market Rules and the Verification Source

Each market operates under its own published rules, documented on the market page. Kalshi also provides a rules summary that sets out two things precisely:

• the specific outcome required for a strike to resolve Yes, and
• the outcome verification source — the authoritative reference used to confirm the result.

This is the part of a regulated event contract that most resembles a prospectus, and it is the part most traders skim. Whether a market counts a rate cut rather than a hold, whether it uses a percentage change or an absolute figure, and which agency's release settles it are all defined here — and they are the terms that decide whether your read of the world actually pays.

Kalshi states that all markets are reviewed by its markets team and that a market remaining open or undetermined is not itself an indication that the resolution criteria have or have not been met.

How Resolution Is Determined

The rules, the information to be used, and the source of that information are all contained in each contract's terms and conditions. Once a contract expires, Kalshi determines the outcome against those rules and that source.

On timing, Kalshi's documentation is specific and worth internalising: determination can take anywhere from one hour to more than twelve hours after market closure, and is usually governed by when the data arrives from the source agency named in the contract. Your capital is tied up across that window.

Order and Position Features

Kalshi's help centre documents a set of order and position features beyond a straightforward buy:

• Limit orders and quick orders — the two order entry paths Kalshi documents for taking a position.
• Buying Yes vs selling No — Kalshi documents these as distinct actions that reach a similar exposure from different directions, which matters because they can carry different fees.
• Collateral return — documented for the capital released when a position is closed rather than held to resolution.
• Flip selling and Auto Sell (take profit) — documented mechanisms for exiting a position before expiry.
• Block trades — documented for larger negotiated orders.
• Combos — documented for combined market structures.

Because a limit order rests on the book rather than crossing the spread immediately, and because Kalshi charges maker fees on some markets only when a resting order is ultimately executed, order type can change your realised cost. See Kalshi Fees Explained for that distinction.

Kalshi also lists products outside the standard event-contract line, including perpetual futures, which carry their own separate documentation and risk profile. Do not assume mechanics documented for event contracts transfer to those products.

A Pre-Trade Checklist

Before committing capital to any market, confirm all six of the following from the market's own page — not from a summary, and not from an article like this one:

1. The exact outcome required to resolve Yes, from the rules summary.
2. The named outcome verification source.
3. Which of the two closure types applies, and the closing time in the grey text under “Pays out”.
4. The fee applicable to the specific market, visible via the “i” icon next to the order ticket.
5. The quoted spread and available depth at the size you intend to trade.
6. Your own estimate of the true probability, so you know what edge you are actually buying.

Item six is the only one Kalshi cannot tell you. Our Expected Value Calculator converts your estimate and the price into a per-dollar EV, and the Kelly Calculator turns that into a stake size.

Sizing a Position From Your Own Estimate

Nothing in the mechanics above tells you how much to commit. That number comes from your own probability estimate and the price you can actually get — and because a binary contract has a fixed payoff, the arithmetic is short enough to do on paper.

Take a contract offered at 30¢. If you estimate the true probability at 50%, then your expectation per contract is the difference between your estimate and the price:

That reads as a 20¢ expected gain per contract bought at 30¢. Flip the estimate and the sign flips with it: the same contract at 30¢ held by someone who believes the true probability is 20% carries an expected loss of 10¢ per contract. The price is not a signal of value — the gap between your estimate and the price is.

Turning an edge into a stake

The Kelly criterion gives the fraction of bankroll that maximises long-run growth for a binary contract. Written for this instrument it reduces to a single ratio:

Continuing the same case — a 50% estimate against a 30¢ price:

Two practical cautions. Full Kelly is aggressive and assumes your estimate is exactly right; a smaller fraction is the common response to estimate uncertainty. And every figure above is before the fee and the spread, both of which reduce the edge you are compounding — see Kalshi Fees Explained. Run your own numbers in the Expected Value Calculator and the Kelly Calculator rather than trusting a table.

Kalshi and Polymarket Side by Side

The instrument is the same on both venues — a binary contract priced as a probability, paying $1.00 on the correct side. What differs is everything surrounding it, and this table concentrates on the mechanics that affect how you actually trade rather than on marketing claims.

Neither column is cheaper in the abstract, and a headline rate comparison between the two is meaningless because the bases differ. The full structural comparison is in Kalshi vs Polymarket, and if you are considering holding the same outcome on both venues, model it in the Cross-Platform Edge Calculator — after confirming the two contracts are genuinely the same bet, which is the part most people skip.

Where Kalshi Fits in a Working Process

Mechanics only pay off inside a repeatable process. The sequence below mirrors how the analytical tools on this site are meant to be used together, and it applies on either venue.

1. Read the contract first, the price second. Confirm the exact outcome required, the verification source and the closure type before you look at the quoted probability. Anchoring on the price is the most common way a good read becomes a bad trade.
2. Write your own estimate down before comparing it to the market. This is the only defence against the crowd's number colonising your judgement. The implied probability guide covers how the quoted price converts into that number.
3. Check where the mispricing is coming from. The Daily Mispriced Markets page scans a broad market set and ranks the largest gaps between crowd price and a modelled estimate, which is a faster starting point than reading a book by hand.
4. Confirm or contradict with position data. Whale Analytics shows where large holders are positioned — useful corroboration, never a substitute for your own estimate, and the limitations are documented on the page itself.
5. Size it, then apply the fees. Use the Kelly output as a ceiling rather than a target, then subtract the applicable fee and the spread you will cross. A three-point edge eaten by three points of cost is not an edge.
6. Record the outcome and your estimate. A calibration record is the only way to learn whether your 60% calls actually come true 60% of the time; the reasoning is set out in how to win on Polymarket.

Nothing on poly-sim.com places trades, holds funds or connects to your brokerage account. These are analytical tools, and the estimate fed into them is always yours.