Event Trader

#Definition

An event trader in prediction markets focuses exclusively on markets around major scheduled catalysts such as economic data releases, earnings announcements, policy decisions, or planned events. These traders concentrate capital during specific time windows when volatility and opportunity are highest, remaining inactive between events.

Event trading prioritizes quality over quantity, targeting moments when information asymmetries or market inefficiencies are most pronounced.

#Why Traders Use This Approach

Event trading attracts traders because:

• Concentrated opportunity: Most market movement occurs during specific, predictable windows
• Clear timing: Scheduled events allow precise preparation and execution
• Information advantages: Deep expertise on specific event types can create sustainable edge
• Time efficiency: Trading only during events frees time for research and other activities
• Reduced noise: Avoiding between-event periods eliminates random market fluctuations

Platforms like Kalshi offer numerous markets on economic indicators and scheduled announcements that suit event-focused strategies.

#Tools of the Trade

• Economic Calendars: Essential for tracking upcoming releases (e.g., TradingEconomics, ForexFactory).
• News Aggregators: Real-time feeds (e.g., Terminal, Twitter lists) for immediate results.
• Historical Data: Archives of past event outcomes to model potential reactions.

#Economic Calendar Resources

#US Economic Data Releases

#Calendar Aggregators

#Pre-Event Checklist

Complete this checklist before any event trade:

#Research Phase (1-7 days before)

• Historical analysis: How has this event moved markets historically?
• Consensus tracking: What is the market expecting?
• Model estimate: What is YOUR probability estimate?
• Edge calculation: Market price vs. your estimate = edge size
• Scenario mapping: What happens if result is above/below/in-line?
• Position sizing: Based on edge and conviction, how much to risk?

#Preparation Phase (24 hours before)

• Liquidity check: Is there enough volume to enter/exit?
• Spread check: Are bid-ask spreads reasonable?
• Entry order set: Limit orders placed at target prices
• Exit orders prepared: Stop-loss and take-profit levels defined
• Alerts configured: Notifications for price levels and event time
• Platform tested: Can you access the market quickly?

#Event Phase (Day of)

• Final position review: Confirm all orders are active
• News sources ready: Have feeds open for immediate result access
• Distraction-free time: Clear schedule for event window
• Plan reminder: Review your scenario map one final time

#Post-Event Phase (Immediately after)

• Result logged: Record the actual outcome
• P/L recorded: Document profit or loss
• Analysis notes: What worked? What didn't?
• Model update: Should your model change for next time?

#How It Works

Strategy Complexity: Medium

Event trading follows a structured approach around scheduled catalysts:

1. Identify relevant events

   • Monitor economic calendars for data releases (jobs reports, inflation, GDP)
   • Track scheduled announcements (earnings, policy decisions, elections)
   • Prioritize events where prediction markets exist with sufficient liquidity

2. Research the specific event

   • Analyze historical patterns for this event type
   • Review consensus expectations and potential surprises
   • Assess how market prices compare to your probability estimates

3. Position before the event

   • Enter positions hours or days before the scheduled release
   • Consider whether to bet on direction or trade volatility
   • Size positions based on conviction and potential magnitude

4. Execute during the event window

   • Monitor real-time information as event unfolds
   • Adjust positions based on actual vs. expected outcomes
   • Execute exits at predetermined price levels

5. Exit and review

   • Close all positions related to the event
   • Document lessons learned for future similar events
   • Return to research mode until next scheduled opportunity

#Event Calendar Approach

#Event Calendar Approach

Weekly Planning:

• Monday: Research upcoming economic releases
• Tuesday-Thursday: Position for mid-week announcements
• Friday: Trade jobs report or weekly closes
• Weekend: Review results, plan next week

Event Window Intensity:

• 1 hour before: Final position adjustments
• 0-5 minutes before: Avoid new positions (liquidity poor)
• 0-5 minutes after: Rapid price adjustment phase
• 5+ minutes after: Consider exit or reversal trades

#When to Use It (and When Not To)

#Suitable Conditions

• Markets on scheduled, recurring events with predictable timing
• Events where you have researched historical patterns
• Sufficient liquidity to enter and exit positions around the event
• Clear exit criteria defined before entering positions

#Unsuitable Conditions

• Unscheduled or surprise announcements
• Events where you lack expertise or preparation time
• Markets with wide spreads that expand further during events
• Situations where you cannot monitor the event in real-time

#Examples

#Example 1: Monthly Jobs Report

A binary market asks whether unemployment will be above or below a threshold:

• Event trader studies historical accuracy of consensus estimates
• Analysis shows consensus typically underestimates unemployment by 0.1% in certain conditions
• Market prices YES (above threshold) at $0.35
• Trader takes position expecting consensus to be wrong
• At release, the actual number exceeds threshold, and position profits

#Example 2: Inflation Data Release

A market on monthly CPI data:

• Trader identifies that energy prices suggest higher-than-expected inflation
• Market hasn't fully priced in recent commodity movements
• Position entered 24 hours before release
• Release confirms analysis, position closed within minutes of announcement

#Example 3: Central Bank Decision

A market on interest rate decisions:

• Event trader focuses on signals from central bank communications
• Market prices a specific outcome at 60%
• Trader's analysis of recent speeches suggests 75% probability
• Position sized accordingly, with exit plan for either outcome

#Risks and Common Mistakes

• Pre-event volatility: Prices can move significantly before events, eroding potential edge
• Execution risk: Slippage increases dramatically around major events
• Binary outcomes: Events often resolve definitively, creating all-or-nothing results
• Overconcentration: Focusing capital on single events amplifies individual outcome risk
• Preparation failure: Entering events without adequate research leads to gambling
• Missing the window: Technical issues or delayed reactions can result in missed opportunities

#Practical Tips

• Specialize in event types: Develop deep expertise in specific recurring events (jobs, inflation, elections)
• Set position limits: Never risk more than predetermined percentage on any single event
• Use limit orders: Avoid market orders during high-volatility windows
• Plan multiple scenarios: Define actions for each possible outcome before the event
• Test execution: Practice order entry during less important events to refine process
• Track consensus accuracy: Maintain records of how often consensus estimates are correct
• Accept missed events: If preparation is incomplete, skip the event rather than trade unprepared

#Volatility and Price Behavior Near Events

Understanding how prices behave approaching events helps optimize entry timing:

#Pre-Event Volatility Patterns

#The "Volatility Smile" in Event Markets

As events approach, market behavior changes:

Volatility Pattern Approaching Event:

Uncertainty
    │
    │                         ╭──────╮
    │                      ╭──╯      ╰── Resolution
    │                   ╭──╯
    │        ╭─────────╯
    │    ────╯
    │────╯
    └────────────────────────────────────────► Time
    7 days  5 days  3 days  1 day  Event

Key Observations:
- Volatility low when event is distant (prices stable)
- Volatility increases 3-5 days before (positioning begins)
- Volatility peaks in final 24 hours
- Volatility collapses immediately after resolution

#Optimal Entry Windows

#Post-Event Analysis Template

After each event trade, complete this analysis to improve future performance:

#Event Summary

#Trade Details

#Analysis Questions

1. Was your estimate accurate?

   • If yes: Good analysis, continue refining
   • If no: What did you miss? Update model

2. Was your entry timing optimal?

   • Did you get better or worse price than day-of?
   • Would earlier/later entry have helped?

3. Was your exit timing optimal?

   • Did you exit too early (left money on table)?
   • Did you exit too late (gave back profits)?

4. What would you do differently?

   • Position size change?
   • Timing adjustment?
   • Analysis improvement?

#Long-Term Tracking

Maintain running statistics:

#Related Terms

• Prediction Market
• Binary Market
• Liquidity
• Slippage
• Expected Value
• Risk Management
• Volatility

#FAQ

#How do event traders handle unexpected news between scheduled events?

Pure event traders typically avoid unscheduled news entirely, as it doesn't fit their research-and-prepare approach. Some hybrid traders maintain small positions for surprise opportunities, but the core strategy focuses on scheduled events where preparation creates edge. Unexpected events usually favor traders with speed advantages rather than research advantages.

#What's the optimal timing for entering event trades?

Optimal entry timing varies by event type. For major economic releases, entering 12-24 hours before the event often captures value before last-minute positioning crowds the trade. Entering too early ties up capital unnecessarily, while entering too late faces poor liquidity. Experimentation and tracking results help identify the sweet spot for each event type.

#Do event traders need to watch markets in real-time during events?

Real-time monitoring is valuable but not always essential. Traders can set limit orders to execute at predetermined prices, allowing exits without constant monitoring. However, being present during events enables faster reaction to unexpected outcomes and better slippage management. The importance of real-time presence depends on the specific strategy.

#How many events per month do successful event traders typically target?

Quality event traders often target 4-8 events per month, focusing on those where they have genuine edge. Attempting to trade every scheduled event dilutes attention and often leads to trading marginal setups. Selectivity matters more than activity; profitable event trading comes from deep preparation on fewer, higher-conviction opportunities.