Midpoint vs Last Trade
Definition
The midpoint is the average of the best bid and the best ask. The last trade is the price of the most recent execution. Venues often display one of them as the market's probability. Polymarket says its 'displayed price is the midpoint of the bid-ask spread. If the spread is wider than $0.10, the last traded price is shown instead.' The executable price is the ask for a buyer and the bid for a seller.
Why it matters
Media and dashboards quote the displayed probability as if it were a market fact. For a trader, the relevant number is what they can buy or sell at now, for the size they want. Investors should check the bid, ask, spread and time of the last trade before relying on a displayed probability.
Common misconceptions
- •The displayed probability is a summary, not a quote.
- •A last trade can be stale; check its time.
- •Rule switches matter: on Polymarket a spread above 10 cents changes the displayed number from midpoint to last trade.
- •The label is only a starting point. Investor outcomes usually depend on the governing documents, cash-flow priority, valuation policy, disclosure quality, and manager discretion surrounding the term, not just the shorthand definition used in marketing materials.
Technical details
Three prices for the same market (illustrative)
Best bid $0.34, best ask $0.40: midpoint $0.37.
Last trade $0.45, three hours ago, before news.
A buyer pays $0.40, a seller receives $0.34; neither trades at $0.37 or $0.45.
How investors apply the term
Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.
The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.
Frequently asked questions
- Is the displayed probability a price I can actually trade at?
- Usually not exactly. Polymarket's example: with a best bid of $0.34 and a best ask of $0.40, the displayed price is $0.37, a 37% probability, but 'you won't necessarily trade at $0.37 - you'll pay the ask ($0.40) when buying or receive the bid ($0.34) when selling.'
- Why can the last trade be misleading?
- It may be old. In a thin market the last trade can date from hours or days earlier, before news moved the market. AltStreet's Kalshi study found that the most common source of false trading edges was 'stale reference pricing': contracts listed well before their event carry uncontested placeholder quotes, and one series' reference quotes were captured 4,199 minutes before settlement.
- Which should I use to judge a market?
- The current bid and ask, with their sizes. The midpoint is a reasonable summary when the spread is tight and the book is active; the last trade is a reasonable summary only if it is recent.