Trading Successfully

So, you’ve read about what Kalshi is, what event contracts are, and why they matter. Now you’re ready to start buying contracts, taking positions, and hedging risk.

Before diving into trading, here are some tips and tricks for thinking about event contracts and Kalshi’s exchange. We hope they get you started on your path to becoming a Kalshi Pro!

Before you’re able to decide on a market to trade in, you should know what markets exist on Kalshi!

A good place to start your search is through the Home page. This page has three sections that are especially useful for discovering markets.

Even though the Spotlight section can be incredibly useful for generating initial trading ideas, it only shows a sliver of the markets that Kalshi offers. The Daily Movers and Surging Markets categories below can offer more ideas and tell you which markets are currently popular.

Finally, you can check out all the markets that Kalshi has to offer in the Explore Markets section at the bottom of the page. Use the search bar to access any currently listed market. For example, if you type “New York City” into the search bar, you’ll see markets related to city-specific topics such as indoor dining bans or subway ridership. You can also filter the markets in various ways, including by category.

Once you’ve decided on a market to participate in, it’s important to have all the information you need to make an informed trade. Scrolling on the market page will reveal the Rules section, which contains the Start Date, Close Date, Settlement Source, and Settlement Date for the market. These are all important pieces of information to keep in mind when trading the contract.  

Perhaps the most important of these is the Settlement Source. Kalshi’s market questions may seem broad, but each contract has a very specific set of criteria that must be met in order for settlement to occur in a specific direction, whether the outcome is YES or NO. Kalshi contracts are designed to be interesting and competitive, so you should make sure you understand the rules of the contract before you begin trading. The Rules section also describes how the settlement data is gathered and how settlement will occur. Any market participant should be able to verify the result of a contract settlement, and you should familiarize yourself with these details prior to buying and selling contracts.

Price: The Yes/No prices reflect the amount it costs to buy a contract for a specific outcome. If the Yes price is currently $0.50, it means you can buy and own a Yes contract by paying $0.50. Because a correct contract pays out $1, you can interpret the price of a contract as the market probability of the event in question occuring. If a contract costs 50 cents, the market believes there is a 50% chance that the underlying question will resolve to Yes. Before trading, you should think about whether the chances of the event happening are higher or lower than the current prices and make trades accordingly.

Spread: Spread is (price you can buy YES + price you can buy NO) minus 1. The spread shows you how liquid and well-functioning a market is. Generally, low spreads mean that traders generally agree on what a fair price for a contract is, and that there is a lot of liquidity in the market. Lower spreads mean you’re getting better prices, and that it’s easier to close out positions, making trading in that market a bit less risky.

Volume: You want to be able to buy a contract at a good price, and also close out your positions if you don’t want to bear any risk associated with the market anymore. The more trading activity that there is in a market, the better the prices you get, and the easier it is to close out positions. The higher the market volume, the better.

Part of the fun of finance is that information comes from unlikely sources, and finding those wacky correlations can give you an edge in the market.  Can you use Google Maps data to predict the temperature in Uganda? What about using information about the amount of plastic manufactured in Vietnam to predict the next free trade agreement?  

At first, Kalshi can seem overwhelming.  By opening the door to trading event contracts, Kalshi has vastly expanded the kinds of questions that traders have to think about.  But by asking more questions, you'll find that there are more answers than ever before.  Whether it's a contract that is already offered on Kalshi, or something that will be offered in the future, all of the data around us contributes to finding answers.  

Our simple advice for you: Don't be afraid to think outside the box when you start looking for alternative data sources or methods for deciding how you will trade on Kalshi.  In the Information Age, data is all around us and interesting conclusions are always around the corner.

You shouldn't feel pressured to trade Kalshi contracts, and we recommend that you understand the risks involved with trading. The best advice we can give to you is trade the contracts that you want to trade. Find contracts on Kalshi that you think are interesting. These can be markets with intriguing topics, markets that you think you understand well, or markets that give you the ability to hedge risk in other parts of your portfolio. Be deliberate about your choices, and take the time to understand the contracts you invest in.