Yeah, Zvi is (unsurprisingly) right; the change in margining rules (after I wrote that post) makes it much better to sell the low-value contracts, and the withdrawal fees amortize if you’re in for the longer term.
To new rules, and on the back of my envelope, Zvi’s 12% “arbitrage” is something like a few percent good: maybe it covers withdrawal fees on its own, and likely will do so after a few rounds. The opportunity cost of capital is a whole ’nother issue...
I also strongly endorse the punchline that trading (even on the margins of trading costs) is some of the best rationalist training you can find.
Anecdote: In late September I put $20 into PredictIt and followed Zvi’s advice, focusing on the markets for 2020 Democratic nominee and 2020 presidential winner. I was able to increase my money to $86.08, which after the withdrawal fee is $81.78. Because of the $850 per contract limit, a larger initial investment would not have gained any more money. This took a few hours to set up, so it’s not very profitable. But it was fun and informative.
Anecdote, part 2: Around the beginning of April, Andrew Cuomo was added to the presidential (or maybe Democratic nominee?) market, and was trading at roughly 10% (or 5%, or 15%—I really don’t remember). Since I had already had large No positions for everyone else, I got about $60 in negative risk by buying a lot of No shares on Cuomo.
Yeah, Zvi is (unsurprisingly) right; the change in margining rules (after I wrote that post) makes it much better to sell the low-value contracts, and the withdrawal fees amortize if you’re in for the longer term.
To new rules, and on the back of my envelope, Zvi’s 12% “arbitrage” is something like a few percent good: maybe it covers withdrawal fees on its own, and likely will do so after a few rounds. The opportunity cost of capital is a whole ’nother issue...
I also strongly endorse the punchline that trading (even on the margins of trading costs) is some of the best rationalist training you can find.
Anecdote: In late September I put $20 into PredictIt and followed Zvi’s advice, focusing on the markets for 2020 Democratic nominee and 2020 presidential winner. I was able to increase my money to $86.08, which after the withdrawal fee is $81.78. Because of the $850 per contract limit, a larger initial investment would not have gained any more money. This took a few hours to set up, so it’s not very profitable. But it was fun and informative.
Anecdote, part 2: Around the beginning of April, Andrew Cuomo was added to the presidential (or maybe Democratic nominee?) market, and was trading at roughly 10% (or 5%, or 15%—I really don’t remember). Since I had already had large No positions for everyone else, I got about $60 in negative risk by buying a lot of No shares on Cuomo.