Initial Forecast
In prediction markets, the initial forecast appears when trading begins or when the first prices are set. It represents the starting belief about an event’s likelihood.
This forecast may come from market creators, early traders, or automated pricing mechanisms. At this stage, information is limited and participation is usually low. Initial forecasts often change quickly. As more participants enter and new information arrives, probabilities tend to adjust away from early assumptions. Despite being provisional, the initial forecast matters. It sets an anchor that can influence early trading behavior and price trajectories.
For analysts, the initial forecast provides a baseline. Comparing it to later prices helps measure learning speed, bias, and early misestimation in prediction markets data.
Why It Matters
The initial forecast shapes early expectations. Understanding it helps users evaluate how much markets learn over time.
How is an initial forecast set in prediction markets?
Initial forecasts are set when a market opens, often by early traders or predefined pricing rules. They reflect limited information and low participation. These early prices are highly sensitive to small trades. As activity increases, the market typically revises them.
How reliable is an initial forecast in prediction markets?
Initial forecasts are usually less reliable than later ones. They lack broad participation and supporting liquidity. Early prices often move significantly as more information becomes available. Analysts treat them as tentative signals.
How do analysts use initial forecasts in prediction markets data analysis?
Analysts use initial forecasts as reference points. They compare early prices to later probabilities and final outcomes to study learning and bias. Large gaps between initial and final forecasts reveal early misjudgment. This analysis improves understanding of market dynamics.
Real-World Example
On Polymarket, a newly launched election market may open with a probability based on limited early trades. As polling data and participation increase, the market often moves away from that initial forecast.
Initial Forecast and FinFeedAPI
FinFeedAPI’s Prediction Markets API provides historical prediction markets data that includes early price points for new markets. Analysts can identify initial forecasts by examining the first available probability records. This supports learning analysis, bias detection, and forecast evolution studies. The API enables consistent access to initial forecast data across prediction markets.