What is the maximum value of
a contract?
The value of a contract is between X$0 and X$100. Once the outcome to a particular news event is known, the contract's value is usually X$0 if the associated outcome is wrong, X$100 if it is right, or some intermediate value in case of a tie. Keeping the value between X$0 and X$100 enables us to loosely associate the price of a contract to an estimated probability that the outcome will be proved right. So if players buy "Team A will defeat Team B" contracts at X$68, we may infer that they estimate the probability of Team A winning at 68%.
Why do outcomes always come
in opposite pairs?
Outcomes and contracts for sale always come in opposite pairs like "Team A will defeat Team B" and "Team B will defeat Team A". This is to allow you invest in whichever outcome you feel is more likely rather than having to invest against an outcome you do not believe in. So if you don't believe that Team A will win, you don't have to invest against Team A, which would require you to sell contracts you may not own (because you think they will tank). Rather, you can simply invest in Team B directly.
Of course, the prices of opposite contracts are linked. If one's price is P, the opposite's is 100-P. Thus, the sum of two opposite contracts is always worth exactly X$100.
How many contracts of each outcome
are up for sale?
Unlike what happens for an IPO, when a fixed amount of stock of a company is put up for sale, there is no fixed number of contracts that are issued when a new outcome market is created. Instead, contracts are issued and recalled following supply and demand. When two players buy strictly opposite outcomes, contracts are created to satisfy both, and we debit the corresponding amount of X$. Conversely, contracts are recalled when two players sell strictly opposite outcomes, and we credit X$ in their accounts. Finally, when one player buys and another sells, the number of contracts in play remains unchanged, as does the amount of X$. This is a zero-sum game.
Why can't I sell short?
Financial markets allow one to sell short, meaning selling shares that one does not yet own, against the promise of buying them back later, and hoping, in the meantime, that the price will have gone down. Therefore, selling short is a way to bet that the price of the shares will go down.
The eXchange does not allow you to sell short, per se. However, it provides you with an even simpler mechanism for betting that the price of an outcome's contracts will go down: buying the contracts of the opposite outcome! This is logically equivalent to short selling because selling a contract for a particular outcome is exactly the same as buying a contract for the opposite outcome (see Why do outcomes always come in opposite pairs?).
How can I buy when no one is selling?
You cannot. But you can leave an order to buy at a price of your choice, and then wait for another player to come along and match it later.
There are in fact two ways that another player can match your order to buy an outcome's contracts: He can either sell them to you directly, or he can buy contracts of the opposite outcome at the opposite price. In both cases, he is betting against you. Indeed, if you think about it, an order to buy contracts at price P is logically equivalent to an order to sell the opposite contract at price 100-P. That is why every order to buy an outcome is also displayed as an equivalent order to sell the opposite outcome. It helps players find each other and match each other's orders.
What happens when I post an order?
First, you will get a confirmation that your order has been presented to the market, that is, compared to the list of existing orders to check whether it matches any of them for a possible transaction.
One of three things will then happen:
- One or several other players' standing orders are found to match 100% of your order. Then the transaction(s) take place and your order is said to have been "fulfilled" by the market.
- One or several other players' standing orders are found to match part of your order. Then all the possible transactions take place, and the remaining unfulfilled part of your order is itself left "standing", waiting for another player to match it later, unless you cancel it in the meantime.
- No standing order is found to match yours. Then your entire order is left "standing", waiting for another player to match it later, unless you cancel it in the meantime.
Can I cancel an order?
Yes, of course. A "cancel?" link is always available right next to every one of your standing orders. In case one of your orders was only partially fulfilled and the remaining part was left standing, the "cancel?" link will also yield some information about the transactions that did take place.
Why are some user names hyperlinked?
Some player user names appear in hyperlinked blue. They are Very Important Traders (VIT), a special class of players who have subscribed to a package of extra features designed to enhance their trading experience. Here's more information about the VIT package.
Other user names appear in bold red. They belong to the eXchange administrative staff. Eventhough some of them participate in the Game for competitive fun, they are not eligible to participate in the auctions or to win prizes. Article 6 of the Rules of the Game details how these players are treated differently from regular players.
Who do I ask for more help?
Please take a look at the User Guide
for an introduction to playing the game. If you have more questions, please visit the Interactive FAQ message board where the support staff and other experienced players will answer your questions. For a private contact, write to support@newsfutures.com.
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