Trading Basics

PredictIt allows you to make predictions on future events by buying shares in the outcome, either Yes or No. Each outcome has a probability between 1 and 99 percent. We convert those probabilities into US cents.

For example, Trader A thinks an event has at least a 60 percent chance of taking place so she offers 60 cents for a Yes share. PredictIt matches her offer with that of Trader B, who is willing to pay 40 cents for a No share. Each trader now owns a share in the market for this event on opposite sides.

The prices of shares will change over time and both traders could decide to sell their shares at any time. A key to success at PredictIt is knowing when to sell in order to take a profit or prevent a loss.

If an event does take place, all Yes shares are redeemed at $1. Shares in No become worthless. If the event does not take place before the market closes, traders holding shares in No will be paid $1, while Yes shares will be worthless.

Every market asks a specific question about a potential future event. Some markets feature questions that have simple Yes or No answers, while others offer multiple possible outcomes. Each of these options is known as a ‘contract.’

Reading the Rules

Pay particularly close attention to the Rules for each market before you trade. It is essential that you read and understand them. They describe the criteria that PredictIt will use to determine whether your prediction comes true or not.

Buying & Selling Shares

In order to buy shares in a market with only one contract, click on the buttons labelled ‘Buy Yes’ or ‘Buy No.’ In markets with multiple contracts, click on the prices offered.

The next screen shows, under Best Available Offers, the five least expensive offers you can match in order to buy shares. Enter the number of shares you wish to buy and the maximum price you are willing to pay in the spaces provided. You can buy as many shares as you like—up to a limit of $850 per contract—so long as you have sufficient funds in your account.

After clicking ‘Preview,’ you’ll have the opportunity to review your request before submitting. It’s possible that another trader will have bought the shares you want between the time you looked at the list of offers and the processing of your request.

You sell shares the same way that you buy them.

Making an Offer

Very often you will want to buy or sell shares but won’t like the price other traders are offering. Or, you may want to buy or sell more shares than is possible at that time. In these cases, when you can’t immediately match an existing offer, you make your own offer instead.

Follow the same process as when you buy or sell shares, naming your best price and desired quantity. PredictIt will record an open offer on your behalf. Your offer will appear in the list of offers shown to other traders until someone matches it or you cancel it.

It’s not possible to offer to buy more shares in any one contract than you have funds available. Nor can you offer to sell more shares than you own. If you try to register more offers than you are capable of matching, we will give priority to the offer you are submitting and then cancel a sufficient number of your existing offers. We cancel existing offers according to price, starting with the lowest for Buy offers, highest for Sell offers.

Multiple-Contract Markets

Trading shares in markets with multiple contracts works a little bit differently than in those with only one contract. The mechanics of buying and selling are the same, but because the outcomes of the contracts are linked—only one contract can resolve to ‘Yes’, all others to ‘No’—PredictIt debits your account based on your risk in the market overall. This is often much lower than the face value of your shares.

Which state will have the highest voter turnout?

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Imagine that you decide to participate in the market above by buying five shares of No in Iowa for 80 cents each. PredictIt would debit the full cost ($4) from your account.

Then you decide to buy the four shares of No in Wisconsin for 75 cents each. Instead of debiting you an additional $3, PredictIt would credit you 90 cents.

Why? Because now the most you can possibly lose in this market—your maximum level of risk—is $3.10. (If Iowa has the highest turnout, you will make a 90 cent profit (including PredictIt’s trading Fee) on your Wisconsin shares, but lose your $4 investment in Iowa.) That’s 90 cents less than the $4 deducted for your initial Iowa shares, hence the credit.

You will see the adjustment to your risk when you are asked to confirm the purchase of the Wisconsin shares.

A detailed calculation of your overall risk in each market is available on My Shares and on the relevant market and contract pages.

Selling shares involves the same recalculation of risk. Just as it is possible to buy shares while lowering risk, you could sell shares but have your risk increase, requiring PredictIt to debit your account for the difference. If you do not have sufficient funds to cover the increase in risk, the offer will not be processed.

If you sell shares at a loss, funds necessary to cover the loss will be deducted at the time of sale.

Viewing Your Shares and Offers

Detailed information on the shares you own and offers you have made is available on the My Shares page.

In addition to market information and trading options, My Shares also provides details of your ownership in any contract. Click on the number of shares you own or offers you have made. Your open offers may be cancelled on the resulting screen. This same ownership information is available in a tab on the page of any contract in which you own shares or have offers open.

Money Management and Identity Verification

You can deposit funds into your PredictIt account by credit card or via PayNearMe (a cash payment system available to U.S. traders) on the Funds page. We do not store your full credit card information or share it with anyone.

The first time you make a deposit, we will ask you to verify your identity by providing some basic information. We do this in order to comply with regulations governing the operation of PredictIt, to reduce the chances of fraud, underage participants and duplicate accounts. Any information you provide in order to verify your identity is subject to our Privacy Policy. You can update your mailing address, as well as your password and external logins on the Settings page. If you wish to change your address, we will need to verify your identity again.

You can also withdraw funds from your account on the Funds page.

Fees associated with the withdrawal of funds are described in the section below.

A summary of your portfolio is available at the top of every screen.

Gain/Loss calculates the change in value of your shares since purchase. It does not include PredictIt’s Fee on profit from any future sale of these shares.

Invested represents the amount you paid for your shares. Ownership in multiple-contract markets is calculated according to market risk.

Available is the sum you are free to invest in new shares.

Your Profit and Our Fees

Whenever you sell a share for a higher price than you paid, we charge a 10 percent fee on your profit. The same fee applies if you hold onto your shares until the closing date and they are redeemed for $1.

When you sell some, but not all, of your shares in a contract, we will calculate your profit or loss by assuming you are selling your shares in the same order in which you bought them. We do not charge a fee if you break even or sell shares at a loss.

Withdrawals are subject to a 30-day holding period after your initial deposit and a 5 percent processing fee. You can choose remittance either by bank transfer (ACH) or by check, mailed to you at the address you provided to verify your identity.

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