Core mechanics
- Event contract — a binary YES/NO claim on a real-world outcome, paying $1 if true and $0 if false.
- DCM — Designated Contract Market, a CFTC-regulated exchange. Kalshi is one.
- CLOB — Central Limit Order Book, the matching engine pairing bids and offers.
- AMM — Automated Market Maker, the formula-based alternative to a CLOB.
- Resolution source — the predetermined authority that decides whether a contract resolves YES or NO.
Order types
- Limit order — buy/sell at a specific price or better.
- Market order — fill immediately against the current book.
- Fill-or-kill — execute fully and instantly, or cancel.
- Resting order — a limit order sitting on the book awaiting a taker.
Risk and pricing
- Implied probability — the price as a percentage chance the event happens.
- Spread — the gap between best bid and best ask.
- Slippage — the gap between expected fill price and actual fill price.
- Liquidity — how much notional you can trade without moving the price.
- Mark-to-market — your unrealized P&L if you closed at the current mid.
Regulatory
- CFTC — Commodity Futures Trading Commission, US federal regulator for futures and event contracts.
- KYC — Know Your Customer, the identity verification required before trading.
- 1099-B — IRS form Kalshi issues annually summarizing your trading activity.
- Section 1256 — IRS tax treatment for certain regulated futures-style contracts.