PRE-EVENT POSITIONING
Overview
Enter a prediction market position well before the event resolution, when the contract is underpriced relative to your research. Profit as the market updates toward your probability estimate as more information becomes available — without needing to hold through the actual event resolution.
Setup
- 1.Identify contracts resolving in 1-4 weeks where you believe the price is significantly wrong.
- 2.Research the event drivers: polling data, economic indicators, leading signals, expert commentary.
- 3.Enter early when liquidity allows — prices tend to be more mispriced further from resolution.
- 4.Set an exit target based on price movement, not necessarily the event outcome.
- 5.Monitor leading indicators that will cause the market to update toward your view.
- 6.Exit when the contract reaches your target price OR if the underlying fundamentals change.
Max profit
The difference between your entry price and your exit price (you don't have to hold to resolution).
Max loss
Entry price if held to an adverse resolution. Exit early if new information contradicts your thesis.
Breakeven
Entry price (if held to resolution); any improvement in price above your cost is profitable if exiting early.
When to use
When you have informational edge or analytical edge well before the resolution event. Best for economic data contracts where leading indicators (PPI before CPI, ADP before NFP) give advance signals.
When to avoid
For events that are truly random and don't have predictable leading indicators. When the market has already priced in most of your thesis.