234: Domer – The Information Edge: Winning in Prediction Markets

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How are you doing, traders? Thank you for tuning in here for episode 234. We are about to venture into new territory now. For the first time on CWT, I'm speaking with a trader of prediction markets. If you're oblivious to what a prediction market is, just as I was only a few weeks ago, then I'll try to summarize it like this. So prediction markets are exchange traded markets.

Well, yes and no. So I I was thinking maybe there were gonna be exit polls coming out for Pennsylvania, but that didn't happen. So I'm I'm trading right now. There's a Pennsylvania GOP primary race, which is kind of like a proxy race between for the future of the Republican Party between like Trumpism and non Trumpism. And uh yeah, I was I'm paying attention to that right now.

Okay. And I know that you uh Uh, quite active on polymarket, which I understand is one of the kind of crypto prediction markets or crypto exchanges out there. Yeah. Did you happen to get tangled up in the the crypto bloodshed this past week?

No, because most of my currency is dollar denominated like USDC and not the one that cracks.

Okay. Yeah, that's what I wasn't sure about. Yeah. Yeah. Oh man. How lucky.

Yeah, crazy.

So from what I understand, you packed in your nine to five in 2007.

Yeah, it would have been right around May of two thousand seven. So right around now, yeah.

Okay. So what were you doing once you once you left?

Well, so I was already sort of betting on the side as well as playing poker. In fact, you know, the last few months of my job, I had two phones when I was going into work, you know, and this guy that's been on the job for two years.

Okay. So you were playing poker, was that online or you were going to actual meetups at the casino or

That was like the heyday of online poker for anyone that remembers it, party poker. Uh it was called like the moneymaker effect, like all these people signed up for online poker. The government hadn't uh cracked down on it yet. And so it was pretty easy games if if if you knew some math and you were willing to take a little bit of risk. Um, it wasn't too hard to be poker at that point.

Okay. So what kind of success did you have with that early on?

Well, earliest on I lost a hundred bucks almost immediately. I I I deposited a hundred bucks that my grandma had given me for graduation and within like an hour it was gone. But, you know, I'd kind of seen how it worked and and I thought I could beat it. So I deposited another hundred bucks and I ran that into a couple thousand within, you know, a couple of weeks. You know, I wasn't playing high stakes. I'm I was a recent college graduate at that point, so

Right. Okay. And then I believe that that kind of evolved into other things, uh, soon after, like um

Yeah. So my first like real bet on like a prediction market type bet was on a sports book. And I bet on the movie uh Crash to win Best Picture, which was a big upset over uh Brokeback Mountain. I think it was like seven to one odds. And I put like ten bucks on it and I won seventy bucks and I thought I was a genius. I thought I was rich. And that kind of, you know, kicked it all off.

And was that a bet you placed? That wouldn't have been a prediction market as such, would it? It would have just been with a um like a bookie.

Yeah, yeah, exactly.

Okay. Um, and so why did you make that bet? Was it just uh because it had a seven to one payout?

Yeah, I think I had read Roger Ebert say that he liked that film and so I was like, Well, you know, seven to one, worth worth a shot. And then so after I won that, I started researching this a little more. I was like, Well, this is fun. You know, I don't have to bet on, you know, sports necessarily. Um, and then I found a site called Intrade, which is now defunct, but that was like the first kind of prediction market. And then I started to delve into politics as well as movies.

Okay. So you started bent on politics. And I think you also traded stocks at one point too.

Yeah. So as I said, In trade went defunct. That was like right after the twenty twelve election. And so Intrade pulled out of the US. And I was kind of at a decision tree. Do I move out of the US to continue this career or do I try something else? And and I gave stocks a go. And I kind of applied the same principles that I was using in bedding to stocks at that point.

And how did that work out for you?

Uh it worked out it worked out pretty well. So I I I I took like thirty five thousand, which I thought was like a a decent amount of money. Bear in mind I'm trading my own funds. So I took thirty five thousand, uh which I thought was a decent chunk, and then I ran it up to like two hundred thousand or so within a year. So I mean I felt I felt pretty good about myself. But I also was kind of still Jonesing to do prediction markets again because

Thirty five thousand to two hundred grand in a year or so. I mean that's really impressive. Um was that like you know, a couple big trades that you made most of that money or was it kind of consistent consistently being right?

So I was doing a lot of research on shorted stocks and trying to get leverage on a crowded trade that was wrong on the short side. So in other words, you know, if a bunch of people are in a short and they're wrong for whatever reason, the stock can go up. pretty quickly. Um and so you could bet on it with both options and then holding the equity as well.

Okay. So we're trying to anticipate short squeezes basically.

Yeah, I mean I I I was kind of looking for people that had shorted stocks for the wrong reason, basically.

Do you recall what any of those uh crowded shorts were?

Uh one of'em was SAFM, which I'm not sure if it still exists, but it was a uh it's a chicken company. And I had just done a bunch of research. You know, chic chicken companies are very simple. It's like inputs, which is like corn and like soybeans and then outputs. So it was it was very um straightforward what their business was and you can kind of research all the inputs and research the outputs and figure out that the shorts didn't quite have it right on the on why they were shorting it.

This is really interesting because I mean anyone else who had gone had a thirty-five thousand dollar account, run it up to two hundred K, I mean, would most people be pretty happy with that and feel like that they were kind of onto something there. Um but for you it sounds like you were still you weren't so convinced. You were more like y you would rather be in the prediction markets.

Yeah it's just a It's it's really what I love to do because a prediction market is different than like an equity in a stock. Um a prediction market is zero to a hundred, either it's yes or no, and then it's usually time-based, and then almost certainly it will expire based on, you know, the correct expiration of of whatever the event was.

Yeah, okay. That's interesting. So I mean, how would you make a case? Actually, let's let's save that and We should probably talk more about what prediction markets actually are because I mean this is only something that's sort of come across my desk recently and I'm sure for many people listening, this is probably gonna be the first time they're hearing about it or um at least hearing a bit more about it beyond the surface. So Let me just ask you straight out, what are prediction markets?

Yeah. So it would basically be asking quote unquote important questions, questions that were in the news. Um, so for instance, right now everybody is interested, is there going to be a recession? So the market could say, by the end of 2022, is the US going to experience a recession, which would be two negative GDP quarters.

Okay. And when you When you place this bet for thirty cents, what are you buying? Like you're not buying a stock or you're not buying a futures contract or an option. Like what what do you call that?

Right. So well I mean you you you could call it a number of things. I would call probably a contract. Um prediction markets are zero sum. So you're almost always betting against somebody else who thinks the exact opposite of you. So whenever I buy, let's say, one share at 30 cents. you're you're consequently buying one share at 70 cents. So our shares are always going to match. So there's always going to be somebody that has the exact opposite view as me somewhere else.

Right. So that's kind of the key thing with these prediction markets, right? Is that the counterpart to your trade or your bet is another trader. It's not you're not trading against a a bookmaker.

Exactly. So it's mono on mono.

Okay. And who are the participants that are mostly involved in these markets? Like is it just a lot of uh, you know, individual punters or is there are these markets starting to attract, you know, some more kind of professional outfits?

I think it's still so nascent that it's mostly just individuals and it's usually people that come from a similar background as me, which would be finance or poker or sports betting. or, you know, things along those lines. People that are interested in politics, people that are interested in predicting, you know, economic outcomes, um, things along those lines.

And would you say that the average participant is like quite savvy. Like they're quite, um You know, that they research their bets quite well. Like obviously you uh kind of uh an extreme case of this. Um, but like if you look at Like obviously sports betting is a huge thing here in Australia and a lot of the people who participate in that I don't want to sound like a dickhead here, but um, you know, a lot of them are are just purely punters. Like

I would say it depends entirely on the type of market. So if you look at, for instance um, the presidential elections, those will attract so many types of betters, you know, people that really know what's going on, people that just want to bet on the person that they like. And then you can compare that to something that's like super granular, like um, will this bill pass Congress by June? And you're really up against people that know Congress pretty well.

Okay. Yeah, that's interesting. Do you so with that being said, do you have um kind of a preference for which one you'd rather you know, which prediction or which event. you would rather be involved with or you're not too concerned?

I mean not really. I do enjoy the bigger markets just because you can bet more, you're against more casual people. The market will probably move a little bit slower to new information. Whereas, you know, a very granular market with people that are that really know what's going on, if there's a new piece of information, the market will react very quickly to that.

And when you say the market will react quickly to that, what does that mean? Like the I I guess what I'm trying to ask you here is How does the price change over time?

Right. So let me let me think of a market. So for instance, um There was recently a market, uh, latter half of last year on who Biden would pick to be Fed share. And it was, you know, is he going to renominate Sharome Powell or is he going to go in a different direction, perhaps a more liberal direction, with uh, I think her name was Lyle Brainerd? And then, or is it gonna be some, you know, dark horse candidate?

So when these events am I using the right term there, event?

Ja, events, ja. I mean questions, yeah, events, yeah.

Yeah. Right. So when uh an event or a question is actually one of these exchanges actually lists it initially, how is it priced? Like does it come on at fifty cents?

Uh, so there the the order book is usually initially empty and people will find the price pretty quickly. And so that's one one aspect of a prediction market is, you know, if you get in very early you can end up getting a good price because people are Still trying to figure out what this is worth.

Uh, of course. Okay, so it's just like basically how a stock would IPO.

A little bit, yeah. Yeah. I mean, uh the the IPO would be, you know, more range bound, but yeah, similar concept.

Are you looking to get involved at those early stages or do you kind of wait for To see how it how it trades.

I mean, yeah, if it if it's something that I already know a lot about, then I'm eager to get involved as soon as possible. Yeah.

Now I wanna just um hone in a little bit on the time aspect. So is there always an expiry or an end date to all of these um contracts or these events?

Um almost always. Unless you know Somebody like, for instance, who is going to be the next Fed chair, I don't think that had an expiration date just because, you know, somebody was going to be picked eventually. So I would say 95% of them have an end date. Um five percent of them are kind of open ended, but it's usually something that is going to happen anyway.

And what happens at the end? Like when these expire?

Well so almost always it'll happen before the end date. Usually if you reach the end date, so for instance, will this bill pass by July 31st? Um if you reach July 31st and it hasn't passed. then it's probably going to expire as a no. So as you get closer to July thirty first and this bill hasn't passed yet, you know, it's going to drift towards zero.

I noticed on uh Caushi, which I believe is one of the exchanges you're active on. There's uh some pretty obscure kind of uh events you can bet on and one of those was something to the extent of will NASA land a man on the moon by twenty twenty five? So with some of these kind of long dated events, I presume that I mean

Right. So I think, you know, if I were trading that, and I don't I I've no I I think it's actually very unlikely because, you know, NASA has kind of punted that. But let but but let's say it was still up in the air and let's say it was like a twenty percent chance in my mind. And so I would be looking at buying below twenty cents.

So I mean I wasn't specifically asking you about this NASA um event, but just like for some of these ones where the outcome of the event is like a couple years down the road. Um

Yeah, I wouldn't I wouldn't be afraid to bet on that if I if I thought I had an edge.

Okay. But you wouldn't necessarily be trying to hold it for Yeah.

I mean it it just it just depends. I would have a set price of what it is worth, and then if it fluctuated off of that, then I would trade.

Okay, cool. Now can you just speak a bit about what uh venues you actually trade on? Like um where can you bet on prediction markets?

Yeah. So the big one that has kind of, you know, come to the fore a little bit is Calci, as you mentioned. Um for the US people, there's also Predict It, which is focused solely on uh politics. Uh there's Polymarket, which is a crypto based site. And then I also do like kind of side bets with people um on Twitter and stuff like that.

Okay. How does that work?

I mean you f you find people that you mutually trust and if you don't mutually trust them then you find somebody that, you know, can hold the money for you and then you bet on stuff. So I I I had a pretty big bet with some like random high profile Twitter lawyer on the twenty twenty election and some bookie in Las Vegas held the money for us.

That's uh that's fascinating. I didn't know that was a thing.

Oh yeah. Oh oh it's oh it's a big thing.

Yeah. So how come you trade on these three different venues? Like do they just have different events on each one or is each event kind of got different nuances to it that you prefer over the other or what's the idea there?

Right. So Calci just launched. So it's kind of like a new site and they're trying to grow. And in fact, they got regulatory approval from the US. So, you know, if I had to anticipate what I'd be doing like three years from now, you know, it's probably seventy-five percent trading on Cal Sheet.

So the the sites have kind of come online as it's becoming, you know, the the gray area of legality is kind of fading away a little bit. Uh the US is embracing, you know, prediction markets a bit more than they have in the past. And so I just you know, the the sites come online as as they're able to.

Okay. And so you've got these sites like Predict It and I I had a quick look at the the website. I think it's mostly a politics thing, right?

Yeah, it's all politics, yeah

Does uh Calche or Polymarket do they do any politics based events?

Calci cannot do elections right now. So they can't do like who's going to win the twenty twenty-four race yet. I I I I think they've talked about trying to integrate that into the site eventually. But they can do like political tangential stuff like who's going to be the next Supreme Court nominee, which was a big market, um, who's going to be in the next Fed chair, as I mentioned. So that they can do stuff that's like, you know, adjacent to politics.

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So as you're kind of like a an OG in these markets, um, you've been around a a long time doing this. What have you seen? Like what have you witnessed in the way of market growth, like levels of participation? Is it kind of exploded in recent years or it's just sort of gradually ticking up? Like w what have you observed there?

Yeah, so I would say generally speaking, in the US, betting has become much more popular because they kind of, I think the Supreme Court knocked it down a few years ago. And so state by state it's expanding. So along with that. you know, prediction markets have kind of grown and grown because people are more accustomed to betting on stuff within the US, that is. So yeah, I mean it's a growing space for sure.

Okay, so it's been noticeable for you. Um

Yeah, for sure. Yeah.

Yeah. I wonder if it's a bit like kinda how they Um, the twenty twenty like market crash and coronavirus and all that, there was a big uptick in retail participation in markets. I wonder if it's kinda had like similar sort of effect in in your markets there.

Yeah, I think so. Yeah.

And what has that meant for you? Um, like I know like us as uh equity traders, like there was um, you know, some of the moves were obviously a lot more irrational, stocks would run further than you thought they should and Like what is this, um the greater levels of participation? What's that meant for you? Like, has there been have you had the ability to place larger bets because of this or um have more markets come up? Like what's been the knock on effect for you personally?

Yeah, I would say all of the above. I would you know, the the simple answer is that liquidity has increased and you know that's a constant challenge with somebody who does prediction markets for a living is, you know, is there enough liquidity in order for me to make enough money? And, you know, it has increased steadily. Um, and yes, I do remember seeing a bump.

Perhaps a question I should have asked you a little bit earlier, but um, you know, I'd like to start getting into more about your actual research process and and more kind of specifics around your strategy. But just before we do When I'd spoken to you beforehand, you said something that was quite interesting and it was like, you know, for many years this was kind of like y you would collect a decent income from doing so.

I would just, you know, get back to what we just said, which is the popularity of prediction markets has increased because betting in general in the US has become more accepted I guess. Um, and so people are not as averse to joining sites like this and putting a little bit of money down and trying to predict stuff. Um so yeah, I I would say around twenty twenty, early twenty twenty, um, my income really level up. Yeah.

Okay, so it wasn't you didn't really change anything you were doing so much. It was more just uh there was the capacity to do more size.

I d I do think I have changed a little bit. One thing that I've noticed is that my win rates are really high. And in fact I was looking at it and I think they're too high. And the reason I say that

I've never heard someone say that before.

Well but but They are because, you know, that means I'm not taking enough risks is what is what that was telling me. Because I should be losing a little bit more and I should be winning a lot more. Do you see what I'm saying? I can't

Okay, yeah, I know what you're saying.

Yeah, exactly. So I think I had a little bit of a philosophical shift where I was not quite as cautious as I used to be, you know,'cause if if I saw profits in a market, I was like, Oh, okay, yeah, well let's just let's just take some money off the table here. Whereas now, you know, I have a much larger bankroll and I'm like, well, you know, I think the odds are in my favor. Let's just let it let's just let it ride on this.

Yeah, so just in case anyone listening didn't quite understand why you think your win rate's too high, um let me just try and break that down. So um, you know, when you look at trend following traders Um, you know, I think some of them like a good win rate can be thirty percent. And that's because, you know, they have few winners.

Yeah, exactly. Yeah.

Okay. We're gonna we're gonna dissect this a little bit. So how do you decide what markets and predictions to bet on?

Well, I mean, that's the great thing about prediction markets is you get to decide. Like you can you can sift through the markets, you can research it before you ever place a bet. and you know, you can figure out if the if the pricing is wrong or the pricing is right. You know, the

So if you pull up one of these uh exchanges, there there's like I don't know, hundreds, maybe thousands of different events that you can trade on. Like how do you where do you even begin though? Like how do you s start to filter through? Obviously you can't research all of them. I mean, I guess it's like, you know, a a stock trader or uh you know, there's there's thousands of different stocks they could trade. How do they filter down which ones they're going to actually put money on?

Right. So I I would probably first filter it by, you know where I have a baseline of knowledge. So in politics or in movies. So I I I would probably first be drawn to where I already have expertise. The second thing that I would be drawn to is you know, liquidity, how popular is this market? Let me let me give you an example. Uh there was that ship stuck in the Suez Canal.

Okay. So can you talk me through that bet a little bit more? Like what were you what was your actual bet? Like the ship would be freed by a particular date or?

Right, exactly. Yeah. So so I mean, this is over a year ago now. So I I'm I'm not sure I'm gonna remember the exact contours of it, but Let's say it was will the ship be freed by March thirty first? And then from there you can kind of research.

Do people that know a lot about shipping think it's going to be free by March thirty first? And that's a simple question with, you know, very complex answers and varying opinions. And, you know, there's gonna be news articles from all over the world, possibly some in languages.

Yeah, it sounds like a tricky one because I mean one of the things which just sort of pops into my head is you'd want to look up, you know, previous examples of this. Has anything like this happened before? But I don't sure not sure if uh many ships have been um stuck there previously. How did that bet play out for you? Did you did you get it right in the end?

I did I did get it right, although I r what I remember most about that bet is I went away from my computer for like 30 minutes and it randomly got freed like instantly. So I cost myself a couple thousand bucks for that. But yeah, I I more or less got it mostly correct.

Okay. So why did that cost you a couple thousand dollars just'cause you you walked away for a few minutes? Like what did you miss in that in that time? What happened to the market?

Yeah, so it unex unexpectedly got freed, I think. I don't think they were I I I think they were doing some random stuff. They were like, Oh, let's give it a try. Let's give it a try. And all of a sudden it just kind of dislodged. So it was not it was not very expected. And I think the market which was at let's say 35 cents, all of a sudden went to a hundred cents. So the market flipped as we call it.

How did you get out of that bet? Did you just I mean, you could have still sold it later, right? Like what what did you miss in that thirty minutes is kind of what I'm trying to understand. Right.

Right. So what so what I cost myself is the opportunity to buy it at thirty five cents or thirty six or thirty seven. as it was being freed and as the market very quickly went from uh 35 to 100 cents. Yeah. So so I mean these markets work in real time. So as the ship is kind of moving and that that was the other thing. There was like a GPS that was tracking like

Understood. So you already had a position on this on this, but you would have probably

Yeah, and I've been trading in and and and accruing profits and along the way.

Yeah, right. Okay. That's fascinating. Yeah.

Oh gosh. Um Yeah, I mean it runs it totally runs the gamma and I would I'd I I would probably need to look that up and and and get back to this question.

Okay. So just back to the filtering question. Um What are some of the important factors? So you said that things which you maybe have a baseline of knowledge on. Um although you do still float around a lot. What other kind of important factors or considerations are there? Like is liquidity is I I presume is a big one. Is there anything else?

Yeah, I would say, you know, general interest level in this event. So it could be something like the ship that I know nothing about, but other people are interested in it. Well, all of a sudden I need to learn a lot about this because people are gonna be trading it. So I would say interest level um of other people, liquidity, and then my own baseline of of expertise. Because if you think about a prediction market.

I do. Yeah. Although with that being said, I know you know you you do bet on things you don't have much knowledge on. Um that's fair to say, right? Like I presume probably most of your bets are are things which you um have some sort of baseline knowledge, but you do also vary outside of that as well, right?

Yeah, that's true. Yeah.

So in those cases, I mean, how do you become an expert on those topics in a short period of time like What's your research process? I don't know, maybe if you can think of a a recent example might be helpful, but

Yeah. So so a big market right now is whether Finland and Sweden will join NATO by the end of the year. And, you know, that involves so many moving pieces. It involves thirty foreign governments. It involves, you know, Sweden, um, Finland. And I have no knowledge of this. You know, I I'm not a I'm not a diplomat. Y you start reading articles.

What are some of the most extreme measures you've taken to acquire information?

I mean, ooh. I have volunteered for a campaign before. Um Let's see. I I was betting on like Croatian elections. And I was watching Croatian TV and I would take my phone and like use the Google Translate, like real time pictures and like hold it up to the TV. Okay. And kind of try and translate what the Chiron said at the bottom of the screen. Like just trying to figure it out as quickly as possible. Um basically anything I can do within reason that would get me an edge.

With things like politics, you know, that's a subject where people have very strong personal opinions and I've I'm sure you probably have your own opinions um on the subject. Is it difficult for you to ever remain objective?

I would say it has become a lot less difficult. You know, when I first started, you know, my own biases creeped into my betting quite a lot. But, you know, if you let your own biases creep into your bedding, you're going to go busto pretty quickly. So you have to kind of create, you know, a Chinese wall between those two areas of your brain.

A Chinese war, I like that analogy. A couple questions around the pricing.

Okay.

So a bit of a broad question, but we'll see where it goes. How do you determine what's a good price? Like do you use some sort of model or you know, if you see that a market is the yes side of the contract is Uh currently trading at about 30 cents, but you think fair value is maybe closer to 50, you know, how do you think through that part?

Yeah. So I would say that's the toughest. That's the toughest part of the job is figuring out what the correct price is. And I almost always try and figure out Um, I call it the true price, like what the true price is. There's the market price, um, which is the price that's available to you. And then in my head, I try and

Do you ever have the situation where it might be like eighty percent of people, so it's what, eighty cents for the no side of the contract, twenty cents for the yes side? You know, in a situation like that where eighty percent of the market is saying, No, this event is not gonna happen. But you think it does. You think you're more on the yes camp. What gives you the confidence to think the majority are wrong?

Experience and also I'm not really afraid to be wrong. Some of my best bets have been absolutely stupid. It's like Because if you're betting on a long shot, nobody thinks it's going to happen. And even a part of you is like, This is a really dumb bet. But, you know If it's a if it's a five cent bet which pays off at almost twenty to one, it only needs to happen eighteen you know, it only needs to happen once out of every nineteen times to be profitable, you know?

If you are wrong on a trade, what does that mean? Like, do you have uh as a trader uh you know of more traditional markets that you'd normally say you're wrong if the price moves against you by so much? Is that how you operate as well? Or because you've done your research and there's a kind of an end date in sight? Are you like say you buy uh you take a yes contract at 30 cents and it over time it comes down to 10 cents. Are you saying, well I'm down 20 cents on this uh contract or this event?

Right.

Did that make sense?

No, no, it made sense. I th I think in your example, if I haven't sold it yet, then I'm thinking even though it has declined, I would still be ahead of the market price. So for instance, let's say it's at thirty cents. And in my mind, it's worth forty cents. And then it decreases to 10 cents and I'm still holding it. Well, in my mind, it's probably worth at least 10 cents. If I don't think it's worth 10 cents, you know, I'm not afraid to take the loss and and dump it.

Okay. So sometimes you will let the market override your kind of research and um initial conviction on the trade.

Yeah. I mean I'm not yeah, I mean I'm not perfect. I'm not, you know, a super genius. And I think, you know, one important thing is to always like, you know, kind of Stay humble and not think of yourself as as smarter than everyone else.

Can you speak a little bit on how you size your bet?

Yeah, so... I size my bets almost exclusively related to what I think my edge would be. So I'm I'm not sure if you're familiar with it, but there's something called the Kelly criterion. Are you have you heard of this?

Yes.

Yeah. So basically um If I think my edge is high, then I'll bet a lot of money. If I think my edge is low, then I won't then I won't bet that much money. And then I always kind of like keep in mind, you know, what my rough bank role is and I try and size it accordingly.

So is it strictly Kali criterion or is it some sort of variant of it?

Well, I mean, that's kind of like the philosophy of how I think. You know, I don't necessarily try and be granular with like full Kelly or half Kelly or quarter Kelly,'cause I know there are a lot of people that kind of Try and get very specific with it. I would say that's more just like a philosophy of how I think about betting, which is just, you know, if I think I have an edge, bet more. If I'm not sure, bet less.

Okay. One of your trades I saw, I think it was on the Fed interest rates. It looked as though you'd kind of spread your bets across multiple outcomes. Is that is that right? So can you talk about maybe how you kind of structure some of these trades? Like y feel free to use that example if you if you like. I mean, how come you weren't all in on on one? One outcome.

Because I think about it as, you know, probability. So for instance, with the Fed, the Fed is Not a super great example because the Fed almost certainly telegraphs what they're going to do and very, very, very rarely these days does the Fed surprise. But, you know, let's say there's a five percent chance of a surprise either

Gotcha. Yeah. Yeah, that's that's really cool. Um How many trades do you use? place over I don't know, let's say the course of a month or or something like that. I'm just trying to gauge like how active you are on the trading side. Like from what I it sounds as like it sounds as though the majority of your time is probably dedicated to research. Yeah, how many trades? Like you are you trading like, you know, more than ten times a day or ten times a week?

Uh yeah, I would say probably a few thousand trades a month at least, yeah.

Uh right. Okay.

Yeah, so it's so it's not just, you know, I'm I'm I'm betting on quite a lot of markets all at once. So something could change about five different markets today, you know, and I'm trading each of those five markets based on that new information in each of them.

And let's just say, you know, one of those markets, one of those events. Are you trading in and out of that? Or do you normally just, you know, one event is one trade?

Uh yeah, I'm I'm it it depends. Uh oftentimes I'll trade in and out, sometimes I'll just keep growing and growing and growing my position. Sometimes I already have a big position and I'm trying to draw it down. So it it it just depends. But yeah, I'm I'm I'm doing all sorts of things.

Okay. Now just before we close us out here, um I don't know if you've had a chance to uh think of uh one of the most uh one of the strangest events that you've uh bet on.

Yeah. So the one that I remember is whether Britney Spears would be led out of her conservatorship or not.

Right.

Yeah. And that that ended up being like a really big deal on the media. Um, a lot of people were following the trial and stuff like that. And so I really, really, really delved into it. In fact, I was kind of I was kind of annoying my wife because I was watching like Britney Spears documentaries. I had downloaded so many California court cases.

How many do you have any idea like how many hours of research you would have put into that that trade?

Yeah, that's a good question. Uh probably probably around a hundred. A hundred. Maybe maybe two hundred. Yeah.

Yeah. Okay. Uh are you comfortable talking about how much you uh made on that trade?

I think around ten thousand dollars. So I'm not sure and now that I'm now that I'm comparing the ten thousand dollars to the how many hours I spent, I'm not sure if that quite was worth it. But I think there's another element to it where, you know, it's a lot of fun too.

Oh, I think that's that's really that's awesome.

Yeah.

Just some parting words of wisdom here for anyone entering into prediction markets, what are some common mistakes that the less experienced um fall into?

Ooh, okay. I mean there's a lot of them. Uh you already touched on one, which is kind of like letting your biases take over and kind of just betting on what you want to happen. rather than what you think would happen. I think that's the most common one. The second most common one would be not really understanding your bankroll and not really understanding sizing.

Mm-hmm. Brilliant. All right, Domer. I'm gonna let you go and enjoy your evening. Um, I wanna say I've I've really enjoyed this uh conversation. I'm gonna I don't know, have uh Closer look at prediction markets myself. Cool. Certainly not gonna be throwing myself in there full time, but uh you know, you've uh you've got me curious just to just to have a little dig. Yeah, there are a lot of fun.

Yeah, I'm I'm a little bit quiet and secretive, but uh I I am on Twitter. I don't tweet all that much. Uh but my Twitter account is D-O-M-A-N-T-4Hs. Doma.

Cool. All right, man. Well I will pop that in the show notes. So uh anyone can find that and uh a few other links for relevant things that we've discussed at chatwithraders.com slash two three four. Uh this is episode two hundred and thirty four. Dymo, once again, thank you very much for doing this and uh I'd I'd like to chat with you again at some point.

Yeah, a lot of fun. Thanks, man. You've reached the end of the year.

But rest assured there are more episodes.