Part Two: How to Actually Play
Guide by jipkin, updated June 2018
Okay, so you know the basics (https://predictingpolitics.com/guides/how-to-play-the-polling-markets-on-predictit/).
Now how do you make the money?
In this overview, I briefly cover basic betting strategies with respect to the polling markets on PredictIt. A lot will be left out – you are free to play however you want! Even among the most successful polling market traders strategies vary.
You need to decide what percentage of your overall bankroll you’re willing to risk at any given moment in a polling market. Start small, dipping your toes in and out of the pool and learn over time. Alternatively, you can just throw your entire wad at a single bracket and log out for the week. I won’t mind.
Basic betting advice applies to polling markets as everywhere:
- If the price is lower than what you think the bracket/contract is worth, buy.
- If the price is higher than what you think the bracket/contract is worth, sell.
- If you don’t know one way or the other, wait.
Alright, let’s get into the betting strategies.
If you’re just starting out and don’t want to lose money, try negative risk. Achieving a negative risk position is almost guaranteed in any polling market. How? Set out offers for the same number of NO shares in all the brackets at the prices appropriate to guarantee that the profit you make on all your winning brackets covers the loss on the losing bracket. The basic formula is to subtract from 1 the price of your NO share in each bracket and add the results together. If the total exceeds 109, you’re in negative risk!
You will not be able to get negative risk all at once – generally one gets more expensive NO (low 90s) on the edge brackets early on and fill in with cheaper NO on the middle brackets as the week progresses. My first presidential approval market I did this with 10 shares apiece. I made like 2 cents, but I’m a wuss and I knew I needed to learn how the market worked before gambling more.
Another popular strategy is to load up on cheap single-digit YES shares early in the week in the hopes that they’ll pop in value later in the week. You can then sell enough to cover your investment while letting the rest ride if you so choose (“free-rolling”). Not my preferred way to play but something that many find a lot of success with.
Play the swings
The optimal way to play is to continually buy the YES side of underpriced brackets and the NO side of overpriced brackets and sell out of those positions as their fortunes change. Most of the good players attempt this… sometimes it works and sometimes it doesn’t! Hedging your bets by buying multiple contracts is highly recommended. But this raises another issue – how do you know when a swing is coming?
Play the polls
In polling markets, polls move the markets. Whoa.
The whole game is knowing when polls are coming and getting them fast – see Part One. But let’s say you do know that a poll is coming. Let’s say you heard on twitter that PPP is releasing a poll and you know that it’s due Friday morning. How do you play it? Let’s review a checklist:
- What markets does PPP affect? (Congress Approval and Trump Approval)
- Is there an older PPP somewhere in the current average on RCP?
- What would the new number for PPP need to be to move the average from one bracket to another?
- If there are older polls dropped at the same time PPP is added, how would that affect PPP’s impact?
Know all of this beforehand. Then you have a choice: establish a position before it comes out (Predict It!), or react. I prefer reacting (again, I’m a wuss), though accurate prediction is more profitable in the long run. Since I know exactly what number to look for and what brackets to buy or short when the poll comes in, all that’s left is to get the poll as fast as possible when it comes out.
The market moved and I don’t know why
This is the most frustrating thing when you’re a new player. Usually it’s because a poll came out that you didn’t know about. But sometimes, if volume is low, it can happen when someone decides to have a laugh and buy or sell a few shares to spike the price and cause a panic. So constantly check in with volume.
If you get in the healthy habit of doing so, you may notice when things might be about to happen that you didn’t know about. See a ton of offers filling in to buy a bracket that weren’t there before? Chances are, something’s happened to make that bracket worth something.
Since more or less mastering the research side of things, I am rarely surprised by the market moving. Chances are if the market has moved that you are just as capable as anyone of figuring out why. If you don’t solve the puzzle then pay attention to what happens next and try to see what the market was reacting to that you didn’t see.
General polling market advice
Let’s give some advice tailored to the swing-y and lower volume polling markets:
- Beware buying expensive shares early in any polling market. These markets flip more than you’d think. Wait until you know what you’re doing.
- Never ever put yourself in a position to be dropfucked in RCP TA. If drops seem even remotely possible and it’s the end of a market, sell out. Better to miss out on a nickel than lose a dollar.
- If you’re profitable and uncertain, take your profits and sit on the sidelines. Don’t let fear of missing out cuck you.
- By the same token, if you’re underwater, don’t be afraid to either hold or bail depending on the situation. If you still like the position for good reasons and there’s time left and shares available to bail into, holding is fine. If the position has become suddenly tenuous and you can bail for a small (if painful) loss, then bail and reassess.
- Pay attention to volume! It can get icky if you own more shares than you can reasonably sell at a single moment in time. Only get into heavy positions like that if you’re comfortable holding them for longer or the volume is thick enough.
Polling markets are fun if you like research, numbers, and potentially huge swings. You can win playing low-effort strategies like negative risk or high-effort strategies by learning exactly when every poll is going to come out.
The best piece of advice I can give is to seek out others. Whether just on the comment board or in discussion groups off-board, chat with other people. Playing with other people is a lot more fun than playing alone – and you’ll be a lot more successful! People sometimes wonder how the best players (I’m not one of them) do so well. Part of it is that they know how to buy and sell – sure. But a huge part is that they hang out with each other and swap tips and debate the merits of various scenarios and so forth.