Short answer: Jordan Metzner says transaction fees ate the margin on low-risk trades, and bots trading on bots create consensus. His takeaway is that the only real way to make money on these markets is inside information. He lost about $7.
Watch this answer from Episode 26 (starts at 11:33) · Episode 26 notes and transcript
From Episode 26: We Built an AI Trading Bot for Prediction Markets — Here’s What Actually Happened, starting at 11:33.
Jordan Metzner [11:33]: And I think I lost money for two major reasons. One, the transaction fees are incredibly high, and when I'm taking low margin trades, of like low risk settlements, I found that the transaction fees kinda take away my margin. And then two is that, these are bots trading on bots. Right? I'm trading based on the behavior of the whole network, and how many other people are trading on the behavior of the whole network. And so, essentially, you have this, like, kinda consensus algorithm that's happening over time where, consensus drives more consensus. Even if your plan is to do the opposite of the consensus is, then there's a new consensus, and that becomes a new consensus. And so, the good thing about sports is that they're very well defined. Right? A game starts and it stops. It has a winner and a loser or a tie. And so those things are like pretty well definable. There was some news this week that, Polymarket didn't wanna pay out on the Maduro trade because they said it wasn't officially an invasion. And so you start to look at some of these events, these political events, and you start to say that actually maybe there's some gray area in the definition of these types of events, whereas in sports, there was no gray area of who won or lost or how many points were made, etcetera. So in general, it was a very educational experience.
Jordan Metzner [12:44]: I learned a ton. And, just to bring it all around full circle, I think, like, my biggest takeaway is that, the only real way to make money on these markets is to have inside information. And without that, I think, you're you even with algorithm, even with all this data, I think there's just there's no real way to gain some type of alpha or some type of advantage against the rest of the market, at least for me. Maybe I could spend more time trading on it. I've seen people spend a lot of time improving their trade bots, but, the market is continuing to change. More people are coming in, more people are coming out, and it still remains to be seen kind of how this will all end. But, yeah, I just thought it was a cool, fun, little project. I'll probably end up taking my money out of here and, go away with my $7 loss and call it a day. But, yeah, happy to answer any questions, Sam. I built all this.
Jordan Metzner [13:33]: Obviously, it's all connected directly into Kalshi. It's got a back end, front end, the whole thing.
Sam Nadler [13:38]: No. I think it's you know, I think the key would be, like, what signals could actually, drive those earnings, but I think that's obviously the hard part. Super cool tool, Jordan. I mean, I think it's topical and, just shows what you can do with AI even though it didn't you know, your 12 trades didn't really work out in your favor. It's just you know, I'm sure someone who maybe has that ability, that gambling experience could take something what you built and turn it into some a tool that, makes money into sleep.
