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hx8
PaulHoule
I used to play penny stocks for fun and it was a blast to be doing $3000 trades and be responsible for 30% of the volume for the day. You can learn a lot about how markets work if you adopt a penny stock, particularly the kind that trades in a wide range where you can buy in at 0.03 and figure "I'll sell when it hits 0.12" and sooner or later it does... then falls back down to 0.02.
aworks
This is interesting to me. I never had any enjoyment from traditional gambling when I dabbled in it. But I like the idea of being an expert on a little-known company and experiencng the response of my actions. Of course, it would be "for entertainment purposes only."
I was never interested in market timing, though.
roflyear
You can "trade the news" with penny stocks (this is basically just buying when people first start talking about it then selling when more people are talking about it), but like you say, the liquidity is soooooo low that you have to be really careful if you plan to sell more than a few hundred dollars.
Generally, you're going to lose money - so don't do it.
PaulHoule
Like any kind of gambling you have to do it with money you can't afford to lose and if you want exposure to stocks it is hard to say that you shouldn't have a big chunk of your savings in something like $QQQ or $VOO.
Myself I was working on finance-adjacent stuff at the time and thought it had educational value. I did OK trading my favorite penny stock but I've had my share of financial misadventures, like I just had to buy $XIV because I wanted to see what happened and... I did.
chillfox
I used to work for a sports betting company that identified individuals who were a little too good. The key is to remember that they are addicts and will bet on events regardless of if they have insider knowledge or not, so you have to account for this and not only identify the individuals with insider knowledge, but also what events they have that knowledge about and what they don't.
doctorpangloss
Do people here and the WSJ comprehend though that they are giving Polymarket free publicity to farm addicts?
AureliusMA
This is like saying that "Supersize me" is free publicity for MacDonalds.
alexpotato
> I had a thesis two months ago that you could detect predictors with insider knowledge and ride their coat tails and spent some amount of time staring at the data and running some ML algos to detect them.
Polymarket actually wrote an article about "copycat trading": https://news.polymarket.com/p/copycat
AureliusMA
The only winners are the market makers and the ones initiating insider trading. You'll always be on the wrong is of the liquidity when trying to ride alongside scammers.
skinfaxi
> I learned some things about the market during this time, but did not succeed in my detection algorithm.
What failed? Was it too late to follow the trend by the time one was identified or something else? It seems much more transparent than trying to reason about say dark pool trades.
hx8
I am unfamiliar with working with such signal-to-noise ratios.
* I only had the example trades in the news as 100% confirmed positive trades.
* There are hundreds of millions of dollars in trades a day in Polymarket.
* In Polymarket you can just spin up a new account. If an account spins up, makes a $50k bet and wins, and then has no other activity, was that an insider trader or just someone with a behavioral pattern of spinning up new accounts? Just following up on these types of trades didn't provide a very big edge, as the nature of the trade adjusts the payout percentage.
jldugger
> In Polymarket you can just spin up a new account. If an account spins up, makes a $50k bet and wins
You'd probably want to use some form of bayesian ranking, like say add 1k of total bets and 500 in total winnings to the raw scores.
But your bigger problem is just that people spinning up new accounts may be doing it to avoid your tracking. The kind of person with lots of evidence that they're good should be smart enough to know about copycat traders. The evilest among them might use a small bet to lure copycats and then trade against them in alts.
ModernMech
This is the trap of modern society. Think about what you're doing: instead of anything productive, you thought a good use of your time was sitting there staring at numbers, hoping to find a pattern to make money off of people; who in their own right are using insider information to game a system; which itself is set up to capitalize off the fact that the larger economy has failed, and now all that's left is to just make money off of guessing.
hx8
This comment is so patronizing because it's 2008 angst against the financial sector wrapped up in the assumption that the people participating in the financial sector aren't aware of that angst. We're deep in a hacker news comment thread, no one here should be beating the desk about productivity.
I would recommend you look into Bullshit Jobs by David Graeber, where he makes an argument that 50% of American jobs are not only not-productive, but actually harmful. Your argument isn't taken to its logical conclusion yet.
zahlman
We should be happy to live in a world where a significant fraction of people can conclude that "doing something productive" is not a hard requirement for survival.
rwmj
True, but hx8 isn't to blame here and was simply trying an interesting experiment. Blame the system instead.
ModernMech
I did blame the system, I said it's the trap of modern society. The only reason hx8 fell into this trap was because they thought it would be profitable, that's not a moral failing on the part of the poster.
tikhonj
The real trap of modernity is treating "productivity" as some sort of quasi-religious moral imperative.
yieldcrv
Finance has always been the largest sector on the planet through every economic environment you have been alive for, I don't really understand why there is a current of this community that acts so divorced from its perpetual and all encompassing existence their whole lives
Despite you being an individual, you reflect an aberration of sentiment here that makes no sense
For example, the larger economy hasn't failed, another view is that this is price discovery of a mispriced agent in the market. A wage worker whose actual productivity isn't valued accurately, and a market based solution has been developed that allows for closer accuracy. More profits to the insider and the copy trader, their available capital and liquidity is derived from their utility to the employment sector and their potential profits with that capital and liquidity is derived from the event's actual utility to the market.
Additionally, the productivity of all agents isn't known, you don't know what they were doing with their time before and it likely was suboptimal already - as in doomscrolling on social media or vegetating on the couch.
Finally, you have no way of quantifying if those lazy things were suboptimal uses of time, or if a completely active other activity was suboptimal or optimal, as this goes into relative utility and schools of ethics.
TheRealDunkirk
> the larger economy hasn't failed
It's only a matter of time until Social Security starts to fail, right after we've paid all the boomers their full benefits (and just in time for me to be eligible), and then they'll have to implement "austerity measures." After that, groceries, gas, housing, health "care," and higher education will have fully broken the middle class (it's already broken me, and I have a good job and a paid-off house), and the economy (sans imaginary AI investment bullshit) will be exposed as failing. AI (such as it is) will hammer entry level jobs, and tax revenues will be impacted by this. At the same time, we're going to have to start some sort of menial UBI, but with what money, I have no idea. Service on the national debt just surpassed military spending last year. When the shit hits the fan in another 10 years, the country will have to either go to war to reset the accounting ledgers, or actually put themselves on a budget. Which do you think will happen?
Given the numbers and rates we can see at present, all economic activity right now is a process of moving deck chairs on the Titanic. Sure, it hasn't failed, but it is an absolute certainly that it WILL. It's just a question of WHEN, and it's relatively soon. We have no adults in Washington. It's clear they're ALL just trying "get theirs" before it all comes crashing down.
cmiles8
This whole prediction market space seems like a 2026 version of ball and cup game betting. Most of the people participating fail to understand that they (and their pointless bets up for harvesting) are the product here.
david-gpu
My intuition is that it is a lot like sports betting: many laypeople bet for what they hope will happen, rather than trying to beat the market earnestly.
The winners, as you point out, are the house and those with insider knowledge.
tyre
It’s extremely like sports betting, because the vast majority of their volume is sports betting.
Ylpertnodi
... like a horse that is held back for a while and comes in at 23-1.a
rmb177
I realize I'm an N of 1, but I've participated in prediction markets since 2019 and am just above 5 figures in profit. Not life-changing money, but it certainly doesn't hurt.
I'm pretty conservative in my predictions and just think there is a lot of free money on these sites. Maybe that just supports the sentiments of this article and most of the negative comments on this post.
There are certainly cases where I got run over by the steamroller picking up nickels, but in general that's few and far between. A good example is getting trump losing the 2020 election at 90% after the election in November. If you find those types of markets and compound the earnings it's a pretty nice savings account.
I've also been burned by insider trading and vague rule interpretations but at this point, you chalk it up to the nature of prediction markets. I now try to stay away from markets that are more manipulative (e.g. mention markets).
I don't understand the hostility to prediction markets. There are definitely hedging opportunities and we're all adults.
screamingninja
Have you heard of the Sucker Effect? Your gains come solely from the those who made the wrong bet. There is no inherent value generation in the prediction markets unlike the stock markets. Yes, there is money to be made, but at a net loss to the society, so many would not consider these bets "opportunities" but rather "gambling".
AureliusMA
There is no value generation in trading stocks either beyond IPO, as stocks are then simply second-hand markets and can be completely irrational. The main value is just like the lottery : entertainment, excitment.
tsunamifury
There is strong signal that companies then listen to and act on. The market serves (whether you like it or not) as the final board of executives.
benced
The value generation is for passive observers: it is theoretically more informative to be told that there is a y% chance of x from someone with a financial incentive to be right.
(also, we allow plenty of zero and negative sum interactions in society. I don't know why this is special.)
aaron695
[dead]
prepend
I think the problem with prediction markets is the ease of people changing the outcome and profiting on it from others expense.
It’s worse than insider trading as it’s betting that Kyle’s mom will bomb Gaza and then making it happen.
Any societal good from knowing is outweighed by the injustice.
If there was any regulation by government or the markets themselves then it would be better. Betting in things you can’t affect like the weather or earthquakes or elections or whatever is actually pretty useful for awareness.
benced
I understand the hostility to them getting into sports betting since that seems to trigger a particular unhealthy impulse in young men but your anger should be first directed at the companies that are 100% sports betting (DraftKings and their ilk). I don't think the normal things prediction markets do subject young men to the same temptations.
ceejayoz
On a related note:
"Someone allegedly used a hairdryer to rig Polymarket weather bets" https://www.engadget.com/big-tech/someone-allegedly-used-a-h...
JohnFen
Prediction markets are nothing more than gambling. Most people who gamble end up losing. If it were otherwise, running a gambling operation wouldn't be the enormously profitable endeavor that it is.
xorcist
Unregulated gambling, mind you. Huge difference.
jimt1234
I feel that way about what the stock market has become, too.
1vuio0pswjnm7
Alternative is archive.is
Text-only, no Javascript, no CAPTCHA, no DDoS on blog, no geo-blocking, HTTPS optional:
https://assets.msn.com/content/view/v2/Detail/en-in/AA22jnEi...
zahlman
Can these asset links be determined programmatically (or via an API) from the original URL, or is scraping required?
mathgradthrow
Everytime someone loses money on a bad bet in a prediction market, it's an opportunity for them to learn something about ~~counter-party risk~~ adverse selection. You could easily make the argument that the more people are losing in prediction markets, the more learning is happening.
bobro
Every time a drug addict uses, they’re actually learning about biology and the sociology of addiction.
pants2
Counterparty risk would be more like the betting site going belly-up and not getting money out despite having a profitable trade. This is just regular risk.
mathgradthrow
You're right, but I was confusing counterparty risk and adverse selection.
tptacek
Betting venues can make money on transaction volume rather than holding an edge against their customers on the actual bets.
blurbleblurble
What's the difference between penny stocks and prediction markets?
AureliusMA
The authorities heavily regulate penny stocks since Boiler rooms.
prepend
SEC cares about penny stocks a little bit.
esseph
I can't put a hit out in someone I don't like by buying penny stocks, but I can by placing a prediction market bet.
jeffwask
So, the same as NFT's and Memecoin from the same people...
Jtarii
Prediction markets are astrology for the boys.
tokai
Astrology is magical thinking and fraud so it checks out.
justinhj
Astrology is more of a cost centre than a gambling venue, unless you consider choosing a life partner based on the stars.
tsunamifury
I ran the earliest predictions market online at the reboot of The Industry Standard.
Prediction markets fatally suffer from two Problems.
1) large sharks making huge bets at the end (destroying any signal from earlier bets)
2) inside information on poorly written bets.
The solution is -parlay- edit: parimutuel style payouts but that destroys popularity (you are paid out at closing odds not at your time of bet odds spread to sell position).
LargeWu
"The solution is parlay style payouts"
I think you mean parimutuel payouts?
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I had a thesis two months ago that you could detect predictors with insider knowledge and ride their coat tails and spent some amount of time staring at the data and running some ML algos to detect them. I learned some things about the market during this time, but did not succeed in my detection algorithm.
* Polymarket is a bit more transparent with who placed what bet, so it's a good place to go to study winners.
* The most consistent Polymarket winner I saw was placing 95%+ odds many, many times a day.
* Most markets will have a surprisingly small liquidity, so if your edge is just 5% you won't make as much as a 5% edge in the stock market could make you. This is good in that it keeps the biggest fish out, but some big players seem to be using strategies based on holding the most chips.
* Paper trading in Polymarket/Kalshi is very different than paper trading in the stock market, because even a few grand in Polymarket/Kalshi can have a big impact in how other "traders" interact with you. The traditional paper trade validation -> unleash the bot strategy doesn't work. You need to real trade with real money and scale up while watching how the market responds.
EDIT: Bonus learning -- yes the market runs by getting fish into the system. That's why Kalshi is advertising so much, it attracts suckers for the professional to win from, all while Kalshi takes a percentage.