Writing
Notes on how event and prediction markets work: what a contract settles on, how fast information has to travel, how to tell a good forecast from a lucky one, and how risk behaves when every payoff is zero or one.
- The settlement source is the contractOvertime rules, postponements, revised statistics, price references and weather stations: where what a contract pays on parts from what happened, and how to read a market before trading it.
- A latency budget, from the event to the orderSix legs between an event and an order at the venue, how to measure each one on clocks that agree, and why the cheapest milliseconds are usually in your own software.
- Calibrating a forecast against a market priceCalibration, sharpness and proper scoring rules; reading a probability out of a price; and testing a model against the market the way it would really have traded.
- Inventory and risk in binary marketsWhy exposure is counted by event rather than by contract, why fills in a binary market often come from better-informed traders, and how inventory and edge set the size.