Tuesday, March 31, 2009

$50 to $46,562 in 2 years on Intrade.

I was reminded this morning of a member (lets call her “Mrs. Midas” for this note) who made one deposit of $50 on 1st March 2007. As of 31st March, Mrs. Midas has an account balance of $46,562.30.

Mrs. Midas has made no other deposits, nor has she made any withdrawals. She has paid the exchange $4,463.66 in trading fees during this time.

During the two years since the initial deposit she has traded against 1,061 of other traders. The successful member traded on 516 separate markets covering economic, financial, political, entertainment, legal and current event categories on Intrade.

While this member was unprofitable on 38% of markets traded, a demonstrably disciplined cash and investment management approach contributed to the superb performance of her account.

The growth in her account balance and the dispersion of profitable markets to unprofitable markets traded are depicted below.


Intrade said...

Just Checking said :

    first I checked the date. I see it is was not posted on Aprils Fool.

This is pretty amazing, Mrs Midas should write a book. They have been written on more mundane achievements. Seems like 30 or 40 markets generated the majority of profits. Cool if you could say what they were.

Intrade said...

mdeeny said :

    I am sure there 40,000 or more people who deposited $50 lost it all but a few dollars and left the market.

Intrade said...

philibuster123 said :

    Agree with #1 - would very much like to see her most and least profitable trades. And what does he mean by disciplined cash and investment management?
Clearly this isn't luck!

Intrade said...

PrinceMyshkin said :

    I would like to get these figures for my own account. I don't need to know; it's just idle curiosity.

Intrade said...

Delphi said :

    Very cool. I'd love to be able to generate that graph for my own trading history here.

Intrade said...

Edgemundo said :

    John et al.,

Couple comments for discussion,

1) Markets are neither profitable nor unprofitable...it's a zero sum game we all play here - as for any buyer there is a seller at the same clearing price (not accounting for fees that is...)

2) Although it's very interesting and impressive to see this 1000x bagger, the steep 8.5+ % fee does not go un-noticed - which leads me to state that this platform is not yet ready to serve a a serious mainstream investment tool ....

Intrade said...

John Delaney said :


Your comment that our fees are 8.5% is confusing and I do not think is correct.

Price makers pay no fees currently on matched trades.

Price takers pay upto $0.05 per lot on a $10 contract.

Markets that settle in the money pay a $0.10 expiry fee.

All fee details are available here...


Intrade said...

falco said :


I believe Edgemundo is referring to fees as a percentage of profits in the long term.

Intrade said...

@Falco, the fee estimate for the member who traded $50 to $47K still looks to high.

Intrade said...

Edgemundo said :

    John et al,

Just to clarify: I simply take the fees as a percentage of the gross account balance (fees + net balance) which more or less represents the monies invested (in this case $51,025.96. Fees then are $4,463.66 or 8.7%.)

Note that at in-trade a typical trade commission is expressed as a percentage (0-5% in this case) per contract. That’s what explains the difference – and perhaps your confusion.

There are a number of sides to this story of course – some of them may be non-obvious

1) In this case of a 1000 bagger, fees a minor issue, but for a typical investor – 8.7% is a bigger issue.
2) The fees in this example may not be the average – this is an extra-ordinary example.
3) I am solely taking an Investor’s perspective in this example; there are many other valid reasons to making trades at In-trade
4) There are many fee structure comparisons that give interesting juxtapositions:
- investment portfolio managers who charge 1%-3% on invested capital per annum
- online stock-brokerage firms who charge $5-$15 per trade independent of size
- hedge fund managers who take 2% fee + 20% of the profit.

And that brings me to what I wanted to discuss in the first place….fee structure…