TradeFair Hi Lo = the 5-minute prediction markets, which will bring a financial cachet to gambling (alas, for some).

It is official: TradeFair Binaries, launched less than one year ago, has been a disaster of nuclear proportions, and so The Sporting Exchange have ditched it, and replaced it with “TradeFair Hi Lo“ —which is basically a way to bring gambling to the financial markets.

[For the difference between gambling and betting, see Vernon Smith.]

-

Here’s how it works.

You follow the British stock market (and its index, the FTSE). You make a binary bet on whether the FTSE will go up or down in the next 5 minutes.

-

-

Once the previous bet is resolved, you can start off anew with another 5-minute bet on the FTSE —from the level that was the basis for the settlement of the previous bet.

-

-

This innovation (the 5-minute prediction markets) should probably be copied by BetFair, InTrade, TradeSports, NewsFutures and HubDub, as a way to dynamize trading, liquidity, and profitability.

This is a major innovation (focused uniquely on marketing), which may mark a new area for the prediction exchanges. New behaviors will be induced by this innovation, which will bring in new revenues that traditional prediction markets wouldn’t. Let’s see how it unfolds for TradeFair in the coming months.

There is no value added when it comes to forecasting, which will maybe prompt prof Lance Fortnow to complain.

-