Update: the check route worked, and I'm trading now.
Like others, I am discouraged from the small-probability markets by how much margin Intrade requires. What's the point of forcing the North Korea strike down some percents if I have to lock up my full $200 to do so?
The probability of the Higgs boson discovery is much lower - the last traded contract corresponds to a 15% chance. www.bet-on-the-higgs.com explains how to bet and offers US$ 100 monthly to those who believe in the Higgs discovery.
That's right, forgot about the pricemaking discount.
On 'too small to correct', it's a bit of 'if only i knew about this arbitrage when i was in high school' :) Anyway it is a valid point on ideas futures if the biggest (generally, wisest) players find it not worth their time.
Anyway betting on imminent events avoids the carry, generally the biggest costs, so there's still room to play on intrade. Then there's always gold...
The most funny is "California legalizes marijuana" heh, I don`t think so : ) How intrade.com made this plan? I`ll made myself:Tomorrow i win lottery: 50%today I`ll meet incredible beutifull woman, and she ask me about life with me: 25%11.2010 I will have the best holiday ever: 50%12.2013 I`ll have 5 children, and that children will have 5 moms : )
The idea of the U.S. striking North Korea overtly and setting off a huge war in barely more than half a year seems over priced, though I'm not in the business of picking up pennies in front of steamrollers, even slow moving ones.
Yeah, with Intrade it's always the details that kill you. I'd note that you might not take the hit of the Intrade transaction fees, since you wouldn't be buying at the current offer (or whatever the terminology is); Intrade rewards price-movers. But that's small potatoes.
I suppose it's not that bad compared to a lot of investments (put it into stocks and see no gain? CDs or Treasuries at 1%? 30 year mortgages are going for 4-5%, but how does a small investor get in on that? etc.).... Still, it's really frustrating to see an insane price but for a market too small to be worth correcting.
keep in mind the spread, transaction costs & capital carry. Sell Japan and you're making $11 on $100 committed, minus capital costs for 2.25 years (at least 6.5% per year, say the rate of investor mortgages), minus transactions for intrade (?2-5%), minus your genuine probability (?1%). So you'll lose at least 17% or so on those.
at 30% it's a good sell. at 11% it's a good sell only if 2013 were maybe a year away. not two-plus.
However, all of my Intrade money is already committed to other trades. Therefore, I face a price inclusive of transaction costs, credit card APR if I bump the liquidity, and indeed bounded by the profits on alternative Intrade opportunies. As in, I'd only play Japan if GOP House Nov offers less. Which it doesn't, time-adjusted.
Maybe I'll play Japan after midterms, but in the meantime my wisdom lies fallow, unexpressed but in this august forum. I suppose I could become a middle-man, an Intrade hedge fund. Or I could seek one out, pace search costs.
No, it could also be that there is simply too little market volume, which is in fact the case for many of InTrade's listings. Just because an idiot standing on the street corner gives you even odds on a penny that the World will end tomorrow doesn't mean that it's an efficient market.
I mailed them a check and they sent me an email a few days later saying they had received it. Apparently, "this check is subject to the standard ten-business day clearance period enforced by [Intrade's] bank". So, unless something goes wrong, I think the check strategy does work, it's just slow.
Update: the check route worked, and I'm trading now.
Like others, I am discouraged from the small-probability markets by how much margin Intrade requires. What's the point of forcing the North Korea strike down some percents if I have to lock up my full $200 to do so?
The probability of the Higgs boson discovery is much lower - the last traded contract corresponds to a 15% chance. www.bet-on-the-higgs.com explains how to bet and offers US$ 100 monthly to those who believe in the Higgs discovery.
12-14% China war act on Taiwan by 2013
Low volumes, transaction costs, and margin requirements make it impossible to make money of that even if you knew it to be 0%.
Intrade is only useful for predicting American elections, it has too little volume for anything else.
Most of these contracts are thinly traded.
Right now the measure to legalize cannabis is ahead, albeit narrowly.
@gwern,
That's right, forgot about the pricemaking discount.
On 'too small to correct', it's a bit of 'if only i knew about this arbitrage when i was in high school' :) Anyway it is a valid point on ideas futures if the biggest (generally, wisest) players find it not worth their time.
Anyway betting on imminent events avoids the carry, generally the biggest costs, so there's still room to play on intrade. Then there's always gold...
The most funny is "California legalizes marijuana" heh, I don`t think so : ) How intrade.com made this plan? I`ll made myself:Tomorrow i win lottery: 50%today I`ll meet incredible beutifull woman, and she ask me about life with me: 25%11.2010 I will have the best holiday ever: 50%12.2013 I`ll have 5 children, and that children will have 5 moms : )
China-Taiwan odds seem too high. 3% is my best guess.
The idea of the U.S. striking North Korea overtly and setting off a huge war in barely more than half a year seems over priced, though I'm not in the business of picking up pennies in front of steamrollers, even slow moving ones.
Yeah, with Intrade it's always the details that kill you. I'd note that you might not take the hit of the Intrade transaction fees, since you wouldn't be buying at the current offer (or whatever the terminology is); Intrade rewards price-movers. But that's small potatoes.
I suppose it's not that bad compared to a lot of investments (put it into stocks and see no gain? CDs or Treasuries at 1%? 30 year mortgages are going for 4-5%, but how does a small investor get in on that? etc.).... Still, it's really frustrating to see an insane price but for a market too small to be worth correcting.
You could also post your own offer between the 10-20 spread in the hopes that some trader on the other side will accept your offer.
@gwern,
keep in mind the spread, transaction costs & capital carry. Sell Japan and you're making $11 on $100 committed, minus capital costs for 2.25 years (at least 6.5% per year, say the rate of investor mortgages), minus transactions for intrade (?2-5%), minus your genuine probability (?1%). So you'll lose at least 17% or so on those.
at 30% it's a good sell. at 11% it's a good sell only if 2013 were maybe a year away. not two-plus.
I think the Japan nukes number is high.
However, all of my Intrade money is already committed to other trades. Therefore, I face a price inclusive of transaction costs, credit card APR if I bump the liquidity, and indeed bounded by the profits on alternative Intrade opportunies. As in, I'd only play Japan if GOP House Nov offers less. Which it doesn't, time-adjusted.
Maybe I'll play Japan after midterms, but in the meantime my wisdom lies fallow, unexpressed but in this august forum. I suppose I could become a middle-man, an Intrade hedge fund. Or I could seek one out, pace search costs.
No, it could also be that there is simply too little market volume, which is in fact the case for many of InTrade's listings. Just because an idiot standing on the street corner gives you even odds on a penny that the World will end tomorrow doesn't mean that it's an efficient market.
I mailed them a check and they sent me an email a few days later saying they had received it. Apparently, "this check is subject to the standard ten-business day clearance period enforced by [Intrade's] bank". So, unless something goes wrong, I think the check strategy does work, it's just slow.
That would suggest that the markets are roughly efficient.