What are halts?

It means that the stock can not be traded any longer, and is awaiting payout, either because the stock has reached its end date, or it is believed to have met a condition of payout. If you are holding it you can't change your position, or get out if you now realize you went the wrong way. If you are not holding the stock, you cannot buy into it when it is halted.

Question: Should props be allowed to run their course until pay-out without halts?

In my book, the stock should be halted as soon as the pay-out date arrives (really it should be the pay-out minute) and remain as such until payout. Thus, if a person is diligent enough, they can always hold correctly yet discourage 'late switchers' after the close-out date. We wouldn't have the poorly paid out props (see MSYAHOO) and those 'pre-halts' that I hate (can't think of one right now). Neither would people be able to jump on board as soon as their buck is guaranteed.

-NapkinG-

The prop should be halted as soon as the condition in the payout statement are met, and ideally paid out as soon after the halt as possible. I don't have a problem with the pre-halts as long as they make sense, and it is written into the payout statement. Red Rain would have been a good one for a pre-halt. The prop should have been halted at 12:00 AM (Beijing time) the day of the opening ceremonies, so that no one could get in after the outcome was known or evident (although in someways this actually goes against the workings of prediction markets where the market becomes more accurate the closer it gets to the predicted event occurring {the market might predict a 60% chance of paying long the day before, and as the ceremonies get closer the percentages would increase or decrease according to the weather and by the end of the ceremonies the prediction should be very near 100% or 0% depending on what has occurred} .

The pay out ideally would have come at the end of the ceremonies, or the next day (or 8/8/2008 here in the states given the time difference)...Monday morning at the latest, anything later sniffles the market, by tying up assets unnecessarily. (Granted there are some stocks which will be halted on a given day where the actual results may not be confirmed for days or weeks after the halting, and people just need to decide ahead of time if they want their money tied up, (I might keep my money tied up if I'm holding long a stock that is about to be halted at $60 and it looks like its going to payoff in a couple weeks after its halted because I stand to make $40, However if a stock is about to be halted and I bought at say $50, it is now $97 and looks like a few weeks after being halted it will pay off long, I'd probably fore go the remaining $3.00 in profit (plus commission) and get out before the close so that that money was not tied up.

I'm with you on the "more accurate market value as pay-out date approaches and expires". However, our situation with the 1000 share limits means that approaching the 'true' value before payout is very rare. If our market performed in such a way, it would lessen the reward for waiting until the last minute when the outcome is nearly certain. (currently, you can jump on a prop minutes before 'close' - often after 'close' - and obtain a similar payout to someone holding 24 hours earlier. this should be discouraged).

Ideally, I feel the prop should halt right before payout occurs, ensuring no confusion takes place while cashing in shares. Up until this occurs, traders can continually place more emphasis on their position by purchasing more stocks as they become more and more certain of the outcome and even after the outcome is determined, thus pushing the price closer and closer to the payout price of $0 or $100. This would allow those who don't want their money tied up to follow your final example there, roy and cash out early without waiting for official delist payout. In order for this to work, our share limit needs to be removed or drastically increased as well as place less emphasis on individual trades on the trade price.

With our current share limit method, I feel it should halt as of the payout 'minute' (pre-programmed by the admins). This way, it prevents traders from sitting on the fence and forces a decision before the outcome is certain. This is far from ideal as jumping on-board a day before is just as easy.

So I guess this is less of a 'halt timing' issue but instead coupled with the share limit issue.

-NapkinG-

PS. I'm thinking of setting up some debate to unite the community to gauge demand and wishes for change or improvements. We are far more likely to enact change if we clearly outline our wishes and act as a group instead of these one-off requests the admins seem to dismiss. Please let me know if I should pursue this further. (wow, I must be in my work mood right now with those wordings, heh heh)

Actually its not the share limit that affects the predictability of this market. The way in which the market is set up is to blame.

The first error is the imbalance between the effect that Buy/short have against sell/cover, its not an even exchange to buy then sell, they are weighted differently in how they affect the market. Granted that there is a limit on how many shares each player can hold, but that doesn't affect the market, nearly as much as the fact that there is a limitless number of total shares for each stock, and they are artificially priced by the system.

The predictive nature of this board would be improved if 1) there was an overall limit of stocks for each prop (granted it could be a large number of them but limited just the same). 2) Instead of a having unequal buy/sell and short/cover after the initial IPO (which is $50 for the set number of shares) trading is done between players (blindly and by the computer done so collusion could not occur). This way the free market sets the value based on what people believe may happen.

For example I might offer to sell "stock A" long for $60, while someone else sells theirs for $62 (chances are they will wait longer for a buyer than I will however). Likewise I might be offering shorts In a stock at $35 while someone else offers shorts at $38. Even for the same stock you might have a buy price of $60 and a short price of $45.

Now if there are outstanding shares of a stock in the system (stocks available but not owned by any players, they would only be sold if no player is selling any at any price, and then they would be sold at the last transacted price). Trading would actually still be done by the computer, but differently than now. Lets say I bought an IPO at $50 and don't really plan to hold the stock for good because its a distant stock in terms of time. I tell the system I'm willing to sell stock 'X" for $60 then I wait until someone is willing to pay $60 for my stock. Likewise if I missed an IPO or have suddenly came into cash and can now afford a stock I would put out an offer to the system indicating I am willing to buy a stock at $55 in which case I then wait for someone to sell at that rate. The exception to these two examples would be if there were no players selling or buying I would have the option to buy at the last traded rate (if there are outstanding shares available).

In a scenario like this you really wouldn't even need a halt before payout (except for outstanding shares), if a player after the results were known wanted to give up the potential payout he could sell his stock but I don't know why you would do that if you didn't know who you were selling to. Limiting the overall level of stocks would also encourage people to buy and hold because you would not be guaranteed the ability to buy again. Even if the number of stocks was higher than the number of people actually interested in buying it, say there is 2.5 million shares of which 1 million are owned by players who all bought today at the IPO for $50, tomorrow someone new wants to buy and only one player is offering the stock for sale, but they want $80, the price for the stock is now $80 so the new person buys it, and none are for sale when another new person wants to buy, the system will sell from the 1.5 million left over but at the last transaction price of $80.

Shorts are a bit trickier in this sort of market so an easy way around that would be to have each IPO be two stocks with opposite Payout statements (for example Stock "A" will payout if by 1/1/2009 company XYZ sells 1 million or more widgets, and a second stock that says Stock "B" will payout if by 1/1/2009 company XYZ sells less than 1 million widgets. This way shorts and covers go away, and all stocks would be bought and sold only. In the example above if on 1/1/2009 company XYZ has sold 995000 widgets those holding stock "a" would have stocks worth $0.00 while those holding "b" would have stocks worth $100 a share.

HOOOOOoo yeaaaah, definitely glad I opened this can of worms (need a better thread name now though).

I completely, entirely, 99.9% agree (we can’t agree on everything can we?). All the things you have mentioned are thoughts that I have been percolating about since I’ve been playing. When you get down to the nitty gritties of it, our ‘market’ is only a shadow of what a real market is. There is no player to player trading, which is what decides the true price in a real market. Coupled with, as you mentioned, the unlimited available shares, the price is only affected by transaction volume and direction. I don’t have a great understanding of how this works in ppx so I’m glad you elaborated on this somewhat.

My point regarding the share limit stems from this: that the majority of my trades (and from what I understand, most other traders as well) tend to be in 1000 share blocks (or 500 occasionally). We could easily make the share limit 10 and jump the price of all shares by $100 and there would be no difference in profit and losses. For example, I am 100% certain that CREATURES is a short, but I have no mechanism of placing this stronger emphasis on this prop than on REDRAIN which was easily a coin toss (IMO) and I’m in it only for the potential payoff. If I have a stronger sense of certainty, I should be able to accept a greater risk for a greater payout (with payout relative to portfolio size {$50,000 payout much more important to $200,000 net worth start-up than our top 100 > $1,000,000 net worth}).

As I type this, I realize why there is the unlimited stock base: to allow any joe blow to jump into and buy a stock they are interested in, without depending on our relatively small market being willing to sell them to him. The price should still be determined by player-to-player trading but if nobody is willing to sell, he should be able to buy some stock somewhere. Need to reflect on this thought more.

And, forcing P2P trading requires a large majority of players willing to place trade limits on their stocks so that when a buy is proposed at, say, $80 there are players willing to sell at or around $80. With the speed at which our current market moves and player activity, I can’t see something like trade notifications working (ie. I want to buy at $80, everyone holding gets an offer message if they want to sell at $80). Actually, both systems might work: trade notification and pre-approved price point sales: if there is pre-set sell price close to the offered buy price it proceeds immediately, otherwise a notification is sent.

Anyway, I’m rambling in my thoughts now but glad to get this down in print (the two colons in that last sentence shows it).

Oh and I like your idea of two opposing stocks rather than short/covers. I’ve been trying to figure out how those fit into a feature I’ve been dreaming up and that solution might work well.

-NapkinG-

Napkin You wrote
"My point regarding the share limit stems from this: that the majority of my trades (and from what I understand, most other traders as well) tend to be in 1000 share blocks (or 500 occasionally). We could easily make the share limit 10 and jump the price of all shares by $100 and there would be no difference in profit and losses. For example, I am 100% certain that CREATURES is a short, but I have no mechanism of placing this stronger emphasis on this prop than on REDRAIN which was easily a coin toss (IMO) and I’m in it only for the potential payoff. If I have a stronger sense of certainty, I should be able to accept a greater risk for a greater payout (with payout relative to portfolio size {$50,000 payout much more important to $200,000 net worth start-up than our top 100 > $1,000,000 net worth})."

The first thing to remember in a prediction market is that individual opinion doesn't factor in, its a matter of group consensus so the need for an individual to be able to place emphasis is not needed, although you actually do have that ability. Ideally you would place emphasis by the strength of which you hold your stocks, lets assume that you can only buy long. And you believe that a new stock "ABC" has maybe a 75% chance of paying off. Well at the IPO paying $50 a share for a 75% chance seems like a good idea so you buy however many share you usually deal in we'll say 1000. Now as the price goes up you would hold it because you are making a profit and still believe there is a 75% chance of payoff. The stock goes up to $76 but you still don't feel confident in it paying off or increasing anymore. So your options are to keep holding (which in the short term might make sense, but if the stock has stalled for the near future you are looking at lost opportunities), Or sell taking your profit and investing in something that you have more faith in, or investing elsewhere until you have reason to believe that there is a better chance of the stock paying out. (now this is using the assumption that the market is set so that the motive for the players is profit and not predictability). So in your example if you thought RED RAIN was a coin toss, then you would have either passed on the stock or sold when it got out of the 50-60 range. While with CREATURES you would be willing to ride it to the end, or at least buy in when the stock is higher (because as already indicated in a prediction market the stock should become more accurate the closer a stock is to payout) and it should be noted that this "prediction Market has failed very badly at this as is evident by the large number of stocks that have paid out long while below $90 (most notable was GOOGLE which paid out short and I think was still being traded at $90+).

The problem in your example is that in wanting to increase the number of shares an individual holds is the belief that that affects the predictability and it doesn't. Since players in the market are motivated by profit it will always make sense to invest in 1) stocks that are moving regardless of direction, and 2) invest as payouts come closer (especially if in coming near, it causes the stock to move), and 3) Unless there is enough movement across the market to cause your whole portfolio to be moving and earning profit, it is in your best interest to invest fully in those stocks that are moving or nearing payout. So lets consider if the limit was moved to 10,000 shares, people would invest in 10,000 shares that they saw moving or nearing a payout because the profit would be increased proportional to the risk, and again unless there is enough movement to lock up all your money there is no reason not to. This becomes even more pointless in a system that uses unlimited number of each stock because an individual can always buy in and make some profit. The people I can't figure out are people who sit on a stock that is not moving for any great period of time, (don't get me wrong I'm not an advocate of wave riding, but if you have stocks that you are holding that haven't moved in a few days to a week, while there are stocks that are moving that you do not have, then you are missing opportunities, and no longer is profit your motivation). Now there are some exceptions to this I will hold some stocks that are not moving if I believe that the payout could come out of the blue like the one on Bees or HGH. And of course if people could by unlimited numbers of stocks (limited only by their cash you would always buy as many as you could afford on a stocks that was about to close and you were fairly certain of the out come).

Of course the other reason to limit the number of shares a player can hold is to prevent people from gaining or losing to much money at a time. It also prevents high net worth players from being able to invest more than a low bet player on a given stock that is moving or closing, so it becomes an issue of how much can you afford.
.
You also wrote
"As I type this, I realize why there is the unlimited stock base: to allow any joe blow to jump into and buy a stock they are interested in, without depending on our relatively small market being willing to sell them to him. The price should still be determined by player-to-player trading but if nobody is willing to sell, he should be able to buy some stock somewhere. Need to reflect on this thought more."

You are correct regarding the unlimited stock base, it is so everyone can play. However this interferes with the predictive nature because then a weighted system like where we have here is usually needed , but its weighted without knowing how many people are going to buy or short in total to you have a system where the number of people buying or selling influence the value of the stock, and not the consensus of those who have bought on the out come. So for example a stock on something might have a small pool of investors who believe a 100% that the stock will payoff, and be valued only at $55 because not a lot of people have traded it. While another stock that people bought because they were anticipating movement up but really think the stock will fail in the long run may have enough people buy to push it up to $70. Limiting the actual number of stocks in play (or if you want the number could be increased when no everyone is holding and no one willing to sell). Also a player traded system could allow more stocks into the market so that everyone could play but only at the level of the last transaction.

You also wrote

"And, forcing P2P trading requires a large majority of players willing to place trade limits on their stocks so that when a buy is proposed at, say, $80 there are players willing to sell at or around $80. With the speed at which our current market moves and player activity, I can’t see something like trade notifications working (ie. I want to buy at $80, everyone holding gets an offer message if they want to sell at $80). Actually, both systems might work: trade notification and pre-approved price point sales: if there is pre-set sell price close to the offered buy price it proceeds immediately, otherwise a notification is sent."

With player to player trades, the trades would be all handled by the computer. I have 1000 shares of stock 'A", that I bought for $50 and I plan to ride it for a while but my or it is now at $65 and I'm thinking its time to move to something else I would put in to the system that I have 1000 shares for sell at $67. Now the system would show potential buyers that there are 1000 shares f0or $67 some one else might have 500 shares for $70 for sell. Now ideally a two other person wants to but this stock the first bidder indicated he wanted 500 shares at $68 or below so he would get 500 of my shares (based on his request time and date) the second person wants 1000 shares at $69 so he could acquire the other half of mine, but would wait until more went on stock in his price range, which they might increase as the end date comes close.

Finally you said
"Oh and I like your idea of two opposing stocks rather than short/covers. I’ve been trying to figure out how those fit into a feature I’ve been dreaming up and that solution might work well.:

In honesty I stole the two stock idea off another prediction market, as well as many of the concepts I have listed, so I really can't credit. I also know a lot of this has been discussed in other threads (most in the archived forums). The much maligned Brian B I think wrote a lot in the old forums about ask buy systems and he and a couple others probably have a better understanding of it than I do.

-NapkinG-

And so it begins. NapkinG, I hope you have no life so that you can keep up with roygbiv's incessant need to have the last word. And a very long word it is, if history teaches us anything. In all fairness, I think that the majority of roygbiv's posts are an example of what a good forum should consist of. Well thought out ideas, expressed in an intelligent manner with the intention of stimulating an exchange of ideas. It's just that there really can be too much of a good thing.

Your right bill I often times post quite verbose responses, and those who do not like them are not obligated to read them. I am curious as to why you felt the need to interject here, except for your incessant need to post while saying absolutely nothing of value. Napkin and I are having a discussion not even a debate (since we pretty much agree on most things. And actually I'm impressed that Napkin has put the level of thought into this topic that he has, which is more than I can say for most players (although I believe that understanding the workings of this game or prediction markets in general is not really needed to play and enjoy this game). maybe I should follow your lead and make frequent posts that add absolutely nothing to the discussion at hand.

1) thanks for giving me the end credit for your post roy, it certainly confused me - wait, I didn't type that!
2) that was a lot to digest so I might not get a meaningful post in soon (I'll probably pick it apart rather than continue to grow our post length and topic points). already have some thoughts but I want to digest them and flesh them out.
3) @bill, its almost the nature of forum posts as there isn't the direct dialogue so making all your posts at once is needed. granted, some discretion on what points to dwell on is needed. but i give roy the credit for responding to each of my statements. and, yes I am prepared to continue this conversation, as we need at least some activity in these forums.

-NapkinG-
PS. feel free to call me napking, nappy, napster, the napkinger but the G (or 'g') is important if you go that far. You don't wipe your kids arse with a damp version of me. I'll tell you guys the story of my name some time.

NapkinG sorry about dropping the G.

If you have any confusion with the last long response to your posts, it is most likely due to my trying to edit my thoughts while constantly being interrupted, and as a result I noticed when I reread it several places that are not as clear as they should be, or where two thoughts come together when they should have been separate. I believe however that you should be able to get the basic points. If you are interested in doing research on prediction markets I strongly recommend anything on prediction markets by Justin Wolfers.

Jeez, roy, at least I threw a compliment in my post. But as I have obviously upset you, I apologize.

yep yep, got the gist of it (I tend to do the same thing), was just busy at work yesterday; got a response coming up.
and the naming thing is just a little ribbing, no worries there.

-NapkinG-

-POINT- Max share limit per stock needs to be increased or eliminated.
ROYGBIV - The first thing to remember in a prediction market is that individual opinion doesn't factor in, its a matter of group consensus so the need for an individual to be able to place emphasis is not needed

But 100 stupid people don't make 1 smart man. If someone has 'inside information' or more expertise in a certain area, his perspective should have more influence than otherwise. I'm not looking for consensus on average opinion but average 'stock position'. (lets try explaining this numerically) If 10 people are willing to risk $100 each ($1,000) but one person willing to risk $1000 him(her)self, his one trade to buy the $1000 should have close to as much effect on the market as the 10 people buying $100 each. (thought: perhaps not a fixed share limit but a max percentage of net-worth in one stock; would this result in runnaway leader problem... likely.. but we already sorta have that)

Of course, this would effetively be in place under the direct P2P trade system. Trader A wants to pick up 1000 shares so he buys the cheapest 1000 shares boosting the price higher than Trader B buing only the cheapest 500.

Granted, some control needs to be in place to prevent collusion.

-POINT- Available Stock base
This should be fixed initially, regardless of our 'equation-based pricing' or proposed P2P trading. Under the equation-based pricing, the stock limit would be factored into the weighting that each trade should have on the price.(I really like that you mentioned that). Under the P2P trading system, it prevents buying from an outside source with no effect on price. With P2P, an agreed upon price is required and this agreed upon price is the listed going price for the stock.

Should several players end up holding onto their stocks limiting movement or demand is greater/less than available stock base, extra stocks could be entered into/removed from the market (and the weighting re-adjusted under the 'equation' system).

-POINT- logistics of P2P trading
Sure the computer can handle the trading, but this implies that players have set trade limits, or it requires prompts sent to players. To take your example, the page for the particular stock would show an offer of buy for 1000 shares at $67, some mechanism is required so that the best matched price is met. It can't be the first guy to respond as some later sale offers may be a better match. Either some sort of time limit (closest offer after 6 hours) or proximity limit (will only effect if within $X of buy offer) or return prompt ("you wanted to buy at $67, do you accept an offer at $70?").

Phew, that was longer than I expected it to be and I really didn't trim down the topic list did I... I think we're on agreement on the limited available stock base so we can drop that at least.

-NapkinG-

Being an engineer, I have heard a lot of clients wanting this and that, but when I come with the price for this and that suddenly the list is trimmed down considerably.

The reason for this post is that Popsci hasn't ponied up the currency (time or money) to meet the clients' (us) needs with this current exchange (Daily Rank Change) nor is showing any interest in improving it (this thread).

There are a total of three people maintaining this entire website (including PPX). Are those people also tasked with other responsibilities with Popsci or Bonner that takes available time away from PPX?

So using a Cost-Benefit Analysis, it is obvious that the management doesn't want to spend more either time or money to implement ANY of our changes not to mention improve on the product because they are getting the benefit of still having people coming here generating revenue.

What has happen is that we have achieved an equilibrium where there are enough people using PPX to justify its existence, but not improve it. Even if there is a large influx of people to PPX, it creates no incentive to improve it (why change a good thing?). If a large group leaves, they will shut it down (the cost doesn't justify the benefit).

I am so frustrated that Popsci chooses to ignore EVERY question or positive suggestion. Not even a word to say that would cost too much, just deafening silence.

Roy and Nap - Thank you for your well thought out posts, too bad they fall upon deaf ears (or blind eyes or numb fingers).

In summary, we as clients have a list, but don’t know the budget is because the engineers won’t respond. If I ran a business like that, I wouldn’t be in it for long. And PPX may not be either.

Well said frosty,

and that is where the core of the issue comes in. popsci's business reasons for running the ppx. I won't add any more as you said it well.

I chose to engage this discussion because it is an interesting one to go through. Would I like to see action and changes come from this? Definitely, I won't argue with that. Nor am I concerned with how that change is manifested. If there is no change, well we can continue to discuss it and jump onto your topic as to why we can't get the actions we envision.

Where corporations motivated on money fail, open community projects or efforts become motivated on fun and communal goals. I wonder if there is a place for a Public-Private-Partnership of sorts: a community member crossing the barrier and volunteering to move toward more community goals.

And ultimately we, as a whole, hold the magic bullet. We can leave and deny the revenue they need. I've seen many occasions where fed up users create their own publicly run services for free rather than continue to be confined by business needs.

-NapkinG-

NapkinG another well thought out post. Instead of copying and pasting your whole post, I'll just use the Topic headings that you listed to save space.

-POINT- Max share limit per stock needs to be increased or eliminated.

I whole hearted agree that 100 stupid people don't make 1 smart person.
But there are two fundamental problems with your idea. The first is having to do with risk, in an ideal situation your right in that those willing to place more money at risk in one stock should be allowed to . The problem here is that if you have say $300K And can invest in say 100 shares of say 75 stocks at various price points, but if only say ten stock are showing signs of movement, and profit is your motivation you would have ten stocks under preforming because you haven't maxed out the number, and 75 that are doing nothing for you. So unless you can tie up the majority of your money in moving stocks (no matter how many of each you buy) the incentive is always to max out those that are moving or to buy the max.
The other problem is the assumption the the person willing to risk more knows more and in a market like this that is seldom the case. I actually thought of third reason as I was typing, Risk here is artificial, since you really don't stand to lose anything, other than fake money, as a result people will be much more inclined to take risks that they might not take if it was real money.

Allowing ownership by percentage of net worth although an interesting idea, is also less than ideal. First although we have a runaway leadership now its largely a factor of how long they have played and how much time they dedicate. Bu allowing people to buy a number of shares based on their net worth would significantly increase this issue, one of the benefits of the limited ownership is that it limits profits and losses to an even playing field (this would be different if there were more stocks moving than the average player could hold). For example if you and I were at different net worths where you could own 2000 shares, where I could only own 1000. I would have to buy and hold a stock at $50 to make the same profit that you would make buying 2000 shares at $75. Neither of which gives any more validity to the possible outcome of the stock. The other issue would be in a weighted system like we have here someone with the ability to buy 2000 shares would have more influence over the direction of the market than someone who could only invest in 1000 shares.

The one place where allowing players to buy a number of shares linked to their net worth is in regards to the monthly contest, which is based on net worth increase, and the current system does make it harder for those with a larger net worth to win, and after a while I believe it is impossible for them to win. But this isn't the contest format that I would have chosen.
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-POINT- Available Stock base

It really doesn't matter where the max. number of total stock fixed, after the IPO period. The criteria would be that new stocks would be "created" if there were no listed sellers of a stock, then the system would create them at the last transacted price. Whats important here is that the only way value would increase is if someone was willing to sell them otherwise the stock remains flat. So the day I buy an IPO at $50 I might list it at what I think is a good return for me say $75.00 so after the IPO if I was the only one selling the price would be $75, now if I sit for a couple months with no buyers I might rethink my price. Now other people could later offer their shares for less which would be sold before mine, but the system would not create any new stock until all sellers prices have been met.

The main advantage to doing an ask bid system is that it does a way with the weighting issue altogether and is not affected by the number of shares outstanding.

-POINT- logistics of P2P trading

There are a number of reasons for the system to do trades blindly. And unfortunately that would require players to set trade limits, but otherwise it makes the system to easy to tamper with. Setting trade limits prevents collusion for example I might be willing to sell a stock to Milkweed because he's a good kid and I like him, but I might not sell to Brian B because I think he's rude. Likewise I might not sell to Jodeman (because he's to far ahead already, but I might sell to someone with a net worth of 275K. Setting trade limits also eliminates the need to be on at all times to try and make a trade, say I play between 2-6 pm and I want to sell stock "ABC" and the only person interested in buying plays from 6-8AM if we actually had to touch base to sell it might never happen. All trades (ideal for longs in a two stock release) would be bought for the buyer at the stated price or lower, and for the seller at stated price. So as a buyer I put in that I want 1000 shares at a top price of $55, the system would buy up to a 1000 at $55 or below. So if 1 person is selling 250 shares for $52 and another is selling 500 shares for $53 and a third is selling 1000 shares for $55 the system would buy my 1000 shares deducting 250 shares at $250, 500 shares at $53 and 250 shares at $55. If there weren't 1000 shares I suppose you could indicate to buy as many as available or that you only want in at 1000 shares. First come first serve is the way to go. Now a system could be in place to show you going rates vs your willingness to buy or sell so that you could see what the market conditions are. You actually need this information in order to know what to buy or sell at.

Frosty I have long since given up any expectation that things will change or improve here, however I do still find merit for sticking around, and at least discussing possible options. I think I have stated it before that from Pop Sci's standpoint this market (although many of us players think it is lacking) obviously meets whatever expectation they had for it, otherwise it would have changed, or it would have been discarded. The error that myself and many others have made, including those more knowledgeable about prediction markets than I am, is that we want and expect this market to meet our view and our understanding of how it should work, which may or may not be the intent of Pop Sci (and most likely it is not since so many of us have issues with the way it is ran). In a case with Pop Sci I think how the market performs is secondary to the fact that it brings people to the web site, and hopefully to advertisers. And it is clear that even though there is a lot of negativity in the forums it has not affected their goals.

Great post BTW.

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Share limit
I'll agree that under the equation-based price movement, you'll always want to buy/short the max shares in the stocks which are moving, expected to buy out soon or toss your remaining money into expected movement. Yet, under a P2P system, I don't see 'movement' working in the same way as we currently have. Since there isn't the unlimited stock base and an opposing player is required for a trade, we won't see people jumping ship once 'movement' occurs. An agreed upon trade price will modify the stock price to that trade price. Other traders notice this, modify their trade limit or enter a sale/buy offer, but unless there is the opposite side available the price won't move any further. There has to be a party willing to cash in their current profit/loss in that stock and forfeit future profit from that stock.

The reason why we have 'movement' and 'wave riding' right now is analogous to a snowball effect, once the threshold is met in the 'equation' the price moves, others notice this, act accordingly and cause the price to move further. Since there is always stock available at the price which the trader wants, the trade will always go through and push the price change further. don't know if that was coherent enough and it certainly wasn't concise

logistics
I don't know how many people use trade limits right now, but I assume it is low. Setting trade limits is the ideal system for the P2P system. So to encourage trading, the limits would have to be forced set once the stock is aquired or some other mechanism for trade should be utilized. To mitigate coercion, the name of the person offering the trade should not be revealed, only the value of the trade which is the only important factor. Trades should be blind, yes, but trade limits must be supplemented with a secondary method for blind trading.

I do not like first come first serve. Trade limits should go through first on a lowest to highest basis (or reverse for selling), yes but under first come first serve, it is possible for the stock to jump really high should the first offer be right at the bid price, removing the opportunity for others to jump in for the bid at the lower price. That would result in more conservative limit price adjustments in trades as the buyer (even though he thinks it will go up) wants to buy at the lowest price. I guess that just comes down to preference on how much involvement should be required.

And that all made me wonder about restricting the trading hours... (though I don't want to discuss this, it should be separate from here)
-NapkinG-

NapkinG sorry about the delay in responding to your last post,but I was distracted with other matters.

Share limit
You are correct in that under a P2P system movement would be different than it is now. The most noticeable thing would be doing away with the weighted system that is used now and which is very inaccurate. You may or may not see people jumping from stock to stock on a whim, However the dynamics and thinking involved in the game will most certainly change, in that it will be hard to get rid of bad stock (at almost any price) so people will have to think of the long term consequences of holding a stock that is near what they see as the demand limit, while also thinking about the cost to get in as the end nears. The other thing that will throw people off is that jumps in value of a stock may be in large jumps not the small incremental steps we have today.

For example say I buy stock "ABC" at the IPO price of $50 and the payout is sometime between now and 6 months (meaning if criteria is not met in 6 months the stock pays out at $0.00). Now after the IPO the stock is trading at $75 with the anticipation that the payout will come within the 6 months. A new IPO comes out that is set to payout within 3 months, but I have no cash, my option is that I can sell "ABC" to buy the new stock with the anticipation that the first few days of an IPO will give me a decent profit like "ABC" did, or I can pass on the new stock. Now if I sold "ABC" and bought the new stock it was a good move only if the new stock rises more than "ABC" so if the new stock jumps to $60, and "ABC" jumps to $77. However If I stay with "ABC" it goes up to $77 and stalls for a few months because there is no news, and no one is buying or selling. Then in month 4 there is an announcement of a set back and it now appears that the criteria will not happen (like 95%) within the allotted time. Suddenly most people holding this stock are wanting to sell but there are no buyers even as the price drops down to the $20's. The game becomes when do you buy this stock would you risk $20 a share for what you see as a 5% chance of a payoff, would you offer $1.00 a share for that same chance. If you were holding "ABC" would you be willing to take $1.00 a share. The whole dynamic of how this game is played would change.

LikeWise if "ABC" suddenly looks like a 99% chance that it is going to payoff in the next 3 days. Everyone suddenly wants in, how much profit would you be willing to give up so you could have the cash to invest in something else now. Would you be willing to sell at $95 (giving up the potential of $5.00 more in profit when it pays out) so that you can invest in a stock that you believe will rise more than $5.00 a share over the same period of time. The primary risk is that a person may get stuck with stock that they can't unload (which happens in real life).

The Opposite side would be with the dual release of stocks one that an event will happen by x-date, and one that it would not. SO you would initially see people buying one or the other, then as the outcome looks more certain they would try selling the erroneous one, while trying to buy into the certain one.

Your analysis of wave riding is fairly accurate. Although the problem that has always bothered me (and I believe Rooster talked about this as well) is that in reality wave riding as it is in the current system is not dependent on anything other than movement, so the stocks don't really have to be about anything they literally could be called stock "a", "b" or "c" with no other information except when they close. If enough people buy or short a stock it causes movement up or down, wave riders see this and react so they buy or short pushing the direction of the stock. Once they have made what they think will be all the profit of that ride, they start looking for the next wave (which as they leave may slightly reverse the trend {although as stated earlier not at the same level as buying or shorting), this can then lead to riders flipping their position or other jumping in again pushing the direction. The issue here of course is that the movement of stock being driven by wave riders does not reflect people's belief in the success or failure of the stock.

logistics
Not many people use the trade limits now, because they don't work the way they should.

First come first serve is the best way. As a seller you have decided a price based on your analysis of the market and current prices what you are willing to sell it for. If I'm a buyer I should be allowed to buy your stock because I come to the table first with the money that meets your price. The fact that someone else is willing to pay more is irrelevant (one because by getting their first the deal should have been completed, a trade would be completed as soon as a buyer accepts a seller's pre-set price). Now as a seller I could change my sale price (prior to an offer to accept) if I realize I have undervalued my stock or over valued. Now if two people both want to by a sellers stock and try to accept at exactly the same time, then it could go to whomever bids the highest but I don't see that happening very often.

People have discussed limiting trading hours in the past, the issue is who's time zone do we use. In earlier discussions we had players in Europe, and maybe even a Kiwi. And of course people argued about the East Coast West Coast.Wasn't pretty, and everyone wanted what suited their own interest most. So you were right to just drop it.

Re-test

Oops, forgot the reply was back on me.

I am of the mind that there is a price for everything, or to borrow an economics term, an opportunity cost. If selling or buying a stock is that important to you, you'll be willing to pay the higher price / take the larger loss with in mind the opportunity for higher profit there or elsewhere.

You are right that the thinking of the game changes more to a risk/reward system than a resource management system. Say you are holding at $95 and a payout is likely within-a-week, but there is greater profit elsewhere, how much lower of a price are you willing to take for the potential profit elsewhere. Within the same timeframe of ‘within-a-week’ in order for your second option to be more profitable, it would need to move the expected $5 plus the lower price you are willing to take to unload your first stock. And to keep in mind, it also comes down to how high a second party is willing to pay for that ‘within-a-week’ profit on the $95 stock.
On the other side of the stock, it is highly unlikely that someone is willing to buy your hold at $5 as it will drop down to $0 soon. Your only motivation is to get out of that hold before it gets to that point. If you bought it at $40 thinking it was 40% likely to happen, but now you're not sure, how much are you willing to loose to prevent further loss. This both drives the one stock price down and inversely drives the other stock up. (I'm assuming a direct inverse price movement on the two opposing stocks).

One more advantage I just noticed is that the P2P trading and limited stock base better contains the total market value as someone has to loose the money that someone else gained.

-NapkinG-

NapkinG I think one of the best things that a P2P market would do is increase the awareness of market risk. As it is now you can always sell your stock no matter which direction you are going (granted you still can lose money). But if say you bought a stock long at say $75 and there is news which makes the stock look more like a short and it goes down to $65 in a day you can sell it and at $65 and at least stop the loss. But in a P2P there might not be any buyers for your stock (depending on how strong the news is), in which case you might be stuck with a stock that you can't get rid of.

Every now and then active players have been caught on the wrong side of a stock when it has halted. With A P2P you could be stuck in the wrong position very early with a stock.

A P2P market would mostly change the strategy needed to be successful in the game.

Waveriding would end or be greatly reduced. Players would probably see slower changes in their portfolio values. This might result in reduced interest in the game - people do like to see progress.

My impression is most of the more active players have a pretty good handle on how stocks will close before they open.

If so, then stocks would probably rise or fall very quickly after opening, and new players would probably tend to avoid existing stocks since the profit potential would be reduced.

On the other hand, even though it's impossible to do anything but lose money buying BULBS long (because of the commission and the fact it's already at the maximum payout of $100 a share) I notice some players are still buying it.

By the way - the direct post without previewing option in the forums is back.

Visit www.ppxchat.com A great place to meet PPXers and learn strategy.

Although extremely long winded, and at times a bit boring, this is the most comprehensive thread on the workings of a prediction market, problems with this market and possible solutions. Not saying that either I or napkinG are correct, but, no other thread in this forum has offered better insight. The old forums had quite a few worthwile threads especially regarding wave riding, and cheating.

Very informative thread.
Thank you for bumping it.