Closing a position

MagicMarkets is an exchange. Every price you see is aggregated from bookmakers and exchanges around the world into a single order book, which is what gives our markets their depth. Closing a position works the way it does on any exchange — and we built smart credit so it costs you nothing to do.

Closing means taking the other side

When you Buy an outcome you are backing it to happen. To close that position you Sell the same outcome at the current price. The two trades sit against each other, and whatever is left over is your profit or loss — locked in, whichever way the event ends up going.

You do not have to close a position at all. Leave it and it settles normally when the market resolves. Closing early is how you take a profit while a price is in your favour, or cut a loss before the result is in.

The Trade out button in your positions does this for you. It works out the opposite trade and the amount needed, and opens it ready to place.

Closing needs available cash

Here is the part that surprises people coming from other prediction markets.

A Sell puts up liability, not stake. That is the amount you would owe if the outcome you are selling goes on to happen, and it has to be free in your account before the trade can be placed. So closing a position temporarily needs cash, even when you are closing at a profit.

Smart credit

On a traditional exchange, that cash stays locked until the market resolves. You would be sitting on two positions that cancel each other out, with capital tied up behind both of them, waiting on a result that can no longer change what you get paid.

We thought that was a bad deal, so we built smart credit. It recognises when two of your positions offset, and returns the capital behind them to your available funds instead of holding it to settlement. It is why closing on MagicMarkets is a quick in-and-out rather than money parked until the final whistle.