Prediction markets are penny stocks
Boom and bust cycles caused by retail gambling or news events (shit traders have been modeling for decades). I put retail indicators on a prediction market chart and here’s what I found:
- High volume price levels are tradable and reversions to them happen in volatile and or slow to resolve conditions.
- Smart money (the whales you’re tracking) are moving from similar places that a VWAP gets placed at.
- Tools that are often used to model stock market sentiment are also being used to model backtest-able conditions across resolved markets.
- Emotional Fear/Greed indexes. Retail indicators are the exact thing used for that index.
Here’s what I think can be modeled easily:
- HVN/MA reversion from a fearful area
- High volume MA buy? Buy with them.
- Having a knockout sweep your buy level, that can’t be modeled.. be safe 😂