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Am I gaming the system?
After less than a week on HubDub I have almost doubled my H$1000. Interestingly I have only 6 settled predictions from which I actually lost about H$30 in total. Which means that I have made all of my winnings by predicting on questions in which I felt that the current market valuation was askew, betting on an (IMHO) undervalued option, and cashing out when my gain was greater than say 10%.
Is this gaming the system? Is this an acceptable and even anticipated approach to HubDubbing?
If I can increase my wealth by 10% every few hours thusly, it's easy to double my stake within days. It's equivalent to the lure of day-trading in other markets. But it isn't the idea of HubDub I had from press items when I joined.
Should we perhaps be charged for our transactions? (This might offset the H$20 we receive per day.)
There's also a potentially unfortunate consequence to the approach I have outlined. By cashing out early, I seem to avoid any problems regarding voided questions, including ones that were voided because they were unfair or were suspended after the result was determined.
In case it's not clear, this post is aiming to inform the admins of potential exploits or bugs (in true Beta fashion), as well as to bring up some issues regarding the design philosophy or expectations of HubDub.
Is this gaming the system? Is this an acceptable and even anticipated approach to HubDubbing?
If I can increase my wealth by 10% every few hours thusly, it's easy to double my stake within days. It's equivalent to the lure of day-trading in other markets. But it isn't the idea of HubDub I had from press items when I joined.
Should we perhaps be charged for our transactions? (This might offset the H$20 we receive per day.)
There's also a potentially unfortunate consequence to the approach I have outlined. By cashing out early, I seem to avoid any problems regarding voided questions, including ones that were voided because they were unfair or were suspended after the result was determined.
In case it's not clear, this post is aiming to inform the admins of potential exploits or bugs (in true Beta fashion), as well as to bring up some issues regarding the design philosophy or expectations of HubDub.
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The best answer from the company
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Hey,
Great question!
Spotting a price that is out of line or cashing in early is most certainly not gaming the system (in fact I would recommend checking our prices against other exchanges like Intrade). Both of those have the advantage of increasing liquidity which is good for any market.
There is an open (and long term question) on whether we should reward users differently for making longer term predictions and holding them until conclusion. I can see some A-list bloggers being interested in making one prediction per day but not becoming day traders.
I was thinking that maybe there should be a separate leader board for users like that. (And then we can hassle the Blodget's of this world who throw out 100 predictions a day and never get pulled up on any of them!)
I’m happy
The company says
this answers the question
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Inappropriate?That is very possible. I almost doubled up today on one wager and over doubled in less than a week with legitimate wagers. Gaming the system is where you see people who have been on a day or two with 6-8K of H$ in winnings. I think you are ok.
I’m glad there are honest players out there
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Inappropriate?Hey,
Great question!
Spotting a price that is out of line or cashing in early is most certainly not gaming the system (in fact I would recommend checking our prices against other exchanges like Intrade). Both of those have the advantage of increasing liquidity which is good for any market.
There is an open (and long term question) on whether we should reward users differently for making longer term predictions and holding them until conclusion. I can see some A-list bloggers being interested in making one prediction per day but not becoming day traders.
I was thinking that maybe there should be a separate leader board for users like that. (And then we can hassle the Blodget's of this world who throw out 100 predictions a day and never get pulled up on any of them!)
I’m happy
The company says
this answers the question
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Inappropriate?I look at it like any market. There are short term trades and long term trades, you just have to decide what your trading style is. I personally don't see how you can reward long-term vs. short-term traders. I could wager on a market that has 15 weeks to go before the market closes, then close out my wager once it hits a certain return point. While the wager may appear to be long term based upon the close date, you (the PTB (powers that be)) can't know why I placed the wager.
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Inappropriate?I am in general agreement. There is nothing wrong with buying a position because you think it appears weak (valued too low) and then selling it once you think it is over-valued.
I have made most of my H$ buying and selling on the politic questions (US election almost exclusively) and NONE of them have been settled. Yesterday I bought McCain at 25% (Presidential question) he went up to 37% and I sold it.
The media stories on Hubdub imply that you are to bet on how you think story will "end". Betting in the way you are right now actually takes more insight than predicting the outcome - you are determining how likely OTHERS will view the question and outcome, and you are betting on what they will do. Takes more insight, I think.
Finally, when I do purchase a position, and then it goes down, I just sit on it until it is settled. -
Inappropriate?InfernalMachine,
I just checked and you have around H$436,000. Pretty good for playing only, "a little less than a week" 8^)
Seriously, I don't think Hubdub sees itself as a site which only allows users to predict the news and wait for settlement ... it's a news prediction market. If you weren't allowed to cash-in early it really wouldn't be a market at all.
bcguelph,
I think your final statement belongs in this thread:
http://getsatisfaction.com/hubdub/top...
It's a cardinal rule of investing to not bail out in bear markets, but to try and wait them out ... or if you can buy while everything is discounted. -
Inappropriate?A great thread. I'm in total agreement that buying and selling prior to settlement is not "gaming" the system.
Hubdub's marketplaces will penalize you appropriately, while still allowing a well placed wager to make money for it's owner.
When buying or selling, you are always paying the market some percentage points. (The premium you pay for a $H100 wager is greater than that of a $H20 wager.) When you sell a position, you are selling at the rate the market will pay, not exactly the true current value of your position. (When you sell a $H100 position, your sell percentage is lower than when you sell a $H20 position.)
I believe the market mechanics are just fine.
I’m totally agreeing with bcgleuph
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Inappropriate?I would agree completely that youare just successfully playing the markets. And just because it seems obvious to you, doesn't mean that everyone does it. Some people aren't comfortable trading that much, I love to trade a postion. A person can make alot of money by wagering on a position that don't think will be the outcome if they can get in at low enough of a percentage and get out before question is settled. I would say on a majority of the sports questions I try to get in and out of a market before the event. If I can wager $100 and get 40 or 50 bucks in profit, I will take that even if I could win a few hundred, because i could lose the original 100. So I like to make the guaranteed money.
I know for me gaming of the site is defined as purposely creating a question with lower odds than common sense would suggest, then wagering on that position to guarantee those profits. For example you take a question in which the odds should be 90-10 like will a certain baseball team score 3 runs in the first inning, but you set the odds at 60-40. Then you wager on the question, when the market forces move the question to a reasonable level of 90-10 or 95-5, then they cash in, profiting from incorrect starting odds. It is easier to do when you pick a sport that isn't as well known. It would be like starting the odds at 50-50 that the Patriots would beat the Dolphins last year. Obviously one team should be favored more like 90-10. -
Inappropriate?This was asked by me in the first week of the public beta. There was much discussion then about gaming (unlike now ;-) ) and I was wondering, given that this was promoted as a prediction market site and that the cash-in button was explained as a means to pull out of a bet if it went south, whether day trading was acceptable. It's a classic noob question, and maybe some portion of the discussion here should be added to the advice for new players that's being constructed in another thread.
As for the holding onto bets when the odds drop, that's not always the best policy. If events occur in the real world that impact the question significantly (ie your prediction becomes impossible or extremely unlikely), then it's a good idea to pull out asap and maybe even bet on another option. Of course, if the market has changed solely because of the emotions or wishes of others (and not the facts or real-world probabilities), then it's often a good idea to hang on. In fact, if you're sure of your wager, it's a good thing that the price has dropped (although your net worth takes a temporary hit) because you can bet more on your prediction at a better price.
The one major difference between HD markets and financial markets is that a losing prediction is worth zero, not just "less", and has no opportunity to rise again, so as the deadline approaches the waiting it out idea becomes a lot like wondering if you should hold onto a stock that people are predicting will be worthless (ie the company goes bankrupt).
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