Front Office Football Central - View Single Post - Prediction Market Inefficiency (or ping: Quicksand)

QuikSand · 04-13-2024, 01:06 PM

I am fully out from PredictIt now, as well.

However... their fee schedule makes this king of small-margin play troublesome. They take out 10% of your gains as a fee, but then another 5% at the time of deposit.

So, let's say I wanted to hit this market hard. I buy up $1,000 worth of 55c "Trump No" shares, still the current price. And let's say there's some short term news that moves the needle a fair bit. A pretty good hit here is, say, moving that number to 65? That's a big move.

Now, if the "buy" price for "Trump No" moves to 65, that means the sell price trails it a bit, let's optimistically say it's 63. I sell all my 1,818 shares at 63 cents, yielding a gross of $1,145. I lose 10% of my gains immediately, so that's down to $1,131. Now I go to cash out, and... they pull a full 5% from that, and I cash out with $1,075.

Now, I'm not sneezing at a 7.5% ROI in a week or two. When I was locked into the site, I tried to make moves like that a lot, but... yeah, that's a lot of overhead to clear and this is forecasting this as a pretty solid HIT.

04-13-2024, 01:06 PM	#44
QuikSand lolzcat Join Date: Oct 2000 Location: Annapolis, Md	I am fully out from PredictIt now, as well. However... their fee schedule makes this king of small-margin play troublesome. They take out 10% of your gains as a fee, but then another 5% at the time of deposit. So, let's say I wanted to hit this market hard. I buy up $1,000 worth of 55c "Trump No" shares, still the current price. And let's say there's some short term news that moves the needle a fair bit. A pretty good hit here is, say, moving that number to 65? That's a big move. Now, if the "buy" price for "Trump No" moves to 65, that means the sell price trails it a bit, let's optimistically say it's 63. I sell all my 1,818 shares at 63 cents, yielding a gross of $1,145. I lose 10% of my gains immediately, so that's down to $1,131. Now I go to cash out, and... they pull a full 5% from that, and I cash out with $1,075. Now, I'm not sneezing at a 7.5% ROI in a week or two. When I was locked into the site, I tried to make moves like that a lot, but... yeah, that's a lot of overhead to clear and this is forecasting this as a pretty solid HIT.