Probability Risk
Probability risk is the risk that your estimate of an event's likelihood is inaccurate.
Why it matters to you
Suppose you estimate: YES: 70% The market offers: YES: 50% That appears attractive. But the trade only has the expected advantage you calculated if your probability estimate is reasonably accurate. If the true probability is closer to 40%, the apparent edge never existed. This is one of the biggest risks in prediction trading: Your edge is only as good as the estimate behind it.
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