Closed

#Market State Progression

Unopened → Open → Closed → Settled/Resolved

#Definition

A Closed market is one where trading has ended but the final outcome has not yet been officially determined and settled. During this period, positions are frozen - you cannot buy, sell, or modify your holdings - while awaiting the event's occurrence and subsequent resolution.

#Closed vs. Other States

#Market Lifecycle

Created → Open → Closed → Resolved → Settled
   ↓       ↓       ↓         ↓          ↓
 Rules   Trading  Frozen   Outcome   Payouts
  set    active  positions determined  sent

#State Definitions

#When Markets Close

#Scheduled Close

Most common: Market closes at predetermined time

Examples:

"Will Bitcoin reach $100k in 2025?"
Opens: Jan 1, 2025 00:00 UTC
Closes: Dec 31, 2025 23:59 UTC
Resolution: Jan 2, 2026 (check historical data)

Typical timings:

• Before event: Closes minutes/hours before (election closes on election day)
• During event: Closes as event occurs (sports game closes at final whistle)
• After period: Closes at end of time window (annual market closes Dec 31)

#Event-Triggered Close

Some markets close when event occurs:

"Will Bitcoin reach $100k?"
Opens: Nov 1, 2024
Closes: When Bitcoin hits $100k OR Dec 31, 2025 (whichever first)

Event triggers:

• Price threshold hit
• Announcement made
• Goal achieved
• Deadline passed

#Emergency Close

Rare: Platform closes market unexpectedly

Reasons:

• Suspected manipulation
• Technical errors
• Rule ambiguity discovered
• Legal/regulatory issues
• Force majeure

What happens:

• Trading halted immediately
• Positions frozen
• Platform investigation
• May void and refund, or may proceed to resolution

#The Closed Period

#What Happens During "Closed"

1. Positions locked: No buying, selling, or transfers
2. Prices frozen: Last traded price is final
3. Awaiting event: The real-world outcome occurs (if not already)
4. Data gathering: Platform/oracle collects resolution information
5. Dispute window: Time for challenges (on some platforms)

#Duration of Closed Period

Minutes: Election markets

Closes: When polls close (8 PM ET)
Resolves: When race called (~11 PM ET same night)
Closed period: ~3 hours

Hours: Sports markets

Closes: At final whistle
Resolves: After official score confirmation
Closed period: 15-60 minutes

Days: Earnings markets

Closes: Before earnings call (4 PM ET)
Resolves: After earnings release (5 PM ET same day)
Closed period: 1 hour

Weeks: Regulatory markets

Closes: Dec 31, 2025
Resolves: When BLS releases Jan employment data (early Feb)
Closed period: ~5-7 days

#Why Markets Need a Closed Period

Prevents last-second manipulation:

• No trading during event outcome
• Can't front-run resolution data
• Fair for all participants

Allows verification:

• Platform confirms outcome
• Multiple sources checked
• Dispute period provided
• Quality control

Manages volatility:

• No panic trading during ambiguous moments
• Prevents flash crashes from confusion
• Orderly resolution process

#During the Closed Period

#What You Can Do

✅ View positions: See what you hold ✅ Monitor event: Watch real-world outcome unfold ✅ Prepare appeals: Gather evidence if disputing ✅ Calculate returns: Estimate profits/losses ✅ Review other markets: Trade elsewhere

#What You Cannot Do

❌ Trade: Cannot buy or sell ❌ Withdraw: Funds locked until settlement ❌ Transfer: Cannot move shares ❌ Modify orders: Existing orders canceled at close ❌ Add liquidity: Cannot deposit to pools

#Platform Communication

Good platforms provide updates:

Before close:

"Market closes in 24 hours"
"Final chance to trade"
"Positions will lock at [time]"

After close:

"Market closed"
"Awaiting official results"
"Expected resolution: [date]"
"Dispute window: [duration]"

#Close Timing Strategies

#Trading Before Close

Early exit (hours/days before):

• Lock in profits
• Avoid last-minute uncertainty
• Accept slightly worse price for certainty

Wait until close:

• Get best price (narrowing uncertainty)
• Risk last-minute information
• Maximum profit potential

Example:

Election market:
- 1 week before: Biden 60¢
- 1 day before: Biden 65¢
- 1 hour before close: Biden 70¢
- Closes: Trading stops at 70¢

Trade-off: Exit at 65¢ (safe) vs. wait for 70¢ (risk reversal)

#Closing Price Significance

The closing price represents:

• Market's final probability estimate
• Collective wisdom at moment of close
• Benchmark for comparison
• Historical record

Accuracy metric:

If market closed at 70¢ YES:
- And YES wins → Market was well-calibrated
- And NO wins → Market underestimated uncertainty

Over many markets, closing prices near 70% should win ~70% of the time

#Platform-Specific Close Behavior

#Kalshi

• Scheduled close: Exact time in contract specifications
• No trading extensions: Closes precisely at stated time
• Fast resolution: Usually within hours
• Email notification: Alerts when market closes

#Polymarket

• Smart contract close: Automated based on timestamp
• Oracle activation: UMA Oracle begins resolution process
• Dispute window: 2-hour period for challenges
• On-chain settlement: Automated after resolution confirmed

#Manifold Markets

• Creator chooses: Can close anytime
• Flexible timing: Can extend or close early
• Immediate resolution: Often resolves same moment as close
• Play money: Less formal process

#Closed Market Analysis

#Post-Close Review

Traders often analyze closed markets:

Price accuracy:

Market: "Will Fed raise rates?"
Closed at: 85¢ YES
Actual outcome: YES (rates raised)

Analysis: Market was confident and correct

Volatility history:

Tracked price from 50¢ → 85¢ over 2 weeks
Major jumps on news releases
Final surge in last 2 hours

Volume patterns:

Low volume first week
Spike in volume 3 days before close
70% of total volume in final 24 hours

#Learning from Closed Markets

Calibration checking:

• Did 70% confidence markets win 70% of time?
• Were you overconfident or underconfident?
• Which types of markets did you misjudge?

Strategy improvement:

• When should you exit early?
• How to interpret closing price movements?
• Which signals mattered most?

#Problems During Closed Period

#Extended Close

Sometimes resolution delayed:

Disputed elections:

Closes: Nov 3, 2020
Expected resolution: Nov 4-5
Actual resolution: Nov 7 (race called)
Closed period: 4 days (longer than expected)

Source unavailability:

Closes: Dec 31
Expected resolution: Jan 3 (BLS data)
Actual resolution: Jan 15 (government shutdown delayed release)
Closed period: 15 days

What happens:

• Funds remain locked
• Platform communicates delays
• May eventually void if too long
• Interest/compensation sometimes provided

#Disputed Outcomes

During closed period, outcome may be unclear:

Sports game ends with controversial call
→ Closed while officials review
→ Hours of dispute
→ Final ruling
→ Resolution proceeds

Dispute mechanisms:

• UMA optimistic oracle (2-hour dispute window)
• Platform review (email appeals)
• DAO voting (governance tokens)
• Legal arbitration (regulated platforms)

#The Importance of Clean Closes

Well-managed closes:

• ✅ Build trust
• ✅ Ensure fairness
• ✅ Prevent manipulation
• ✅ Allow verification
• ✅ Protect platform reputation

Poor close management:

• ❌ Erodes confidence
• ❌ Enables abuse
• ❌ Creates disputes
• ❌ Loses users
• ❌ Regulatory scrutiny

#Closed vs. Settled

Key distinction:

Closed = "No more trading, waiting for outcome" Settled = "Outcome determined, money distributed"

Timeline example:
Nov 5, 8 PM: Market closes
Nov 5, 11 PM: Outcome clear (closed but not settled)
Nov 6, 9 AM: Platform confirms resolution
Nov 6, 10 AM: Payouts sent (now settled)

Many users confuse these states, thinking "closed" means they'll get paid immediately. The closed period is the interim waiting phase.