Trading Smart in Prediction Markets with @PredMTrader | Prediction Market Movers

(upbeat music) Welcome to Prediction Market Movers. My name's Chris Garlocker with Prediction News, and we've got a great guest for you today. We've got the one and only prediction market trader here himself. He's gonna talk about how he got into prediction markets. We're gonna talk about the upcoming New York City mayoral race, and then we'll go into some of the mentions and what the industry can look like here. So once the hype finally dies down, and we get back to competing. If you're here with us, like this video, subscribe to our YouTube channel, App Prediction News, and follow us on X, App Prediction News. Now I wanna bring in our guest, Prediction Market Trader. You just wanted to go by your title, right? - Yeah, you can call me Prediction Market Trader or PMT for short, that's what I usually use, 'cause this is a pretty long-- - I gotta figure out a better nickname. - PMT it is. - Well, I know you have an accounting background, you have a background in poker and horse racing, so you've got that trading, expected value type betting experience. How did you find your way to prediction markets and what about them made you stay there? - Yeah, it's a great question. So I first got into prediction markets, actually back in July, 2024. So right around the last kind of election hype going into the presidential race, it's funny because I used to think of myself as like a recent joiner, like only having traded on these platforms like a year and a half, but now in the last few months, they've kind of gone parabolic. There's so many new users in the space. So it almost feels like I've been here a long time, even though I know so many others have been in the space for five plus years. So the first trade I ever placed was actually on JD Vance to be Trump's VP pick. So I had been really into politics at the time, kind of casually, not taking it seriously. And then I found that you could go on a prediction market, pick who you think was gonna be the VP candidate, which was crazy to me at the time. What's funny is obviously, JD Vance ended up winning. I think I got in at like 15 cents, but I didn't hold on to my trade after spending about one or two days looking on these platforms. I quickly sold my shares and I was like, there's no need for me to kind of take a risk here. Because looking at all the markets offered, I quickly saw that there were so many inefficiencies with just the prices obviously, a lot of these platforms, especially at the time, were very new volumes liquidity wasn't as deep. So there was just ample opportunity to apply kind of old strategies from other types of niches. So in the sports gambling vertical, arbitrage across sportsbooks is a really big strategy that people kind of historically used. So using something like that on prediction markets, where you have very correlated markets was something I got really into in the beginning and heavily focused on. And then since I've kind of expanded into taking more directional trades, but that was what first got me into it. And kind of ever since that, I've been completely hooked. You touched on a little bit of my background with poker, horse racing. I've always loved the idea of trying to find edges. And that's what drew me to poker. That's what drew me to horse racing. And entering the space of prediction markets, where I think it's so much easier for someone to kind of find profitable edges versus poker or other avenues. It was an easy draw. What about prediction markets makes it easier to find an edge than say poker or horses? - Yeah, I think the biggest thing is, A, you're not really seeing a ton of institutional money yet on these platforms, right? For a cowshee, right? There is, I think SIG has been on the platform for like a year or so being a market maker and certain markets, but I think for the most part, it's still heavily like peer to peer. And I think anytime you have, mentioned markets is something I've done a lot. And anytime you have lower liquidity, lower volume markets, that really, I would say, aren't as solved, right? These are very new markets. If you look at the world of say poker, the last few years it's blown up with people using what's called solvers, which is kind of trying to get to the stage of game theory optimal poker. In prediction markets, everything's so new. You know, another example is recently, you know, NFL announcer markets have popped up, right? And this is something that's completely new. So the day that these launch, nobody has solved these. Nobody has gone into the historical thousands of NFL games to see what these announcers are saying. You know, so it just presents this opportunity to whoever is the most clever and, you know, just quick to kind of do their research. Like it really gives you this ability to, you know, find edges, I would say. - Yeah, it makes a lot of sense. Anyone can find an edge if they have the relevant background and expertise and put in the work to go find it. - Definitely, yeah, 100%. - And what are you trading on the New York City mayoral elections? There are a couple of good markets, you know, that space. - Yeah, definitely. I've been, you know, if you've watched my content in the past, I think we were touching on this as well. Like I've been heavily focused on mention markets. So last week, I was very focused on the mention market for the debate. To me, debate mention markets are some of the most fun offerings to have. And I think they're also interesting because, you know, with a lot of markets that you trade on mentions, like a Trump speech, for example, right? There's hundreds of historical Trump speeches. So going back to being solved, those are ones where while there is a lot of uncertainty, there's a lot of historical data. But for debates like these, sure, you can listen to a lot of speeches that Mamdani will do, Cuomo, Silva, but, you know, a lot of people don't know what to expect. Like going into this last debate, right? Is Silva going to attack both candidates? Is he going to attack one of them? But to answer your question, I guess, definitely, I'm most focused on the debate mention markets. And just tomorrow, we're going to have the second debate. So it's going to be something I'm heavily focused on. And in relation to the actual political markets, it's unfortunate that it's not really a close race anymore. You know, so am I going to, you know, wager on Cuomo or Mamdani? I mean, there's a case to be made that maybe Mamdani is almost a lock at this point, but, you know, maybe there's a chance that Silva, I mean, I know it's very low, would drop out and Cuomo would see a-- But so I don't have any traits currently on the actual political markets, but I am starting to think about, you know, ones that maybe aren't as close, like the New Jersey governor race is a little more of like a contested. And I guess that last point, I would say, is like, I'm a very top-down trader, so I'm not bottoms up in the sense of building my own models like for that mayoral race, you know, there are probably a lot of more politically dialed in people that would have much more like, you know, informed, you know, decisions on like where they're going to be trading there. This-- yeah, I was trading on the first mayoral debate. And I mean, I can pop it up here. I just had, you know, $10 each on four terms that were priced around, you know, $20, $30 each. And two of them had, I got Ackman and Puppet, so that, you know, helped offset me and pay for that. But, you know, if anything is, we were talking about this before the call too. I am the opposite of what a good trader is. Once I, you know, placed the bet on the event, I can't watch the event. I'm terrified to look. I'm just, you know, I want to go all or nothing, right? Yeah. You've got the more-- you've got the more sound strategic approach to mentions. How are you, you know, what are you doing live during a mention market? Yeah, it's a great question. I mean, I actually just posted like some sort of guide. But it's funny because we're opposites. I don't know if I could, you know, place a trade on a mention market and not watch the event. Like, that's just so fun to me. You know, and obviously, content-wise, it's great to be able to root for, you know, a yes or a no strike. But in terms of like how I typically trade mention markets, I will say when it comes to live trading them, at least, for the bigger mention markets, and that would be like this debate, you know, there is kind of edge you could find live trading because the liquidity will be deeper. And especially when it comes to like commercial times, things like that where a market maker is going to be comfortable to place bits out. I would say overall my strategy for trading mention markets and also from talking with a lot of kind of top sharps that trade mention markets, it's a combination of, you know, transcripts and kind of that quantitative analysis, analyzing historical word frequencies. And then another term that you'll hear a lot of traders use, which is vibes. You know, you can't purely just data mind historical transcripts because obviously, you know, the world is ever evolving, the issues happening around the world that might influence Trump to bring up one thing or another thing are always changing. So you kind of got to marry the two and it almost becomes a little bit of an art form. I would say I tend to be more or try to lean more into the vibes side of things where, you know, I have that historical data I'm looking at, but I'm also blending that with, you know, what is some breaking news that might influence, you know, mom, donning to bring something up or Cuomo to bring something up. And I think with the mention markets like this, where you can't get a lot of historical data, it does become a lot of vibes and kind of just going based off of feel and intuition. Yeah, that makes a lot of sense. And what are you watching in the second debate and has that first mention market informed what you're looking for and betting on tomorrow? Yeah, another great one. And I mean, I really love situations like this where you have one debate. And, you know, there was not a lot of information going to that first debate. Things were priced as accurately as people could. But now that debate has ended, you're going to see some of the same words come up in the second debate, you know, as a strike to the way drawn. So what I always love to do is I really like to look at, okay, what words hit in the last debate? What was the reason they hit? And are market participants going to either over or under value the probability of a word getting hit, right? So if you have a recurring strike, two debates in a row, and maybe it was somewhat of a fluke that it came up last debate. So maybe the moderator asked a very specific targeted question that prompted it to be brought up. You know, some people might look at it in the second debate and say, hey, they mentioned this last time, surely the odds should increase that this will be set in the second debate from kind of going into the first debate. So I would say, yes, I am going to prioritize transcripts from the first debate and kind of looking at how that debate panned out. And I'm going to kind of look for value where some words maybe could potentially be over or undervalued depending on if they were said or weren't said in the last beach. Or if candidates got feedback from their campaign teams to adjust their performances in certain ways too. I mean, that can definitely add to another layer of uncertainty as well. Yeah. And that's what I love about these things. It's like there's so many layers to get into, right? Like I'm less so politically knowledgeable, but you're way more knowledgeable in politics than me. So like there's an edge that you can kind of factor in of like what's how are the campaign decisions and what they want to focus on going to evolve and how might that change kind of divides of this debate going into it? Yeah. I mean, I have a low sample size of mentioned markets to base performance on. But I mean, I was all-- I mean, I was only vibes based going into the first debate mark. And I figured Bill Ackman's going to come up. He might come up just because Mom Donnie's, is he going to go after Cuomo for being an establishment guy with big donors and the big machine behind him? Chris Stetties, I think, was the grocery store chain that could come up in relation to Mom Donnie's stay runs grocery store things. So I thought-- I mean, I bought them all because I thought they were under price and I thought if they hit, I would get the necessary return to pay for those markets. And that time it worked out. And I mean, that's a longer running experiment that I'm running with these small dollar bets is to see, yes, the market's always going to be able to come to a number. But there's also this bubble of uncertainty around certain numbers more than others. And that's-- I mean, I'm in prediction markets for the forecasting. So that's something I'm going to be watching, certainly going into the midterms. But at least in these first three elections that we have, that's where I'm really enjoying those and watching those. Yeah, 100%. And I mean, I think for anyone that's getting into prediction markets are interested always starts small. And I mean, I would even take it a step further to say, I want to say, when I first got onto these platforms, for the most part, I wasn't even trading. I was like, you don't even have to be placing a trade, but just following markets. If not to just make you more informed, but also if you want to eventually trade in the future, understanding how these markets evolve as new information comes out is just really good information to have. So either trade very small when you're starting. So you have some action to incentivize you to get involved. But if not that, just watch the markets. I mean, it can be very enjoyable. And then the last piece I would say is I love mentioned markets. And I think they're one of the most fun markets. I have traded much more than mentioned markets historically. Like I actually was probably most known for trading AI model markets. That was kind of my specialty in the past. But I think for new users, picking a market niche that is enjoyable to you that you are naturally interested in is also extremely important. Because the data and research required to kind of build a long-term edge can be very time consuming and difficult at times. But if you're very interested in it naturally, it's not going to be a struggle for you to stay involved with all the information. Yeah. These are great markets for anyone with a really niche interest because they're increasingly more and more markets that are tailored to you. How do you-- one of the reasons I think there's so much hype in this industry is because it's so accessible to so many people. And you can cater these niche interests. I mean, what do you think about the current hype in the industry? Is it-- do you think it's overblown or do you think it's pretty appropriate for people who are just coming to prediction markets and seeing what's on offer? Yeah. I mean, I think hype is definitely like a good word to use with what we're seeing in the industry right now. Like I said, I've been on prediction markets going back to July 2024. And what I've seen in the last two months is just unbelievable. I mean, a South Park episode dedicated to prediction markets that mentions both of the top platforms. Like I would have never expected that to see that. And then also just what you're seeing with these new valuations, it's getting completely blown up. Whether or not it's all just hype, I mean, I would say right now I definitely feel it's not just hype right now. I think this increasing hype is tied to the dramatic increase with volumes. Like obviously, Koushe with sports lately, volumes have been going parabolic. What is going to kind of remain to be seen is just give this more time. What does this look like a year from now? It's really exciting for me to think about because on any given day, prediction markets are changing dramatically. Day by day, week by week. I mean, I've never been this close to like involved in an industry that's just every week is completely changing. So I think it remains to be seen. What I'm looking for to-- I think with the nature of these products, like you said, they can almost apply to everyone. What I really would like to see for these to get as big and parabolic as they can would be eventual institutional adoption. And I think that's where volumes will kind of hit their peak liquidity. And that's where these really become just massive companies that are huge infrastructure. I think it's getting to institutional adoption. I think-- well, I mean, underdog sports, they announced that they're intending to use Cal Street, manage and hedge some of their exposure as well, which was-- I mean, that was an early argument in Cal Street sports lawsuits, too, that other sports boat companies could be Cal Street customers. And now, assuming underdog actually follows through and does that, I think that is an unexpected boost in that particular line of legal reasoning for them. Yeah, 100%. And I mean, I think, obviously, now with these companies fully focused on growth, you're going to see a lot of new, fun culture markets that are going to play really well with marketing and growth. And maybe they won't do a ton of volume in liquidity, but they're fun markets. They're going to attract new users. But the end goal is that going back to that real world value in the sense of hedging events. And that's where I would see a lot of institutional adoption. I mean, if you think about the presidential election, it's historically right. If you want to hedge against Trump or Kamala winning, you buy a specific basket of stocks rather than getting just direct exposure. So that's one of the clearest markets that have these hedge opportunities. Obviously, Fed interest rates are great ones. A lot of the economic indicator markets. But I think as this grows, finding more markets that would cater to actual institutional participants is going to be really big. Because I think there's so much more that can be discovered in terms of offerings. What do you think this industry looks like post-hype when we're after the Badge Wars and these two companies, Cowshing and Polymarket Prime Marley, are competing more intensely with each other. And you have this other layer of startup companies carving out corners of the industry for itself. Yeah, I guess the first thing I will say is I think competition in any market-- I don't think anyone would really disagree with this-- is like an overwhelmingly good thing. I think for end consumers, it's just going to be great for everyone having competition. So I think that's great for the industry. And what I see in the next year or two, the first thing is I think I expect to see a lot of people building software platforms on top of prediction markets. I think right now as a trader to me, there really hasn't been many tools that have emerged as kind of the definitive tool that someone's using on top of prediction markets. So I think that has a lot of room to grow. And then especially as you have hopefully institutional money trading on these platforms, they're going to want terminals, things like that to allow them to be more complex, manage risk. So one piece of it is I think there's going to be a lot built on top of prediction markets. The second piece I think is if this continues to grow, as it continues to grow, I think the media landscape is going to significantly change both in the-- maybe I'll pause on saying significantly, but I think you'll see prediction markets get integrated significantly more with media. And that just means traditional media using prediction markets more to inform decisions. And that also means seeing maybe prediction market-specific media outlets, what you guys are doing, what I'm starting to do with some of my content. I think those will start to get much bigger. And then I think just on these platforms as a whole, I think the bull scenario, the bull case, is that in a few years, assuming everything is going well, I think you have institutional platforms trading on these. And that's where I see liquidity and volumes just skyrocketing. And then that's where I also see a lot of economic markets that provide some incentive for players to actually hedge risk. I also think clearly sports are going to continue to be a huge part of these platforms. I think undoubtedly for the next year, there are going to be a very large percentage of volume and liquidity and probably only continue to grow in the next few months. So I think the first few years it's going to be about that. Sports, but I think once they get that unlock with finding more real hedging opportunities, you brought up underdog, but also outside of that, I think that'll be huge. You mentioned there's not the definitive tool as a trader yet. What are you hoping is developed in this space over the next few months or even 12 months? I definitely think the first thing that comes to mind is like a really well built out trading terminal, I would imagine, especially-- won't be used as much for retail participants, but for people that are market making more serious or more serious directional traders, I think having really well built out terminals will be a big thing. And what I will say is in that space, there is a lot of competition. I think I get messaged by about 10 people a week that are saying they're building a terminal and to give feedback on it. So definitely a lot of people are getting involved. And also I think you'll see a lot of outside investment as well as people kind of race to build things on top of it. I will say the only tool that I pay for, which is really funny, for prediction market trading after having used it for a year and a half is a tool that is more of like a data repository for all historical transcripts. It just saves me a lot of time to a couple hundred bucks a month. And it's very worth it for me. Yeah, that's interesting too. It's not just the oracles or the AI generated quick markets. It's these startups and companies and products that can cater to anybody who's trading on whatever their niche area of interest is as well. I think that's going to be a huge untap market so far. So startup folks, entrepreneurs, if you're watching, I think the prediction market industry is going to indirectly open up just a ton of opportunity. For new companies. Yeah, 100%. And I think it's really funny too, because from talking to other traders in the space who have found a lot of success, almost everyone builds their own proprietary tools or maybe internal models. And obviously, if somebody builds a very successful tool at predicting an outcome, in almost every case, the most profitable use of that is to use it themselves and be profitable on it, which is why you're not going to see that publicized as a tool for everyone to use. So I think that's where the space is definitely going to get interesting. And I think to your point, there's so much opportunity right now. We've talked a lot about what could go well about the industry and what's potential for the industry is. Is there anything you're worried about that could become an anvil around the industry's neck once we're post-type? And we start to see some cracks around resolve problems. Yeah, I mean, I think two headwinds I would probably talk about. The first one, obviously, I'm not an expert in, but obviously regulatory-wise, that's to me the biggest risk in this industry, as you're seeing sports volumes are getting very large. From what I've read, Koushie has been doing very well defending their position, but obviously not an expert there. But that's what I think is the biggest risk, number one. But number two, I would say, is to institutional adoption, I think if someone is going to-- if an institution is going to be wagering significant sums of money on these platforms, I think the markets that they're going to be focused on are going to be kind of definitive markets. So when it comes to things like the contracts and resolution criteria, I think those are going to continue to improve. And I think that's going to be somewhat of a risk to institutional adoption. It's like, you know, if you're-- like I said, if you're an institutional participant, you want to know very clearly, and what scenarios is this going to pay out versus not. So I think like, if institutional money is on these platforms, they're going to be focused on fed rates and more defined things versus more judgmental markets that you can sometimes see offered. Yeah, that's interesting. I'm thinking-- I mean, I'm looking at some of the early projects in the crypto space because Calcium Polymarket are both investing heavily in crypto builders, where you can experiment as much as you want. And then, you know, regulated platform like Calcium or Polymarket US when it eventually launches, they can just take what actually works in crypto and adopt it in the CFTC regulated space as well. But, you know, I know there are some murmurs about, you know, products in crypto, where you can place leverage trades on prediction markets. And that makes my palms sweat a little bit. I think, you know, if responsible trading does not become a fault line in the industry before those products launch again traction, I think that's going to kind of force the issue to ahead in a way that I think the traditional finance, at least in the United States, hasn't quite had to grapple with in the same way as the, you know, state regulated gambling industry is so. And those are, that might be a fault line that's, I mean, I know it's coming. I just don't know how soon or how explosive, you know, that's going to be. - Yeah, I have seen, you know, murmurs about that and projects being built on some of the platforms around kind of leverage because I think to newcomers to the space that come from like you said, a crypto background, I don't myself personally, but there are a lot of them thinking like you see leverage everywhere in crypto. Why don't you see this on prediction markets? But it's funny because I feel like adding leverage to a prediction market is would be, it's a very difficult thing to kind of solve for, especially if you're putting up positions that's collateral because obviously when it comes to prediction markets, very frequently like you're either right or wrong. So your, your, your collateral is either going to be worthless in a day or it's going to be, you know, so I think having a mechanism to even offer leverage is going to be difficult if people are looking into that. But I'm sure there's smarter people than me, but I think that's a fair point. - Yeah, I think what you could see platforms that end up like prediction market platforms that price based on like a bonding curve or something like that where you get some more steady and predictable pricing and positions. But that's, I mean, that'll be a thorny problem to untangle anyway. So it may not even, you know, maybe the leverage products aren't even the, you know, responsible trading, you know, catalysts that make that a big issue for the industry either. So we will see. I mean, there are a ton of interesting, you know, especially the AI projects, I think, like PNP Exchange where you can just, you know, really quickly on your X-V to AI generate a, you know, settlement terms and a market and if that can be done automatically, I mean, talk about, you know, micro betting at scale, right? - Yeah, but I mean, it's a really interesting idea. I would definitely say for me, I am probably pretty bearish on create your own market. I know a lot of people are looking on doing it. I think from my perspective, it's like a, the resolution criteria, right? I mean, you look at these platforms like CalShi where, you know, they have dedicated teams building contracts as their full-time job to think about the roles, things like that. And sometimes there's gonna be outliers that they don't always have a counter for in the contracts in which cases they'll usually end up paying out both sides. You know, so this is, you know, there's just so many potential possibilities to where like, that you have to account for, that even these professionals sometimes will not account for them. So I think with create your own market, that's a big risk, the resolution criteria. And then I also think when it comes to like liquidity, with create your own market, it'll be difficult to ensure you don't have a ton of duplicative markets popping up everywhere because people created them with slightly, I mean, granted, I know there's smarter people than me that are gonna think about solutions to this and whatnot. But overall, I don't, I don't think create your own market is the direction that I would like to see, these markets go, what I would love to see is maybe a more formalized process for proposing new markets, maybe even some type of voting system to kind of ensure that people really want it. 'Cause right now, you know, you are seeing that built out in some of these platforms. So right now, it does feel a little more casual, the mechanism to get new markets where people are kind of messaging and discord channels are on Twitter. So I think seeing that more formalized would be a good thing. - Yeah, so you want the security of an expert team who will take every resolution processes and make sure you have a market that people actually want to trade in and have the liquidity to submit trades. - Yeah, 100%. And I think, I do think like contract resolutions is going back to kind of existential risks. Like that is, you know, a big risk in making sure you have sound contract resolution criteria. Not even from a regulatory point of view, but even just as a business because obviously, if that happens too many times that you have to kind of settle both sides, it's not gonna be, you know, a good solution in the long run. So I think that's gonna be, you know, very important to definitely focus on. - Yeah, absolutely. - Well, PMT, thanks so much for coming on. You know, it was great to talk to you, get your thoughts on the industry and the mentions of New York. Where can people find you and follow you if they want to watch your stuff? - You can follow me on ex at PredM trader, prediction market trader. I'm typically streaming every day in posting daily content. I'll be expanding to additional platforms soon. - Very cool. And you just published your first article on ex as well, right? - Yes, my first article on kind of some strategies for trading mentioned markets. I'm not the best mentioned market trader in the world, but I think for new users, it can be really helpful. - Absolutely. Well, I will see you in the mentioned markets myself. And, you know, if I have any successful long-term trading strategies, I'll be sure to, you know, we'll be sure to talk about them later. - Great. - Well, great catching up with you, Chris. Really enjoyed it. - I'll be right back. - Great to meet you.