Frequently Asked Questions - FAQ

Forecast Contracts are an investment instrument for trading future outcomes of specific events with a yes/no or result. They provide a way to express your view on whether an event will or will not occur and receive a payout for the right prediction. In addition, Forecast Contracts pays interest in the form of coupon incentives for the length of the contract.

• Trading Forecast Contracts offers a way to earn money even when the prediction is not correct by offering incentive coupons for the length of the contract.
• Forecast Contracts are priced low and have the lowest fees, which makes trading them easy for anyone.
• The fee is included in the price of the contract, so there are no surprises.
• The investments are fully collateralized so there is no risk to the trading ecosystem.
• As there’s no buyer-seller, trading Forecast Contracts is extremely simple and transparent.
• ForecastEx is the exchange and clearinghouse for Forecast Contracts. They are regulated by the CFTC, so your investments are safe.

A Forecast Contract’s value is based on the probability of the underlying event occurring. If there is a 50% chance of the event occurring, the value of the contract is $0.50. There is a 50% chance that it is worth $1.00 and a 50% chance that it is worth $0. Likewise, a contract is worth $0.70 if there is a 70% chance of the event occurring, and $0.10 if there is a 10% chance of the event occurring. In order to effectively price a Forecast Contract, an investor must determine what the likelihood of the event is. The probability of the outcome, determines the value of the contract.

You can trade Forecast Contracts by opening an account at one of ForecastEx's Members.

ForecastEx charges a fee of one cent per each contract or pair. The fee is included in the price of the contract. More details on ForecastEx's fee schedule can be found on the Regulatory Page.

Contracts are fully secured by cash deposited by the Member prior to their bids being accepted. ForecastEx invests that cash and passes 100% the earnings back to the Members each month. The amount of earnings, or Incentive Coupon, passed on to each Member is proportionate to their interest in the collateral invested by ForecastEx at each day's close and the rate earned. Accordingly, if the value of a given Member's positions increase over time, their interest in the collateral and therefore proportion of the Incentive Coupon earned, increases as well. Members may share these earnings with their clients, making trading on ForecastEx an appealing option for investors.

Yes, Forecast Contracts are legal. ForecastEx LLC is registered with the Commodity Futures Trading Commission (CFTC) and is the Designated Contract Market ("DCM") and Derivative Clearing Organization ("DCO") for Forecast Contracts. Learn more on the Regulatory Page.

Forecast Contracts are a low-risk investment option that allows investors to profit from their knowledge in predicting the future outcomes of major events. They can also be used for lowering risks by hedging against uncertain market movements. Forecast Contracts incentivize long-term investment by distributing interest in the form of incentive coupons over the contract's lifespan. This provides a continuous reward for those who maintain their contracts.