Raising the $1000 investment limit

What was the logic behind the maximum $1000 investment limit (per 6 months)? I see frequent opportunities for trades that would earn a great economic rate of return given a little patience (certainly many multiples of a bank deposit rate!!) but which make no sense to initiate given that there are frequent opportunities to invest constrained capital in even higher return short-term trades. I think boosting the investment limit to a minimum $5000 would promote liquidity and and free up funds that would thus move the market closer to more accurate prices for some contracts. Thoughts?

Gidday Legs, we operate with an authorisation from the Securities Commission that comes with conditions, and one of them is that we only allow traders to add $1000 every six months. Now if it turns out that a lot of traders are unhappy with that limit, or (relatedly) we feel it is interfering with the quality of the predictions coming out of the markets, we might consider applying for a change to that condition. The average amount put on by our traders is about $50 so its not a condition that currently binds many traders!

Feedback from others on that $1000 limit is most welcome.

At the end of the day, the point is to get accurate prices. Too high a limit, and iPredict becomes a feasible hedging mechanism for folks to offload other kinds of risk. That's what happened over on inTrade with the Obama contracts: somebody who stood to lose money if Obama lost went and bought a bunch of GOP contacts to partially insure himself against a negative outcome. Since that trader was large relative to the field, prices were way out of whack for a long time. Too low a limit, though, and folks can't put reasonable stakes in where they're confident that prices are out of whack. I think that explains some of the weirdness in the Temp.high stock currently (still trading at 3 times proper value, I'd reckon). Right now we might be a bit on the tight side.

Quite...i've been in those temp stocks but bailed out some of that today, not because the trades stood to lose money, but because there was much better money to be made in the OCR stocks.

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Edited 1 time(s). Last edit at 04/20/2009 11:49AM by russiansexpat.

Too high a limit, and iPredict becomes a feasible hedging mechanism for folks to offload other kinds of risk. That's what happened over on inTrade with the Obama contracts: somebody who stood to lose money if Obama lost went and bought a bunch of GOP contacts to partially insure himself against a negative outcome. Since that trader was large relative to the field, prices were way out of whack for a long time.

I don't think this is a problem because it simple creates opportunities to make large amounts of money from arbitraging to bring the pricing back down to accurate levels.

The reason we have limits, I'd say, is so the Securities Commission can claim that they are preventing people from being able to gamble their life savings away on iPredict. Regulations of this sort chafe on my nerves.

Vote NO to Limit 1000!

Can iPredict sell their Coupons to private investors or on another market, for example on TradeMe?
Then the Securities Commission implied limit of $1000 will be satisfied.

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It is difficult to predict, especially others' predictions.

I guess we can do that as a marketing tool, if I understand you correctly, but how will that assist with the $1000 limit?

admin Wrote:
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> I guess we can do that as a marketing tool, if I
> understand you correctly, but how will that assist
> with the $1000 limit?

Coupons would not count towards $1000 limit, as they bought on secondary markets, not directly from iPredict.

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It is difficult to predict, especially others' predictions.

dutching Wrote:
-------------------------------------------------------
> admin Wrote:
> --------------------------------------------------
> -----
> > I guess we can do that as a marketing tool, if
> I
> > understand you correctly, but how will that
> assist
> > with the $1000 limit?
>
> Coupons would not count towards $1000 limit, as
> they bought on secondary markets, not directly
> from iPredict.

Surely, the Securities Commission would view this as a rather blatant attempt to circumvent the conditions that they imposed.

Yes, tricky things like that will get us offside very quickly. iPredict can arrange a formal application if there is demand for it and if there is a justification in research or academic interest to support it.