What is Opinion Trading?

By Tradex Admin —
Knowledge Is Power

Opinion trading involves trading on future outcomes of events. This is enabled by prediction markets, where many buyers and sellers trade opinions on various topics. For example, if you are a sports enthusiast, you could trade the opinion on whether England will win the FIFA World Cup.

You can buy ‘yes/no’ opinions to questions such as whether the price of one share of a company will touch INR 1670 by the end of a month. Each of these yes/no event contracts trades for a price. You can buy these depending on your opinion. If your prediction is right, you make INR 100 for every correct event share you own.

These opinions have a period before their market resolution. In this period, the price of the opinion can change. For example, currently, there is a trade in the opinion of NATO’s expansion in 2022. This opinion of yes/no, selling for a price each, is due for market resolution at the end of Dec 2022. An international summit upholding Ukraine’s right to self-determination could send the prices of ‘yes’ soaring. On the other hand, a statement by the US against equipping Ukraine with killer weaponry could bring the price down.

Based on your analysis of events around the topic, you can safeguard your profits either by exiting the market early at the current price or by waiting for the market to resolve (in this case, the end of 2022).

Opinion trading is different from betting as it involves knowledge & analysis of events and probabilities. There are no laws prohibiting opinion trading and prediction markets. The earnings are taxed as per normal IT laws. It is regulated as per Information Technology Act, 2000.

What are the current companies in opinion trading?

In India, TradeX is one of the best platforms.

In the US, there are Kalshi and Polymarket.

It is a new age concept with few pioneers right now.

What is the future of opinion trading?

Prediction markets are set to become the next big thing. They have the potential to become the new age social media, popularized by early adopters. Opinion trades reward knowledge of events and analytical skills. They monetize good judgement. They enable people to see the reasons behind both aspects of arguments.

In the longer run, prediction markets will become barometers of public opinion. They will enable businesses and politicians to see their initiatives' popularity empirically.

Conclusion

Opinion trading will harness the power of opinionated common people. It is a tool of the future, where it pays to forecast it right. It is time now to monetize the #WisdomOfTheCrowds and trade now!