title: Cornice Trading Glossary type: canon-reference domain: trading-systems status: canonical last_updated: 2026-01-17

Cornice Trading Glossary (Canon)

Purpose Establish a shared, precise vocabulary for prediction-market trading, execution, and risk across Cornice systems.

Scope This glossary defines terms used in architecture, code, strategy documents, logs, and operational playbooks related to trading across prediction markets.

Canon Rule Terms defined here are authoritative. If a term conflicts with exchange-specific naming, Cornice-internal usage takes precedence unless explicitly overridden.

Core Concepts

Canon refinement (2026-01-14) Team consensus refined the definitions of Exchange/Venue/Market/Contract to remove overlap. Terms below reflect the current canonical model.

The Exchanges (baseline context)

• Polymarket Crypto-native prediction market (USDC on Polygon). CLOB-style order books. Smart-contract settlement.

• Kalshi US-regulated, CFTC-approved event contracts. USD-denominated. Centralized custody + matching.

They look similar conceptually. They are not symmetric operationally.

Exchange

The company or platform offering prediction markets (e.g., Polymarket, Kalshi).

Venue

Cornice-internal alias for Exchange, used in code and logs to describe the trading location.

Market

An expiring, well-defined prediction opportunity with explicit resolution conditions and a fixed settlement time.

Examples:

• “Bitcoin > $90k at 3pm Jan 16, 2026”
• “Rams will win next game by 7 or more points”

A Market may be binary or categorical, but must always resolve deterministically.

Outcome

A specific resolvable result within a Market.

• Binary markets: YES / NO
• Categorical markets: A, B, C, …

Each Outcome maps to one or more tradeable contracts depending on venue structure.

Contract

The tradeable instrument representing exposure to a single Outcome of a Market.

Contracts are venue-specific instruments but are treated as logically equivalent when they reference the same Market and Outcome semantics.

Market vs. Contract (Cornice model)

• Market = event definition and resolution rules (cross-venue concept)
• Contract = outcome-specific tradable instrument (venue-specific)

Opportunity (Play)

An identifiable pattern across Markets or Contracts that yields a chance at profitable returns, with risk ranging from zero to bounded exposure.

Edge

The difference between $1.00 (100 cents) and the total cost of the paired legs in a candidate trade.

Positive Edge implies a favorable mismatch that may be actionable.

Span

A continuous time window during which an Opportunity’s Edge remains positive based on repeated observations.

Spans are used to summarize how long a “trade-now” window lasted, along with its peak and average edge.

Position

The net exposure held in a Contract.

Includes:

• Side (long / short)
• Quantity
• Average entry price
• Unrealized and realized P&L (where applicable)

Trading & Execution

Order

An instruction to buy or sell a Contract.

Key attributes:

• Side: buy / sell
• Type: market / limit
• Price (if applicable)
• Size

Fill

The execution of all or part of an Order.

An Order may result in:

• Full fill
• Partial fill
• No fill

Each fill records execution price, quantity, and time.

Atomic Trade (Conceptual)

A logical trade composed of two coordinated Orders across different venues, intended to succeed or fail as a unit.

Important: This is a Cornice system abstraction. No current prediction market provides true atomicity across venues.

Paired Execution

The practical implementation of an Atomic Trade.

Characteristics:

• One Order executes first
• The second Order is conditionally executed based on the first
• Failure paths are explicitly handled (hedge, unwind, or tolerate bounded exposure)

Paired Execution is deterministic, stateful, and auditable.

Liquidity & Pricing

Bid / Ask

• Bid: Highest price a participant is willing to pay
• Ask: Lowest price a participant is willing to sell

These define the immediate executable price range.

Mid Price

The midpoint between the best Bid and best Ask.

Formula:

(best_bid + best_ask) / 2

Used for valuation and comparison, not guaranteed execution.

Spread

The difference between the best Ask and the best Bid.

Formula:

best_ask − best_bid

A proxy for liquidity and transaction cost.

Depth

The available quantity at each price level in the order book.

Depth indicates how much volume can be traded before materially moving the price.

Slippage

The difference between the expected execution price and the actual fill price.

Slippage increases with:

• Order size
• Thin liquidity
• Market volatility

Risk & Operations

Settlement Risk

The risk that a Market resolves unexpectedly, ambiguously, or later than anticipated.

Includes differences in:

• Resolution rules
• Dispute mechanisms
• Settlement timing

Venue Risk

Risk arising from exchange-specific mechanics or failures.

Examples:

• API downtime
• Trading halts
• Delayed settlement
• Custody or contract-layer issues

Exposure Window

The time between execution of the first leg of a Paired Execution and confirmation of the second leg.

This window represents unhedged or partially hedged risk and must be explicitly bounded by system policy.

Terminology (Derived)

Gap (Span)

The maximum allowed time between positive observations before a Span is considered broken and a new Span begins.

Active Now

A UI indicator that the most recent positive observation falls within a recent window (for example, the last 1–2 minutes).

End of Canon Reference