How Does it Work?

Tell me what I'm trading

We've created an exchange for you to trade (speculate on) events that directly affect your life, like politics, entertainment, financial indicators, weather, current events and legal affairs - these are our trading categories.

Within each category we list a set of contracts, a contract is an event that will have an unambiguous result.

For example, some of our political contracts are: "Will George Bush be re-elected in 2004" or "Will John Kerry win the Democratic Nomination". Each one is an event with an unambiguous result, either George Bush will be re-elected or he won't.

You are trading (speculating on) what you think the outcome of that event will be.

Let's use one of our political contracts as an example - Will George Bush be re-elected President. There are only two possible outcomes for this contract - Yes, he will be re-elected or No, he will not.

When the election is over and the result is official, if George Bush gets re-elected that contract will close at 100. If on the other hand he fails to win the general election, the contract - Will George Bush be re-elected President - will close at 0.

However, until the election is over that contract will fluctuate in value between 0 and 100 just like a stock, reacting to the news of the day and buying & selling by you the trader.

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Tell me what the prices mean

Since our contracts trade between 0 and 100, you can think of the price at any time to be the percentage probability of that event occurring. Let's go back to our George Bush example, on December 1, 2003 the George Bush re-election contract was trading at 63, meaning, traders gave him a 63% chance of being re-elected.

If you thought President Bush will be re-elected you would expect that price to go up - towards 100. In that case, if you bought one contract at 63 and Mr. Bush did get re-elected you would make the difference between your purchase price - 63 - and the closing price - 100 - or 37 points. How much profit would that be? Click here.

It's important to realize that you don't have to hold your contracts until the result of the event is decided - you can get out of your position at any time until the event is over. So if you change your mind about the outcome you can come back to the exchange, enter an order and close out your position, whether it's for a profit or loss depends on you.

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Who determines the prices?

You do - along with thousands of traders around the world. Just like the price of Microsoft stock is determined by the buying & selling activities of thousands of traders in the financial markets, the price of our contracts are determined by traders, like you, who are confident enough to back up their opinion by risking real money.

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How do I calculate profits and losses?

Think in terms of points, when a contract trades from 63 to 73 - that's 10 points. Each point is worth 10¢.

If you bought one George Bush re-election contract at 63 and he does win the election, that contract will close, or settle, at 100. Your profit will be 37 points x 10¢ per each point or $3.70.

Settlement price – purchase price = your profit

OR

100 – 63 = 37 points X 10¢ per point = $3.70 a profit

On the other hand, if he does not win re-election that contract will settle at 0 and your loss would be 63 points.

0 – 63 = – 63 X 10¢ per point = – $6.30 a loss

Remember, you do NOT have to hold onto any contracts you buy or sell until the election, you can trade out of them any time!

Let’s take another example, you buy 6 contracts at 50 in the morning and sell them out at 73 later that day. You collect 23 points (73 – 50) times 6 contracts times $.10 for each point or $13.80 in profit.

23 points X 6 contracts X $.10 = $13.80

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How do I place an order?

First, decide which trading category you want to trade – politics, financials, entertainment, business propositions, weather, etc. To view all the categories click on the Markets tab at the top of the page, you’ll see the choices on the left hand side. Let's stay with our political example we’ve used previously - select politics from the trading categories.

You’ll see several sub-categories, select - US Presidential Election. In the center of the page you’ll see the complete selection of contracts you can trade in the category of - US Presidential Election.

Supposed we want to trade the George Bush re-election contract, scroll to the bottom of the page and select it by clicking on the Red .

This will take you to the Trading Screen and you’ll notice an order book appears on the left hand side of the page with the heading - President.GWBush2004, this tells you that you’re entering orders for the contract you intended.

In the Order Book you’ll see “BID” and “ASK”. The BID is the price traders will buy the President.GWBush2004 contract from you and ASK indicates the price traders will sell that contract to you.

Just like an exchange on Wall Street, you don't have to buy or sell at the price those traders are offering - you can place an order to buy or sell at any price between 1 and 100. Obviously, you'll want to place your bid or offer at a price that is both attractive to you and with the likelihood of being accepted by other traders.

Remember, when the election is over and the result is official, if George Bush gets re-elected the contract will close at 100. If on the other hand he fails to win the general election, the contract - President.GWBush2004 - will close at 0.

Now it’s time to enter your order. Let’s assume that you think Mr. Bush will NOT be re-elected, you’ll want to SELL this contract because you expect the value will be 0 in the future or will go lower between now and the election. In the order ticket enter the quantity you want to trade in the appropriate box and the price you’d like to sell those contracts in the box marked limit price.

Below that you’ll see a box marked lifetime, the drop down arrow here let’s you choose how long your order is good for. Let’s select Good for Session which means until the trading session is over for the day, of the day you enter the order.

In this example we believe that George Bush will NOT be re-elected and the price of this contract will eventually go down to 0 so we’ll sell this contract by clicking on the red Sell button after the quantity and price of your order have been entered.

The trading system will ask you to confirm your order. After you’ve reviewed the order and you agree with it click on the red Sell button once more.

You’re done! Your order has been entered and it will appear in the order book along with the orders other traders have entered.

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How do I know if I made a trade?

When you see New Message highlighted in red below the order ticket it’s an indication you’ve made a trade. If you click on it you’ll see exactly what trade you’ve made. This is especially convenient when you’ve got multiple orders working in different trading categories at the same time.

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How do I cancel an order?

There are several ways to cancel an order. One way to do it is to go to the Trading Screen tab; at the bottom of the page you’ll see all your open positions and working orders.

Click on the Orders tab and select the order you wish to cancel. You’ll be asked to confirm your selection, click OK and it’s done - your order is cancelled. You’ll see that order disappear from your working orders.

The other way to cancel an order is to go to the Positions tab on the Trading Screen, under the column Cancel Orders click on the order you want to cancel, you’ll be asked to confirm your selection, click “OK” and it’s done.

Remember, once your order has been accepted by another trader it can NOT be canceled. Cancellations can only be done BEFORE your order has been accepted by another trader.

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How can I monitor my positions?

All your positions are conveniently displayed on the bottom of the Trading Screen tab.

Here you’ll find a listing of your positions, working orders and margin associated with every position in your portfolio.

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How do I read my account statement?

That’s easy. Click on the My Account tab then under Details you’ll see all your banking information as well as how to change your password.

Under Account you’ll see all your cash balances, trades, as well as profits and losses as far back as 30 days.

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How can I open an account?

That’s easy. This process should take less than 4 minutes!

From the home page click on the Signup tab at the upper left of the page. We’ll ask you some simple questions including how you’ve heard about us (this one is especially helpful to us please take some time to answer – thank you) and you're done.

Remember, after you’ve opened an account and before you trade, make a deposit to cover your trading activities. See - How do I add and remove money from my account.

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Is my money safe?

Yes.

Every trader’s funds are held in bank accounts designated for member funds. Our member fund bank accounts are subjected to review by our external auditors annually.

Also, before any trade is accepted by the exchange each party to that transaction must have adequate trading capital in his/her account sufficient to cover the risk that trade represents. This guarantees that all traders will be paid by the party on the other side of his/her winning trade.

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How do I add and remove money from my account?

Withdrawals: Please request check or bank wire

Deposits: Check and Bankwire desposits are accepted. Credit cards can be used by non-US customers.

If you have questions on which cash transfer method fits you best or how to open an account email us at help@intrade.com.

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