Why this is important
High stakes makes Manifold fun. There would be no Tumbles Financial Complex without markets where @Tumbles can bet at size (e.g. the US and Canadian presidential markets). Manifold can't provide enough liquidity to make every market fun, so we need to rely on users to bet against each other.
The problem
Leaving open limit orders on prediction markets is dangerous: news could break at any moment, letting traders fill your limit order placed with old, now out-of-date information. This is true in stock markets as well, but stocks are much less likely to go to 0 (or 100% if you’re holding no).
Possible solutions
Timed limit orders (capped fill amount per hour)
How it works: You set a max % (or mana amount) fill per hour (or other minute interval). If the price moves beyond your limit price, your limit order fills at the minimum of your fill threshold and order amount every hour until your limit order is cancelled or fills completely.
Pros: This lets you set a maximum amount of the order you lose due to news breaking. You might get a better price for shares if traders move the AMM above your price. User experience is relatively easy to get right and implementation is relatively easy.
Cons: Your order is less likely to fill completely as opposing traders trade more against AMM liquidity, which is capped at 1 and 99%. You can still lose all of your order if you don't see the limit fill notifications in time.
Limit offers (require creator agreement before filling)
How it works: You can create a new type of limit order that requires your consent after placement and before it fills. A trader will see a table of limit offers and click a button to request to fill yours. You get a notification and have an hour (or other minute threshold) to agree, otherwise your offer is cancelled.
Pros: This completely protects your limit order, you can check if there are any relevant news before agreeing. This allows trading to scale to any size.
Cons: We'd need a new way to create and expose these limit offers, which sounds like a challenging user experience problem. Many limit offers may go unfilled (even without relevant news bc a user is away from their device), disappointing traders. Implementation is non-trivial.
Credit: @Ernie's suggestion doc
Conditional limit orders (order fills only if AI with web search thinks there is no recent, relevant news)
How it works: You can toggle AI protection on your limit order, which will use a fast AI model (likely gemini flash 2.0 with web search) to check if there are any news articles related to the market since you made the order that might influence your decision, and only fill if no news appears relevant. Maybe you could write a custom prompt as well. The AI might have to be queried every minute or so to make sure trading isn't slowed, or maybe we would just slow trading down on that market if a trade would get a significantly better price at >1000mana and query the ai at the time of the trade.
Pros: Off-loads your news-searching work onto an AI and protects your orders from news if none has been published yet. Should be pretty smooth user experience.
Cons: The AI might make a mistake when evaluating if news is relevant, or news might be so recent that the AI can't find it (though you might not be able to find it, either). If we slow down trading to let the AI search for news (although we could cache the result and run the search at a max of every minute), this would be a worse experience for traders. Perhaps traders could choose to ignore these orders?
Have any other ideas or comments?
Related Poll: /ian/why-dont-you-place-more-limit-order
Related market: /ian/percent-limit-offers-limit-orders-i
Open to any of those options if it's optional and doesn't make the current limit order interface harder to use / more clunky.
Timed limit orders (capped fill amount per hour)
I both love and hate this option.
I love it because it means I can potentially get better prices from my limit orders.
I hate it because it sounds like it will make market behavior very hard to predict. I see there are a bunch of limit orders but I can't really trade into them effectively unless I bet every hour or so. So Instead I just put up my own limit orders, and we just stare at each other.
Wouldn't a better way to do this be to do a partial N/A resolution.
For example, anyone who bet after 11pm (when the big news happened), is N/A, everyone else is good.
@HillaryClinton There are lots of other types of news that would change the price you'd offer on a limit order that you set in the past
@ian doesn't news resolve most markets?
No solution is perfect here, the key is to choose something good, and easy to understand for users. Anything overly complex is bad from a user acquisition POV.
What incentive would there be for buyers to wait around an hour for the chance of being accepted by a limit offer?
@GleamingRhino To bet at very large size: they could accept the offer and the trade would be placed if the creator accepts.
@CraigDemel The basic underlying issue resulting in this post is that some people feel there is not enough incentive for traders to put up limit orders and that it would be better for the site if more users used limit orders more frequently.
There are plenty of other possible ways to increase the quantity of limit orders -- you can share all your best ideas.
@Eliza The incentive is obvious to me. If a market is volatile but it's currently above or below what I want to pay, I set an order at X.
Or if I buy at 20 but think the real value is more like 80 than 100, I buy NO at 80.
The people who think this is too complicated would be even more leery of instruments that are even more complicated.
I like the AI one. At the end of the day, those limits are placed at a certain point of time, so I'm ok with almost any news disqualifying my limit order (the cost is low, worse case I place another limit order).
@PanAnon Can you clarify on exactly which parts of the limit order UI you want updated to reflect 'selling'? Is it mainly that it is unnatural to place a limit order to buy the opposite type of share, or do you wish it could be denominated in Shares instead of Mana to simplify the data entry?
I know @jack has previously mentioned wishing to also place regular (buy) limit orders with the number of shares also. Shares are very minimized in the UI right now but there is definitely room to experiment, especially in the limit order panel.
@PanAnon If it's data entry, you can input the shares you want to buy/sell now in the market order panel: https://manifold.markets/post/you-can-edit-the-amount-of-shares-d?r=aWFu