Trade on Election Markets

New traders should keep a few things in mind before diving into election betting.

First, don’t spend more than you can afford to lose. America’s legal election markets are volatile financial instruments whose value can change as rapidly as the state of a political race. Traders who find themselves chasing losses should use one of the consumer protection features, like limiting their bets or time sizes on a prediction market platform. However, the availability of consumer protection features varies across platforms, so traders should remain aware of their options.

Next, new traders should get some idea of the reasons supporting “Yes” and “No” positions in an election market. Understanding the strengths and weaknesses of each position provides a better idea of whether a market price is reasonable and what a better one could be if it isn’t.

Finally, be aware of how quickly the odds of an event occurring can change. Event contract prices react so quickly because new information can transform the way an event’s likelihood is viewed, like the aftermath of Joe Biden’s debate against Donald Trump.

Prediction markets can be used for financial hedging, exposure, forecasting, or entertainment. No one should bankrupt themselves over these contracts.