ForecastEx Review
ForecastEx is the newest prediction market the Commodity Futures Trading Commission (CFTC) has approved. The prediction market platform launched in August 2024 and offers event contracts on economic and climate figures. It’s part of a growing number of derivatives exchanges offering futures on real-world events.
It’s also not built for casual traders. You need at least $2,000 in your Interactive Broker account either in cash or other commodities to execute a trade on its prediction market. ForecastEx contracts pay interest, so they’re for investors willing to hold onto financial instruments for years at a time
If you’re an institutional or experienced trader, then ForecastEx is a viable option. If you’re an individual interested in casual betting on climate or economic events, you’re allowed on ForecastEx, but you’ll find other top prediction markets more suitable.
Here are the most important things to know about ForecastEx.
What is ForecastEx?
ForecastEx is a derivatives exchange registered by the CFTC. Traders can use real money to trade on the economic and climate markets that ForecastEx offers. Climate, federal interest rates for example, have markets on them through ForecastEx.
There’s also an agreement with the CME Group to offer futures on some of its markets. The CME Group is a separate company that operates derivatives exchanges. On CME Group platforms, you can trade on the price of gold, oil, and other commodities. With ForecastEx, you can trade larger contracts on what prices in the CME Group’s markets will be. Just think of the CME Group as another category of markets to trade in on ForecastEx.
ForecastEx also allows predictions on where different market prices will close at the end of each day. Through the CME Group, users can trade on the price of gold at the end of the day or where the Euro will close once trading hours are up.
ForecastEx gives users monthly markets and daily markets to trade in depending on their preferences. However, there are also high and low-stake markets. The ForecastEx markets pay $1 each. The CME contracts pay $100 each. Users can easily flip between these two markets to see what trading options are available under both price points.
How does ForecastEx work?
ForecastEx works like a trading platform. You can select the market you want to trade in, then buy contracts on the outcome you think will come true. If you believe the average U.S. temperature will be below 54.12 degrees by the end of the year, then you can buy however many “No” contracts you’re confident in.
ForecastEx’s contracts are priced from $0.02 to $0.99. The more likely the outcome, the more likely its contracts are to pay out. Payout potential makes more likely outcomes more valuable, so the contract’s price is also the probability of a payout. A $0.50 contract has a 50% chance of occurring – according to the market. The extra $0.01 is the fee it takes after each market resolves.
ForecastEx also has event contracts available through a partnership with CME Group which are priced from $1 to $99. These are on how other derivative markets will close, so there’s a wide range of economic markets to trade in on ForecastEx.
Does ForecastEx have unique benefits for its customers?
ForecastEx is among a select group of prediction markets regulated by the CFTC. Long derided as gambling, research has found that prediction markets can aggregate a knowledgeable group’s opinion into a clear snapshot of that event’s probability. Event contracts are the new type of derivative that allows regulated prediction markets to exist.
On a regulated prediction market, your payouts are guaranteed if you hold contracts that meet the payout criteria. ForecastEx must document not only that you’ve won, but also which data source will decide whether your contracts pay out. This level of clarity is part of the CFTC’s requirements for derivatives exchanges. It’s a basic but crucial feature that you’re guaranteed to have on a CFTC government-regulated platform.
How to sign up and start trading on ForecastEx
Step 1
ForecastEx isn’t a standalone platform. It’s a service that Interactive Brokers offers. If you want to trade on ForecastEx, then you’ll create an Interactive Brokers account and access ForecastEx through the client portal. However, Interactive Brokers has an application process rather than a traditional registration process. It begins familiarly enough with a username and password screen.
Step 2
Then the application begins. You’ll choose the type of account you want – probably individual – then enter information about your employment, sources of income, and create your security questions. That’s only the first step of the application.
The next step of the application is even more involved. Next, you’ll have to provide your income, net worth, and liquid net worth. Then you’ll select the investment purpose for your account and the types of investments you’d like to make, along with your experience with the investments you select. If your answers don’t align with Interactive Brokers’ risk profile, then it won’t allow you to complete your application. You can click the “back” button at the bottom of the application to try again, but ForecastEx telegraphs at every step that it is not for day traders.
Step 3
If you make it past this step, then you have a long list of agreements to agree to. There’s an option to select “I Agree” to all three pages of terms at once. Finally, you can provide your electronic signature at the bottom of the page, and you can move on to making your first deposit.
You’ll make your first deposit through a linked bank account. Enter your bank information, the amount of money you want to deposit, and submit it. You’ll have money in your account immediately and you can begin trading.
Getting to the market is easy. Go to the client portal you’re taken to when you complete the signup process. Then, go to the “Trade” heading and find the link to “IBKR Forecast Trader.” That will finally take you to the prediction markets where you can begin trading.
You’ll find contracts offered by ForecastEx and CME. ForecastEx contracts pay out at $1 and CME contracts pay out at $100. They also focus on different topics. ForecastEx prediction markets cover longer-term financial and climate indicators while CME markets are focused on how existing derivatives markets will close each day.
Step 4
Click the market that interests you, and you’ll see information about the available contracts. You can choose the “Yes” or “No” option. In markets with contracts available to trade immediately, you can make a market trade, which immediately executes your trade. Some markets will require you to make a limit trade, which executes your trade if a contract price reaches a certain level
This step included a bizarre technical difficulty. Typing the price in was hard. In a ForecastEx market, you can only enter a price between $0.01 and $0.99, which is the range of prices those contracts sell at. The number kept showing up on the wrong side of the decimal, and it took a great deal of experimentation to enter $0.41. Once you’ve completed your battle with the “Amount” section, you can submit your order.
However, you need at least $2,000 in your account to execute this trade. ForecastEx is only for investors who are interested in holding investments. If you’re interested in frequent prediction market trading, then you might consider starting with Kalshi or Polymarket.
How to trade safely on ForecastEx
ForecastEx is a real-money platform, so guarding your login information is a vital part of trading safely. Derivatives are among the most risky investments, and event contracts can be unpredictable. Events that few saw coming can disrupt even a seemingly stable interest rate market. Don’t share an account with anyone else. Have your own and make sure you’re making the trades you feel comfortable making.
You should also have a rough trading plan for your time on ForecastEx. Treating it like a gambling platform instead of a place to apply the knowledge you have about a subject will likely lead to greater losses.
Trading on contracts you don’t understand also increases the risk of adopting problematic trading habits. Chasing losses and betting too much aren’t problems unique to gambling platforms. Plenty of financial traders – especially high-frequency traders – become addicted to the trading, losing themselves and their money to trading that got out of control.
There’s nothing wrong with investing in risky futures. Just set a budget and have a rough plan so you don’t lose control of your finances.
ForecastEx fees
There’s only one fee on ForecastEx: a $0.01 fee after markets are resolved. It’s a small cut that’s built into the contract bid. The only fees most customers will have to worry about cutting into their profits are fees associated with their banks. The money you make on your ForecastEx account will remain yours.
This is a cheaper fee than what you’ll find on Kalshi.
Deposit and withdrawal options on ForecastEx
ForecastEx has a few ways to deposit money on its platform. They include:
- ○ ACH Bank Transfers
- ○ Checks
- ○ Request for Payment
- ○ Wise
Bank transfers and checks are basic and familiar deposit methods. Request for payments allow businesses to invoice other institutions. It’s an option for large trading companies but probably not for individual traders. Finally, Wise is a payment platform that converts foreign currencies into currencies ForecastEx accepts. For most U.S. traders, bank transfers will be the best deposit option.
Withdrawal options are more limited. They include:
- ○ ACH Bank Transfers
- ○ Checks
As a CFTC-regulated financial platform, ForecastEx is subject to anti-money laundering laws. Those laws require ForecastEx to know who they’re sending money to. Bank transfers and checks are standard transaction methods that easily match the legal requirements American financial institutions are subject to. There are a few variations on these options, like ACH debit authorizations, but bank transfers will be the best withdrawal method for most individual traders.
Is ForecastEx legit?
Yes. ForecastEx has been a designated contract market by the CFTC. The platform is subject to CFTC regulations, including collateralizing customer positions and guaranteeing payouts when they’re earned by holding contracts that hold clear settlement terms. If you’re going to trade on ForecastEx, then you’re choosing one of the most secure and credible prediction market companies.
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