I Can Sell My Bet?
Wait… I can sell?
After placing my first few trades, I found myself checking my portfolio far more often than I probably should have. One thing kept catching my eye.
Underneath my position was a number. Sometimes it was green. Sometimes it was red. Sometimes it said +$3. A little while later it might say -$1.
The market hadn't finished yet. Nothing had actually been decided. So how could I possibly be making money?
Then I remembered something I'd only recently learned. I wasn't placing a bet. I owned shares. And just like shares in a company, I didn't have to wait until the end. I could sell them whenever I wanted.
The maths behind the number
If I sold my shares right now, another trader would buy them at the current market price. If that price was higher than what I'd paid, I'd lock in a profit. If it was lower, I'd lock in a loss.
That moving green or red number wasn't showing money I'd already made. It was showing what someone else was willing to pay for my shares right now.
I'd bought 16.67 shares at 30¢, spending $5.00. Later, the market price had risen to 49.5¢.
At first, I made the mistake of thinking: "If I invested $5, shouldn't I just work out what $5 buys at 49.5¢?" That gave me about 10 shares, which clearly wasn't the answer.
The real trading lesson
Then I realised I was asking the wrong question. I no longer owned $5. I owned 16.67 shares. The platform simply multiplied the number of shares I owned by the current market price:
I'd originally paid $5.00, so my unrealised profit was $8.25 − $5.00 = +$3.25. That was exactly what my portfolio was showing.
One of the biggest advantages of prediction markets is that you don't always have to wait for the final result. If the market moves in your favour, you can lock in a profit. If your view changes, you can exit early and reduce your loss.
Understanding that I could buy and sell shares before a market resolved was the moment I stopped thinking like someone who had placed a bet and started thinking like someone managing an investment.
Keep learning
Continue with the rest of the Prediction Pantheon learning hub, or compare where to trade.