All termsProbability, Pricing and Expected ValueWorth knowing
Bayesian Updating
Bayesian updating is the process of revising an existing probability estimate as new evidence becomes available. In formal statistics it can be expressed mathematically, but prediction traders can also apply the principle conceptually.
Why it matters to you
Instead of thinking: "This news is bullish, therefore YES." a probabilistic trader thinks: "I previously estimated 45%. How much should this information change that estimate?" This encourages measured probability updates rather than emotional reactions to headlines.
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