Foresight Exhange is a prediction market. Players buy "shares" in various claims with fake money, and if the claims come true, they make money. It's at

FX originated as a way to track pundits - who always make wild predictions but are almost never held accountable for them. If they played FX, we could look at their score in a year or two and see how accurate they were.

It is also useful to find out the concensus about various ideas. News reports make an effort to cover both sides of every story, even when the facts don't back up one side. The classic example is global warming, where a few respected scientists are quoted warning of the dangers, followed by a other scientists who happen to be employed by Big Energy who play down the dangers. If there were a related claim on FX, you can look at the price, and look at the holdings of successful players.

The most popular claim right now is Bush04, trading at about 50. The claims states that Bush will win re-election in 2004. The price, 50 cents, is the price for one share. If the claim comes true, you get 1 dollar for that, doubling your money. Or, if the price goes up you can sell it to another player and make a little less money.

However, if the claim doesn't come true, your share becomes worthless. That is an example of a "YES" share. You can also buy "NO" shares, which become more valuable the lower the price goes. So if you think Bush won't win, buy NO shares at 50 and the lower the price of Bush04 goes, the more money you make. Another popular claim is OBLNov - that Osama Bin Laden will be removed from the FBI most wanted list before November 5, 2004. Right now it's trading around 23 - so if you buy a YES share for 23 cents, you stand to make 77 cents profit if it comes true and your share shoots up to 1$. NO shares are the opposite of YES shares, so they cost 77 cents now, and holding one the most you can make is 23 cents. You place buy or sell orders on the claim page, and if someone wants to buy the opposite of what you want, a transaction takes place. So if I thought OBL wouldn't be found by november, I would be willing to pay 77 cents to make ~25% in 6 months. If someone else thinks paying just 23 cents for a chance to make 300% profit is worth it, then a transaction takes place, I get NO shares and the other person gets YES shares.

The market is created by the orders placed.

There are two main ways to make money

1. on the fundamentals - buy based on your knowledge of the facts, and wait for the claim time limit to come true and hope you were right.

2. "playing the market" - if you notice a claim fluctuating a lot, try to buy on the low ebb and sell on the high. "buy low, sell high". You can do this over and over and make money. Or you can do it the other way around - sell high, buy low.

I've made about 10% in 6 months. The best players have made 500% or so in more than 5 years.

Here are some example claims:

Bush04 - GW Bush remains US Pres. '04 - I sold (=buy NO shares) at 60, and since then the price has gone down to 50, so I made 10 cents each.

CONG05 - GOP holds Congress in 2005
Demo04 - Democrat wins Presidency-2004
Draft - US conscription before 2010
GoCh - Machine GO Champion by 2020 - for some reason a number of people actually believe this will happen. More money for me....
IraqED - Free elections in Iraq within 3 yrs
mdvw - A device can view human mind
MJ06 - Michael Jackson found guilty
NUKE - Nuclear Weapon Used by 2010
OBLnov - Bin Laden gone before election - I got screwed on this one, bought fairly high when rumors that he was already found were swirling. Since then the price has gone down so I've lost money.
suibmb - US Suicide Bombers< 2005
SWING - # of "swing" states Nov. 2004
WarmSU - Pres Mentions Global Warming
Yen - Dollar-Yen Exchange Rate < 80 - For some reason people think the yen will become unbelievably strong...

The site suffers a bit from a UNIX tough on newbies mentality, but it's not too bad. It's extremely addicting, and I check my shares multiple times every day.

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