Learning Center
What are Forecast Contracts?
Forecast Contracts enable investors to trade their opinion on specific yes-or-no questions on economic indicators such as the US Consumer Price Index and the US Fed Funds Rate, and climate indicators such as temperatures and atmospheric CO2.
How Do Forecast Contracts Work?
For each contract you hold that expires "in the money", in reference to the settlement value,
you receive a fixed payout.
Pick an Indicator
Choose from ForecastEx Forecast Contracts on economic or climate indicators.
Trade Yes or No
Trade YES or NO positions based on your view of whether the event will happen. The "YES" price is determined by the probability that an event will happen.
Generate income based on your insights
You can earn the difference between the purchase price and the closing price for each contract you own and an incentive coupon, accrued daily and paid monthly.
| Contract Specs | ForecastEx |
|---|---|
|
Markets |
Economic or Climate Indicators |
|
Contract term |
Weekly, Monthly, Quarterly, Yearly |
|
Price quotation |
USD |
|
Contract size |
1 contract = USD 1.00 |
|
Minimum price increment |
USD 0.01 |
|
Final settlement |
USD 0 or USD 1.00 |
ForecastEx Forecast Contracts
Forecast Contracts let you trade your view on the outcomes of various economic and climate indicators.
Each contract pays USD 1.00 and your max profit per contract is USD 1.00 minus the contract cost. Forecast Contracts are quoted in USD 0.01 increments.
Additional information on Forecast Contracts
is available from ForecastEx
Example Forecast Contract Trade
“Will the year-over-year change in the US Consumer Price Index exceed 3.8% this month”
Last month’s Consumer Price Index (CPI) was 3.8%
For the “Will the year-over-year change in the US Consumer Price Index exceed 3.8% this month” Forecast Contract: YES is trading at USD 0.52. NO is trading at USD 0.49.
This indicates the market is assigning a 52% probability the US CPI will be above 3.8% this month and an 49% probability the US CPI will be below 3.8% this month.
You believe the US CPI will be above 3.8% and decide to buy 20 YES Forecast Contracts at USD 0.52 per contract for a total cost of USD 10.40
The US CPI comes in at 3.9% so each of your YES contracts has a fixed payout of USD 1.00.
You receive USD 1.00 for each YES for a total of USD 20.00. Since you paid USD 10.40 for the 20 YES contracts and commissions are USD 0.00 your profit on this trade is USD 9.60.
ForecastTrader Educational Resources
Market Commentary and Analysis
Commentary, analysis, and insight on US economic indicators from Interactive Brokers’ senior economist Jose Torres.
Market Calendar
Trader’s Academy Courses
Learn About Key Economic Events
As a trader, you will come across many factors that you must consider before entering or exiting the markets. Some of the most important aspects to look for are economic events that can move the markets drastically one way or another.
Monetary Measures, Economic Output and Corporate Profits (US)
This course covers the central banking system, the government bond system, fiscal budgets, economic growth calculations, and corporate profitability's importance. Some of the indicators include the money supply, yield curve, gross domestic product, and corporate profits.
Course Lessons:
Business and Consumer Activity and Confidence (US)
This course covers indicators that provide insight into economic activity and confidence like confidence, sales, incomes, production, and more.
Course Lessons:
- Purchasing Managers’ Index for Manufacturing
- Consumer Price Index
- Industrial Production
- Personal Income and Outlays
- Consumer Confidence
- Retail Sales
Employment and the Labor Market (US)
This course explores a variety of labor market indicators that shed light on the composition of human work like participation, unemployment, employment, and wages.
Course Lessons:
- Labor Force Participation
- Payroll Employment
- Unemployment Claims
- Unemployment Rate
- Average Hourly Workweek
- Average Hourly Earnings
Construction and Real Estate (US)
This course covers indicators that track the real estate market and its many different aspects such as mortgage rates, mortgage applications, spending, prices, shovels in the ground, permitting and more.
Course Lessons:
Interested in Trading Forecast Contracts
at Interactive Brokers?
New to Interactive Brokers? Open an Account.
Interactive Brokers (Nasdaq: IBKR) is an automated global electronic broker that serves individual investors, hedge funds, proprietary trading groups, registered investment advisors and introducing brokers.
Our four-decade focus on technology and automation allows us to provide our clients with a uniquely sophisticated, low-cost global platform for managing investments.
Our clients enjoy low-cost access to stocks, options, futures, currencies, bonds and funds from a single unified platform.
Already an Interactive Brokers Client?
Request trading permissions if you don't have Forecast/Event Contract trading permissions but would like to trade Forecast Contracts.
Trading permissions are usually approved immediately.
Trading on IBKR ForecastTrader
- Log in to IBKR ForecastTrader
- Select a Forecast Contract
- Click on YES or NO to trade
- To search for Forecast Contracts, select the Markets menu and enter a description of a product
(e.g., "US Fed" for US Fed Fund Rate, "cons" for Consumer Price Index, etc.)
Trading Forecast Contracts on Other Trading Platforms
Forecast Contract positions are available for review from any of our trading platforms.
You can also seamlessly access IBKR ForecastTrader from our other trading platforms. Click a trading platform to learn how.
Select the Trading Tools or New Window menu items and select IBKR ForecastTrader.
To search Forecast Contracts, enter a description for product (e.g., "Consumer Price") into the Watch List field or Help/Ticker Lookup field, and then select the product and Event & Forecast Contract.
Please note that TWS now supports the use of ScaleTrader, Accumulate/Distribute, and IBALGO+Accumulate/Distribute for Forecast Contracts.
, select Search, enter description for product (e.g., "temperature") and press Return > Event & Forecast Contracts. To navigate back to IBKR Mobile, select the User ("head/shoulders" icon ) > IBKR Mobile menu item. Forecast Contracts are only available to eligible clients of Interactive Brokers LLC, Interactive Brokers Canada Inc., Interactive Brokers Hong Kong Limited, Interactive Brokers Ireland Limited and Interactive Brokers Singapore Pte. Ltd.