How to Play / Trade

Overview of the Trading Exchange

FT Predict allows you to use your fictional FT$ to take part in a trading market to test your judgment about the likelihood of certain events or outcomes taking place that directly affect your life and your business in categories such as politics, financial indicators and current events. Within each category we list a set of "contracts." Each "contract" is an event that will have an unambiguous result. Explicit rules for each contract are available for review before making a trade for that contract.

An example of a political contract might be: "Will Hillary Clinton be elected president in 2008"? The result will be unambiguous: Hillary Clinton either will be elected president or she won't. When the election is over, the contract will be settled. If Hillary Clinton gets elected, the contract will close at 100. If she is not elected, the contract will close at 0. Until the election is over the contract will fluctuate in value between 0 and 100 just like a stock, reacting to the news of the day and buying & selling by traders.

In order to facilitate liquidity in the Trading Exchange, we may from time to time import the most recent open-bid and/or ask-quantity/price data from Intrade.com.

Open an account

From the home page click on the Join tab near the top of the page. Follow the instructions to register and create a user name and password. It's free. You will receive an account with a starting balance of 10,000 FT$ to use to make trades. To return to your account during the contest go to www.ftpredict.com and logon using your username and password.

Choose the Contracts You Want to Trade

To view the available contracts, click on the Trading and Quotes tab at the top of the page. Category choices will be listed on the left-hand side. Browse categories until you find contracts of interest. Review the contract rules and prices before making a trade. You may make any combination of trades in any contracts and/or categories with the available FT$ in your contest account balance.

Evaluate Prices

Since contracts trade between 0 and 100, you can think of the price at any time to be the percentage probability of that event occurring. Using the Hillary Clinton example, on January 1, 2007 the Hillary Clinton election contract was trading on Intrade.com at 24, which means that traders gave her a 24% chance of being elected in 2008. If you thought Hillary Clinton would get elected then you would expect that price to go up towards 100. So, if you bought one contract at 24, and held it until the election, and if Hillary did get elected, you would make a profit of 7.6FT$ - i.e., the difference between your purchase price (24) and the closing price (100) divided by 10. The contract with price 100 is worth of 10FT$. If you buy one contract at price 24 you are actually risking 2.4FT$.

Important: You do not have to hold a contract until the result of the event is decided. In many cases this is not even possible - the event may not be decided until after the contest is over. You buy or sell a contract when you believe it is most advantageous. So, if you change your mind about the outcome (or if you simply want to take your profit or loss from a given position and shift your investment to a different contract), you can enter an order to sell; whether it's for a profit or loss depends on you. There is no inherent advantage in making more or fewer trades or in holding positions for longer or shorter times. Your skill and judgment in deciding about the optimum selection and timing of trades and the probable movements in the market are what count.

Who determines the prices?

You do - along with other traders. Just like the price of a publicly traded stock is determined by the buying & selling activities of traders in the financial markets, the price of our contracts are determined by traders like you in our Exchange and/or on Intrade.com (In order to facilitate liquidity in the Trading Exchange, we may from time to time import the most recent open-bid and/or ask-quantity/price data from Intrade.com.)

Entering Orders

To trade on the Exchange, you must first enter an order. A trade is executed when either your new order is entered and another trader subsequently matches all or part of your order, or your new order immediately matches all or part of another trader's open order. If no other orders exist for your contract on the Exchange, we may from time to time import the most recent open-bid and/or ask-quantity/price data from Intrade.com.

All order prices must be higher than the contract's minimum possible expiry price (0) and lower than the contract's maximum possible expiry price (100).

Orders on certain events and markets may be delayed for a short period (e.g. 1 second) prior to being made live and available to trade against. This delay may be changed from time to time depending on the event or underlying circumstances (see rationale below).

Orders on in-running financial markets are currently delayed for 0.5 seconds. This delay may be changed from time to time depending on the event or underlying circumstances.

When a player cancels an existing order the cancellation is processed immediately.

The rationale behind this feature is to reasonably protect players who enter orders in a contract from potentially losing money as a result of access to slower information over which they have no control e.g. a delayed TV signal or a delayed datafeed.

Any attempt to manipulate a market or circumvent any rule may result in disqualification. To check the order delay time check the contract specification or contact the Exchange for additional details.

Types of Orders

There are several types of order you may use, as well as specifying whether an order is a Good Till Cancel Order or Good For Session:

• Limit Buy/Sell Order: A limit buy (sell) order is a request to buy (sell) a specified number of contracts at a price at or below (above) a specified price limit that you set. A buy (sell) order matches the lowest offers (highest bids) in a price-time priority sequence until the order is filled, or until there are no more offers (bids) at or below (above) the limit price. If any part or all of the order remains unfilled, it remains posted as a limit buy for the remaining quantity with the same original limit price.
• Stop Limit Buy/Sell Order: This order is specified as a buy or sell with an activate price and a limit price. It is invisible to other players until it is activated by a trade at or above (for a buy order) or below (for a sell order) the specified activation price. When this order is activated, it behaves as a standard limit buy/sell with time priority based on its activation time.
• Fill Or Kill Order: A fill or kill order will only be executed if the full order quantity may be matched immediately. Otherwise, the whole order will be cancelled.
• Custom Time Order: This type of order allows you to place an order for a specific time period. Once the system time reaches the time you specified any unfilled part of your order will be cancelled.
• When entering an order, it must be marked either as one of the above or as Good For Session (GFS) or as Good Til Cancel (GTC).

Cancelling Orders

• When you enter a Good For Session (GFS) order, any remaining, unexecuted quantity of a GFS order is automatically cancelled at either the end of the trading day or the expiry of the contract, whichever is earlier.
• You may cancel orders that have not been matched at any time before the expiry of that contract.
• If the minimum and maximum possible prices change, orders with prices below the minimum possible expiry price or above the maximum possible expiry price will automatically be cancelled.

Trades

When the Exchange matches your order with another trader's order it becomes a trade.

• Matching occurs when a bid/offer is placed on a contract's order book at a higher/lower price than an order already on the order book.
• Where the quantity of the new order is less than the order already on the order book, the smaller quantity will match and the remaining quantity will remain on the order book. This is known as a "partial fill".
• When matching orders, the Exchange gives priority first by price and then by the time that the order was received by the Exchange, or in the case of a stop limit buy/sell, the time that the order is activated.
• Traders are notified of new trades in the "Messages" section of the "Trading Screen". Additionally you may set up a notification where the exchange automatically sends you an email with details of the trade.
• A trade cannot be withdrawn or cancelled "by the player" and the Exchange cannot guarantee that the resulting open position (See below) may be closed.
• It is possible that you may enter an order, which appears to match against an existing order but that order may either have been withdrawn or matched by another trader before the Exchange receives your order.

Open Positions

Your open position represents the net result of your previous trades.

• Each time you trade, your open position in the contract is updated. Although your trade has been executed with another trader, your open position shows your effective net position against the Exchange.
• A positive open position indicates that you have bought more of a contract than you have sold. A negative open position indicates that you have sold more of a contract than you have bought.

Closing Out Positions

"Closing out" occurs when you had previously bought a contract and have now sold the same contract, or you had previously sold a contract and have now bought the same contract. In such circumstances, your open position is always reduced.

• You may close out your position by trading on the Exchange with any other player.
• When a position is closed out, the Exchange calculates your trade profit/loss and adds/subtracts this amount in your account.

Review your account

Click on the My Account tab then under My Account Details you'll see all your account information as well as how to change your password. You'll see all your cash balances, trades, as well as profits and losses and full account history.

Calculation Profit/Loss

Profits and losses in accounts are calculated in accordance with the following:

• Trade profit and loss: The profit or loss recorded on the Exchange when you reduce the absolute size of your position in any contract(s). This is calculated as the difference between the trade price and the average cost of the position, times the number of lots traded out. The average cost of the position shall include any Mark-to-Market gains or losses (see definition below) recorded on the position over the life of that position. The "Cost" of a position that is taken into a Trade P&L calculation will reflect the weighted average cost of that position (using the number of lots traded as the weighting factor).
• Expiry profit and loss: The profit or loss recorded on the Exchange when a contract expires. This is calculated as the difference between the valuation of the position at expiry, and the total cost of the position. The total cost of the position shall include any Mark-to-Market gains or losses on that position over the life of that position.
• Mark-to-Market profit and loss: The profit or loss recorded by the Exchange against any open position. This is calculated as the difference between the current total cost of the position and the current market value of the position. The total cost of the position shall include any Mark-to-Market gains or losses previously recorded for that position.
• Transaction Fees: To simulate actual futures trading, a transaction fee of 0.05 FT$ per share will be charged for each trade you make.

Example:

1. At the start of week 1, you have no positions.
2. During week 1, you spend $500 on a position in contract A.
3. At the end of week 1, the "mark-to-market" calculation compares the price you paid for your position in Contract A with the most recent price on that same contract, and it determines that your position would now cost $520. The Exchange recognizes that you've made an unrealized gain of $20 and posts it to your account. You can't trade on this profit though - it's just there to record your unrealized profit.
4. During week 2, you don't trade contract A.
5. At the end of week 2, the mark-to-market program determines that your position is now only worth $510 and records an unrealized loss for week 2 of $10.
6. During week 3, you close out your position at $502, and you make a realized loss of $8.
7. At the end of week 3, there's no position to revalue, so there's no gain or loss.

So, here's how the profit/loss looks for each week (excluding any deductions from your account for transaction fees):

Week 1:	Unrealized profit of $20.	Realized profit of $0	Net total profit $20
Week 2:	Unrealized loss of? $10	Realized profit of $0	Net total loss of$10
Week 3:	Unrealized profit of $0	Realized loss of 8$	Net total loss of $8