Difference between revisions of "Metabets"

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__TOC__You can find the Metabets [http://metabets.battlemaster.org/if/Trade here].<br>
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__TOC__
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Below I have made a guide of how to play it. The further you read the more advanced it gets.
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[http://Metabets.battlemaster.org/if/Trade Metabets] is a meta-game where you place bets on the probability of various events occurring in BattleMaster. The collective opinions of everyone participating should be fairly accurate at predicting probabilities for events. It is also a lot of fun!
  
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====Introduction====
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==Quickstart==
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The Metabets is a betting system for betting on whether or not different things will happen in [http://www.battlemaster.org BattleMaster]. It is very simple to join in, you just create an account and you are ready to begin. As in all betting the goal is, of course, to make a profit. The higher the better.
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For those of you with no patience whatsoever, this is a quick overview to let you get started placing bets right away.
  
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Once you are in then the frustrations starts! How do you play, you ask? Well it is pretty simple to find your way around the pages but at first it looks very complicated and hard to understand. What are all these percentages and shares? What should you buy or sell and at what price?
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You start out with $100.00 (an imaginary currency) and with this you can buy and sell shares. Shares are priced at between 1&cent; and 99&cent;. Shares pay their owners 100&cent;($1.00) if the claim is true. If the claim is false, the owners of the shares receive nothing, but anyone owning negative shares receives 100&cent;($1.00) per negative share. Prices are always listed in cents(&cent;).
  
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Well the latter you will have to figure out yourself. But I will try to explain the first. It is actually not that complicated. Originally the Delphi Method, or Information Aggregation Mechanism as the system used is called, was build as a technique aimed at building an agreement, or consensus about an opinion or view, without necessarily having people meet face to face, such as through surveys, questionaires, emails etc. (look [http://en.wikipedia.org/wiki/Delphi_method here] for more info).  
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Basically, you should buy shares if you think that they are undervalued, and sell shares if you think they are overvalued. For example, assume the claim is “Tom will burn the BattleMaster server before January 1, 2007”. You think that Tom is is a pretty reasonable person, but who knows, stranger things have happened. You decide that there is 5% chance of this happening. Therefore, you should buy shares in this claim if someone is selling for 4&cent; or less, and sell if someone is buying for 6&cent; or more. Or perhaps you believe that Tom is a pyromaniac, and that there is an 80% chance Tom will burn the server before January 1, 2007. In that case, you should buy at 79&cent; or less, and sell at 81&cent; or more.
  
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It can also be seen as such here but in order to succeed at Metabets you do not need to understand the theory behind it. You can enjoy it fully on a much simpler level. You can simply see it as a trade of shares between players!
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It is important to know that you can sell shares you do not have. This will cost you money, and you will then own a negative number of shares. This is the only way that shares can exist initially.
  
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====Beginners====
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The above information is all you need to start trading on Metabets. You can come back and read the rest at your leisure.
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You start out with 100 dollars (an imaginary currency) and for this you can buy and sell shares. The shares belong to different claims. A claim could be: “Tom will burn the [http://www.battlemaster.org BattleMaster] server before Christmas 2005”. Each share has the value of 1 dollar that will be paid when the claim ends (Christmas Eve) if the claim turns out to be true. If not then they are worthless. You can not even use them at the loo (or bathroom/restroom for our non-European readers).
 
  
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These shares you can trade like normal goods. This is where the percentages come into play. You have to evaluate how much you think a share of a claim is worth. This you do by estimating the likelyhood of the claim coming true. If you think the chance is 40-50%, buying shares sold as 90% would be to paying too much. (When I say “sold as 90%” then it is someone saying: “I think there is 90% chance of the claim happening (Tom burning the servers) and therefore I want 0.90 dollars per share when selling you the shares.”). From what you think, you would not likely pay much more than 40% of the shares potential value (1 dollar) when buying it.
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==The Math==
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Assume that you had decided you would buy 10 shares of FIREBM at 65%(65&cent;&nbsp;each). You place a "limit order" to "buy" 10 shares at 65%. If Bob comes along a few minutes later, and wants those shares, he places a "limit order" to "sell" 10 shares at 65%. If nether you nor bob owned any shares, then:
  
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When you now have bought your shares you have two options to profit from them:
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*You now own 10 shares in FIREBM. It cost you $6.50 ($0.65&times;10)
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* You can keep them and cash-in on them when the claim expires (given it is true)
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*Bob now owns -10 shares in FIREBM. It cost him $3.50 (($1.00-$0.65)&times;10)
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* Or you can try to make a profit selling them at a higher price.
 
  
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The latter is probably the way you should make your money. Buy at a really low price and sell again at a much higher one. This is what all trading is basically about. Optimally you would buy at 0% of the value and sell at a 100%. But you are very lucky if you find someone stupid enough to get in on that deal!
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You and bob together spent $10.00. You will receive $10.00 ($1.00 per share) if the claim is eventually judged true, or Bob will receive $10.00 ($1.00 per negative share) if the claim is eventually judged false.
  
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====Experienced====
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==Speculating==
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The part that is hardest to understand is the concept of negative shares! It is possible for you to sell shares without having any. This is how the shares are made. It costs you 1 dollar per share to make before you can sell it, and is called negative shares. Then of course you will get something in return when you sell it. Say you sell it at 50% then you will loose 0.50 dollars selling a share. Therefore you would like to sell “new” shares as high as possible.
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Of course, there are faster ways to make money. If you sell shares for more than you paid for them, you will make a profit. You might even initially sell shares you do not have, expecting the price to drop. Later, you can purchase the shares at a lower price and make a profit! The possibilities are endless.
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“What are the benefit then of selling shares you do not have?” you might ask. Well you see if the claim turns out to be false (most likely in the given example) you will gain 1 dollar per negative share you have. If you have sold them at 50% then you would have made a nice profit of 0.50 dollars (or 50%) per share. So basically when you think a claim is not going to happen you would sell shares to people that think it is going to happen (or at least is willing to pay a little per share in case it did happen).
 
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====Masters of the Market====
 
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There could also be a more speculative reason to sell negative shares. You could also buy them back at a lower price than you originally sold them and then sell them again with a profit. If you do this enough times you will in the end have compensated for the expenses you had when you made the shares. This of course is the hard way to make a profit and should only be attempted if you really know what you are doing.
 

Revision as of 23:39, 8 December 2005

Metabets is a meta-game where you place bets on the probability of various events occurring in BattleMaster. The collective opinions of everyone participating should be fairly accurate at predicting probabilities for events. It is also a lot of fun!

Quickstart

For those of you with no patience whatsoever, this is a quick overview to let you get started placing bets right away.

You start out with $100.00 (an imaginary currency) and with this you can buy and sell shares. Shares are priced at between 1¢ and 99¢. Shares pay their owners 100¢($1.00) if the claim is true. If the claim is false, the owners of the shares receive nothing, but anyone owning negative shares receives 100¢($1.00) per negative share. Prices are always listed in cents(¢).

Basically, you should buy shares if you think that they are undervalued, and sell shares if you think they are overvalued. For example, assume the claim is “Tom will burn the BattleMaster server before January 1, 2007”. You think that Tom is is a pretty reasonable person, but who knows, stranger things have happened. You decide that there is 5% chance of this happening. Therefore, you should buy shares in this claim if someone is selling for 4¢ or less, and sell if someone is buying for 6¢ or more. Or perhaps you believe that Tom is a pyromaniac, and that there is an 80% chance Tom will burn the server before January 1, 2007. In that case, you should buy at 79¢ or less, and sell at 81¢ or more.

It is important to know that you can sell shares you do not have. This will cost you money, and you will then own a negative number of shares. This is the only way that shares can exist initially.

The above information is all you need to start trading on Metabets. You can come back and read the rest at your leisure.

The Math

Assume that you had decided you would buy 10 shares of FIREBM at 65%(65¢ each). You place a "limit order" to "buy" 10 shares at 65%. If Bob comes along a few minutes later, and wants those shares, he places a "limit order" to "sell" 10 shares at 65%. If nether you nor bob owned any shares, then:

  • You now own 10 shares in FIREBM. It cost you $6.50 ($0.65×10)
  • Bob now owns -10 shares in FIREBM. It cost him $3.50 (($1.00-$0.65)×10)

You and bob together spent $10.00. You will receive $10.00 ($1.00 per share) if the claim is eventually judged true, or Bob will receive $10.00 ($1.00 per negative share) if the claim is eventually judged false.

Speculating

Of course, there are faster ways to make money. If you sell shares for more than you paid for them, you will make a profit. You might even initially sell shares you do not have, expecting the price to drop. Later, you can purchase the shares at a lower price and make a profit! The possibilities are endless.

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