So, 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.
Before you start
You can only trade after depositing money into your Kalshi account, and you can only lose money you’ve used to trade – you will never have any debt with Kalshi no matter what happens. The official term for this concept is that Kalshi is a fully cash collateralized market, meaning that your only collateral (asset used to guarantee an agreement) is the cash you’ve deposited into your account.
Discovery
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 Explore page. This page has several sections that are especially useful for discovering markets. There, you can find markets that have been featured for their interesting subject matter or are currently popular with other traders.
You can also check out all the markets that Kalshi has to offer in the All 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.
Guiding principles
Exploring all the markets on Kalshi can be overwhelming if you don’t know what you’re looking for. There are many different reasons why someone might trade on Kalshi, including: to trade on your convictions, to hedge risk, or to profit on spreads.
If you’re here to trade your convictions, finding the right market at the right price is key. Look for markets that you have a strong opinion about, in topics you find personally interesting. As you browse through the markets, pay close attention to the Yes and No prices. Do you agree with the sentiment expressed by other traders?
If you’re here to hedge risk, focus on categories related to your existing investments and financial exposures. For example, if you work in the live events industry, look into markets on the progression of COVID-19 and local weather conditions.
Get creative
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. Data is all around us and interesting conclusions are always around the corner.
Read the contract carefully
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 Open Date, Close Date, Expiration Date, and other important pieces of information to keep in mind when trading the contract.
Perhaps the most important of these are the Source Agency and Market Resolution. 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.
Know the rules: 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.
Don’t forget about the risks
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.