Ideosphere Forum

Re: fx-discuss: Re: if-discuss: too many Claims?

Author: Dave Steele
Conversation: if-discuss: too many Claims? ( prev | next ) reply!
Topic: fx-discuss ( prev | next )
Date: Mon Jul 22, 1996 03:38 pm
James Jones
Dave Steele

>On Mon, 22 Jul 1996, Dave Steele wrote:
>> >The trouble is, what happens if the "right" bid/ask contains a wide
>> >spread?...
>>...If you can find a way to increase the
>> ratio of trading to the number of issues traded, then the spread should
>> narrow.
>Not necessarily. [...] people won't invest in a claim which can
>only barely beat a riskless investment;
>...If the "real" price
>falls in one of these regimes, no trades should be taking place,
>regardless of the density of the market.

Well... OK. But only if there is there is general agreement on the 'real'
price. If it is under contention, then the spread will still narrow.

>> >...One further possible change
>> >that could be made would be to make the prices finer by adding decimal
>> >places...
>> You've said that before, and I don't understand your reasoning.
>> Is it simply because the resolution is too course? The difference in your
>> example is a payoff of 20:1 vs 17:1. How much more accurately can you
>> predict?
>The reasoning is basically that the resolution is too coarse, yes.
>Remember, to make trades you must have both a buyer and a seller; the
>potential gain for the SELLER in my example is 5.26% vs. 5.81%, definitely
>big enough to matter...

OK. I hadn't considered ROI on lenger-term issues. I'm not that far along yet.

>How can the system
>avoid the problem of overloading in a real-money environment, unless there
>is claim oversight? It would seem easy to generate any number of identical
>claims for the express purpose of diluting liquidity in a particular issue
>that someone had a vested interest in obfuscating.

Robin's answer to this would be market-based - a third party filtering
service. Such a step has been hampered (as have many things) by the
Transaction Form. With the impending move to FX (just what are the facts
here?), such a service may be more viable.

>From the IF home page:

Important Notice!

Idea Futures is closing down. It will probably be completely gone by August
31, 1996. Please check
out the Foresight Exchange.

Foresight makes no mention of IF.

Dave Steele
Xetron Corp.
460 W. Crescentville Road
Cincinnati, Ohio 45246


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