Political markets let traders buy and sell shares on election and policy outcomes, with prices reflecting the crowd's estimate of each result.
Types of Political Markets
Common examples include election winners, vote shares, legislation passing and appointments. Each has its own resolution rules.
What Moves Prices
Polls, debates, endorsements and official announcements can shift prices. Large moves often follow surprising news.
Long Time Horizons
Many political markets stay open for months. Money can be tied up for a long time, and views can change a lot along the way.
Worked Example
A candidate trades at 35¢ months before an election. After a strong debate the price rises to 44¢. A trader who bought at 35¢ could sell for a gain, but the final result is still uncertain and the price could fall again.
Key Takeaways
- Political prices reflect crowd estimates.
- News and polls drive price changes.
- Long horizons tie up money.
- Read each market's resolution rules.