PredictMarkets FAQs

What is PredictMarkets?

PredictMarkets is an online markets platform where members can trade contracts on future real-world outcomes using virtual cash in areas such as politics, finance, sport and economics.

The role of PredictMarkets is much like an exchange: providing a platform to facilitate the matching of orders between trading members.

How does it work?

Members can trade contracts on outcomes of future events. If you are a contract "buyer" you will be of the view that the event outcome stated for that contract is likely to happen; and conversely the "seller" will be of the view that the outcome of the event is not likely to occur.

The objective is to make as much virtual cash as possible by trading in the markets provided by PredictMarkets.

What do the prices mean?

The price of the contract gives an indication as to the probability that the event outcome is likely to occur. Given that most contracts are worth $100, if users think it is more likely the outcome will occur, the price will move up towards $100; if users think it is less likely the outcome will occur, the price will move down towards $0. Two key indicators of pricing are the Trade Price and the Spread (see below).

Trade Price: this is the last price that a buyer and seller matched their orders. This gives an indication of the probability of the event outcome occurring at the time the trade was effected. For example, let's say the 'NZ50.Close.High' contract last traded at $80 — this indicates that users thought the probability of the NZ50 Index moving higher was 80% at the time of the trade.

Spread: the spread includes the best (highest) buy price and the best (lowest) sell price, and gives an ongoing indication of the probability of the outcome occurring. For example, let's say the 'CRICKET.NZVWI.WIN' contract had a spread of $45-$55 — this indicates that users think the probability of the NZ beating WI in cricket is somewhere between 45% and 55%.

How do I make virtual cash?

There’s a couple of ways you can make virtual cash.

1. when the outcome of the event stated on contracts you own comes true;
2. or by trading in the market before the event outcome is known, simply by buying into the market at a lower level and selling at a higher level – just as you would trade shares on a stock market.

How do you lose virtual cash?

You can lose virtual cash by buying contracts in markets where the event outcome doesn’t eventuate, or you sell out of a market at a lower level than what you bought at.

How do I place an order?

Once you log in, just go to the Markets section, select which contract you wish to trade, then place your buy or sell order in the box(es) provided.

How do I cancel my order?

In the My Account section, select My Orders from the menu to view all orders. Find the order you wish to delete, then select the Cancel link next to the status of the order. Confirmation of the order cancellation will be provided immediately, and you can view the cancelled order in the My Orders window.

How can I track my transactions?

Select My Portfolio from the menu in the My Account section.

Are there any fees/costs?

There are no fees at PredictMarkets, it is free to trade!

How do I get started?

On the homepage, select the Create an Account link in the top right hand corner and follow the instructions to obtain a login and start trading!

What is short selling?

Short selling allows you to sell contracts you do not own. This lets you profit from a drop in the value of a contract. In effect you borrow contracts from the exchange to sell and promise to pay for them at a later date. If the price of the contract drops, then you will be able to buy those contracts for less than you sold them, therefore earning a net profit.

For example, if the current price of the contract XYZ is $50 but you think this is over-priced, you can sell short this contract. You borrow 10 contracts of XYZ then sell them at $50 - your position is now '-10 contracts'. Later on, the price of XYZ has dropped to $20 so you buy 10 XYZ contracts to 'cover' your position. Thus you have made a profit of $30 on each contract due to the price drop. Of course, if the price of XYZ increases, then you will make a loss.

How do I short sell?

You can short sell simply buy placing a sell order when you don't own any stock. The system will automatically take care of the borrowing process for you, and your portfolio will show that you own '-10 contracts' (or however many you sold).

Why does my cash decrease when I short sell?

When you short a contract, you promise to buy them back at a later date at the market price. To ensure that you have enough money to do this in the future, you are required to have enough cash to cover the worst case scenario. So, when you short a stock that could close at either $0 or $100, your account is immediately debited $100. When you close your short position (i.e. buy back the stock), this $100 is refunded to you.

For example, if you short sell one contract of XYZ at $40, your account is debited $100 (to cover) but also credited $40 (the money you receive for selling the contract). Therefore, your cash balance decreases by $60. If XYZ later drops to $10 and you buy one contract then your account is credited $100 (refunding your cover) but also debited $10 (the money you pay to buy back the stock). Your cash balance increases by $90, i.e. you have made $30 overall because the price of the contract decreased.

How is the value of a negative (short) position calculated?

If you short sell a contract then it will show you have a negative amount of stock, e.g. '-10 contracts' in your portfolio. The value of each of these contracts is calculated as ($100 - current market price), which corresponds to the amount of money you would receive if you bought the stock back at that price - i.e. $100 (your cover refund - see above) minus the cost of actually buying the stock.

How do I get help?

Please Contact Us to submit your query and get assistance from our team.