That makes it sound like there’s a lot of room for big improvements from small changes. Like just add expiration dates to limit orders. Then have the UI suggest reasonable dates. Maybe 1⁄2 of the time remaining. In an absolute sense that is a very long time, but surely it is better for almost all users than the status quo of all of the time remaining.
Expiration dates on limit orders achieve something in this direction, but it’s not quite the same thing that batched trading would achieve.
Consider the case where you place an order based on your current forecast, and then some event happens while you’re not watching the market:
Under the current system, supposing you set an expiration time of 1 day: If the event happens within the day, you will still get scooped. If it happens after 1 day, then you can’t get scooped but you also lose the opportunity to make the trade at your endorsed price. For thinly traded markets it may well take more than 1 day for sufficient liquidity to show up, so you have to make this tradeoff between waiting for liquidity and risking getting caught with your trousers down.
Under a batched auction system, with a batch interval of 1 day: If the event happens within the first day, as long as you notice it before the auction executes everything is fine. If it happens after the first day, it’s still fine as long as you check the market on that day, so you might set expiration dates on your limit orders according to the rule “as long as I can commit to checking on this once per day”.
If you do fail to react before the auction executes: You are still likely to have your order taken up at a more favourable price, because the auction executes at a single price. Looking at the first image in the post, suppose you are the buyer with a limit order at $14. In continuous trading, your order would have been taken at around $14, as soon as the marginal traders showed up to act on the new info. But under batched trading, more sellers would show up before the auction takes place, pushing the price lower. So you are still safer leaving your order sitting there in the market, as long as you trust that the bulk of orders at the time the auction executes are from “live” traders (who are actively reacting to information)[1].
Now I think about this this could actually push in the direction of lower accuracy, because people can afford to be more blasé about leaving low info orders in the market
There already are optional expiration dates, and I use them a lot whenever I can guess the next time new information may become available that I’d want to have a chance to react to.
Half of time remaining is a good guess, for at least about 33% of my bids I’d say (?) So this would speed up bidding somewhat for me, and likely get a lot of people who don’t use expiration dates to use them, and save their skin.
For the IMO markets one problem would be that the markets were set up to close at EOY, not during the IMO. I do not know why. So for anyone who bid in 2025 the default proposal would’ve been too late regardless.
The default on Polymarket is no expiration. It is only after actively choosing to have an expiration date that it goes to 1 day. I suspect that is so short that it encourages people not to choose it. Similarly, the default with Manifold is not expiring. But if you do click to change, it offers 5 options from immediate to 1 month.
Both sites encourage market orders over limit orders. Polymarket makes limit orders visible but not default. Manifold buries them under “advanced.” So the people Joern profited off of were sophisticated enough to choose the “advanced” options but not sophisticated enough to choose good expiration dates.
Encouraging people to use limit orders is a step in the direction of a smoother market. Limit orders with 1 month expiration are somewhat like a sequence of monthly auctions. But they may be harder to understand and require more UI work.
That makes it sound like there’s a lot of room for big improvements from small changes. Like just add expiration dates to limit orders. Then have the UI suggest reasonable dates. Maybe 1⁄2 of the time remaining. In an absolute sense that is a very long time, but surely it is better for almost all users than the status quo of all of the time remaining.
Expiration dates on limit orders achieve something in this direction, but it’s not quite the same thing that batched trading would achieve.
Consider the case where you place an order based on your current forecast, and then some event happens while you’re not watching the market:
Under the current system, supposing you set an expiration time of 1 day: If the event happens within the day, you will still get scooped. If it happens after 1 day, then you can’t get scooped but you also lose the opportunity to make the trade at your endorsed price. For thinly traded markets it may well take more than 1 day for sufficient liquidity to show up, so you have to make this tradeoff between waiting for liquidity and risking getting caught with your trousers down.
Under a batched auction system, with a batch interval of 1 day: If the event happens within the first day, as long as you notice it before the auction executes everything is fine. If it happens after the first day, it’s still fine as long as you check the market on that day, so you might set expiration dates on your limit orders according to the rule “as long as I can commit to checking on this once per day”.
If you do fail to react before the auction executes: You are still likely to have your order taken up at a more favourable price, because the auction executes at a single price. Looking at the first image in the post, suppose you are the buyer with a limit order at $14. In continuous trading, your order would have been taken at around $14, as soon as the marginal traders showed up to act on the new info. But under batched trading, more sellers would show up before the auction takes place, pushing the price lower. So you are still safer leaving your order sitting there in the market, as long as you trust that the bulk of orders at the time the auction executes are from “live” traders (who are actively reacting to information)[1].
Now I think about this this could actually push in the direction of lower accuracy, because people can afford to be more blasé about leaving low info orders in the market
There already are optional expiration dates, and I use them a lot whenever I can guess the next time new information may become available that I’d want to have a chance to react to.
Half of time remaining is a good guess, for at least about 33% of my bids I’d say (?) So this would speed up bidding somewhat for me, and likely get a lot of people who don’t use expiration dates to use them, and save their skin.
For the IMO markets one problem would be that the markets were set up to close at EOY, not during the IMO. I do not know why. So for anyone who bid in 2025 the default proposal would’ve been too late regardless.
Polymarket and manifold already have optional expiration dates, and Polymarket suggests a default expiration of “end of today”.
The default on Polymarket is no expiration. It is only after actively choosing to have an expiration date that it goes to 1 day. I suspect that is so short that it encourages people not to choose it. Similarly, the default with Manifold is not expiring. But if you do click to change, it offers 5 options from immediate to 1 month.
Both sites encourage market orders over limit orders. Polymarket makes limit orders visible but not default. Manifold buries them under “advanced.” So the people Joern profited off of were sophisticated enough to choose the “advanced” options but not sophisticated enough to choose good expiration dates.
Encouraging people to use limit orders is a step in the direction of a smoother market. Limit orders with 1 month expiration are somewhat like a sequence of monthly auctions. But they may be harder to understand and require more UI work.
Hmmm you’re right, guess I misremembered.