Comment by zahlman
1 day ago
Even if a cut isn't taken and there aren't other inefficiencies, any money tied up in long-term predictions is earning 0% instead of whatever the current risk-free rate of return is.
1 day ago
Even if a cut isn't taken and there aren't other inefficiencies, any money tied up in long-term predictions is earning 0% instead of whatever the current risk-free rate of return is.
Assuming that the prediction market is perfectly priced right? How accurate is that assumption, or are you counting that as an “inefficiency”?
Earning less than the risk free rate is a 'cut being taken'.
IBKR relentlessly advertises on the radio, so I’m aware that on their scheme you earn an interest like incentive coupon for every day you hold open the position.
Happy IBKR customer here. ForecastTrader has absolutely horrific liquidity outside of maybe 30-40 large contracts. The rest is all market makers that only offer 10-100 or so shares at each price point before bumping up a penny or two. No knock on IBKR as a whole, but you can't even effectively buy on most events or outcomes without slippage eating away your entire edge, and forget about real serious positions above a few grand entirely outside of those 30-40 big contracts.