Predicting, Resulting, and When Not to Trade

In professional sports betting, outcomes are evaluated based on whether the betting line was favorable, rather than the win-loss outcome. This concept is reinforced by Daniel Kahneman's insights into decision-making biases, notably outcome bias and resulting. The accuracy of prediction markets is assessed using Brier scores; a low score indicates a more reliable market. Polymarket boasts a Brier score of 0.0581, suggesting it is substantially more accurate than random guessing. This information leads to the realization that while trading predictions may yield profits, they must be better than the final betting line to succeed. Additionally, the article highlights the growing relevance of prediction markets, which are increasingly utilized for a variety of events, including predictions on major economic statements. Lastly, it warns against 24/7 stock trading, suggesting that the best trading opportunities occur during regular market hours when liquidity is highest, combating the notion that overnight and weekend trading is beneficial.

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