Executive Overview
3rd Eyes publishes meteorological signals for US weather prediction markets - Kalshi, and the identical contracts carried by Coinbase and Robinhood - focused on daily high- and low-temperature contracts. The core insight is that weather models, particularly a multi-model forecast ensemble and HRRR short-range radar assimilation, can identify temperature outcomes with sufficient confidence to generate positive expected value (EV) on binary contracts.
The strategy targets a specific market inefficiency: market makers price temperature thresholds using basic climatological priors. When numerical weather prediction (NWP) models diverge strongly from those priors, due to an identifiable synoptic pattern, we publish a NO signal. The edge is meteorological, not statistical arbitrage.
When an independent multi-model ensemble and the HRRR hourly update agree that a temperature threshold will NOT be reached, but the market is still pricing that event as meaningfully possible, the true probability is lower than the price implies, creating positive expected value on the NO side.
We operate exclusively on NO contracts, betting that a temperature threshold will not be exceeded (for high-temp markets) or not be reached (for low-temp markets). This creates asymmetric payouts: risk $X to win ~$Y where Y > X when the market has mispriced the probability.
Our Approach
Every signal starts with a multi-model forecast ensemble - four independent global weather models (GFS, ECMWF, ICON, GEM) - cross-checked against HRRR, NOAA's high-resolution short-range model, for near-term markets. Pooling independent models cancels any single model's bias, and the disagreement between them becomes our measure of uncertainty.
A market only becomes a signal when the models agree that a temperature threshold will not be reached and the exchange is still pricing that outcome as a real possibility. We trade NO contracts only - fading temperature bands the market has priced too high - which keeps every position on the same, well-understood side of the payoff.
Each candidate passes a fixed sequence of checks - liquidity, model agreement, a calibrated confidence floor, and a positive-expected-value margin - before it is ever published. Anything that fails a single check is dropped. Our win-probability model is continuously re-learned from our own measured accuracy, so confidence tracks results rather than assumptions.
Risk Management & Bankroll Discipline
The 3rd Eyes framework prioritizes capital preservation over maximizing individual trade returns. This manifests in four hard rules:
Minimum fill $8. If the orderbook cannot fill $8 at the target price, skip the trade entirely. Thin markets mean: poor price execution, high slippage on exit, and outsized fee impact.
The stop - 20¢ below entry - is not a suggestion. When the NO price falls that far (e.g., 95¢ → 75¢), the position is exiting a scenario where our model edge has deteriorated (an unexpected weather development). Holding through a stop risks full position loss.
If a position moves against us, we do not add contracts. The stop-loss exits the position. We wait for the next independent signal.
Every position is a small, fixed fraction of one bankroll (commonly 1-5%). A loss never increases the next stake. The stop limits losses in orderly markets but not in gapping or illiquid ones: assume the worst case on any position is a total loss of that position's stake. We also cap concurrent positions in any one weather region at 2, so a single correlated weather event can't hit several at once.
Known Failure Modes
We are transparent about the conditions under which this methodology underperforms or fails. Every subscriber should understand these risks before placing any position.
| Failure Mode | Cause | Mitigation | Frequency (estimated) |
|---|---|---|---|
| Sudden synoptic shift | A frontal system moves faster or slower than models predict, pushing temps across the threshold after signal entry | Stop-loss at 75¢ (20¢ below entry) | ~1-2% of trades |
| Urban heat island miss | The global models' ~25km resolution can miss localized urban heating; HRRR 3km typically catches this for ≤24h, but not always | Use HRRR confirmation for city markets | ~1% of trades |
| Convective outlier | An unexpected thunderstorm (especially summer) suppresses daytime high below model forecast - but for NO bets, this is usually a win | N/A (benefits NO positions) | N/A |
| Model initialization error | A bad radiosonde observation poisons the GFS analysis, creating a systematically wrong forecast for 1-2 days | HRRR cross-check (HRRR uses independent radar data) | <0.5% of trades |
| Kalshi thin market | Low liquidity → poor fill price → fee drag erases edge | $8 minimum fill filter | Excluded from W/L |
| Summer convective season | June-August afternoon convection randomizes peak temperatures; model uncertainty 3× higher than spring | Lower-band signals (< 90% win-prob) suspended; position sizing halved on the rest | Seasonal - 3 months/year |
| API / system downtime | Kalshi API outage, VPS failure, or cron job failure can cause missed signals or missed stop-loss exits | 5-min scan + 1-min position monitor; Telegram alerts on error | Rare, monitored |
Track Record
The full per-trade record is published and updated daily at /track, reconstructed line-by-line from Kalshi's own settlement and fill records. Every win, every loss, every stop-loss exit at its realized price.
Every row there is reconciled to a Kalshi fill. Every stop-loss exit is counted at the actual price we got out, not the model's intended exit. If you ever see a discrepancy with your own broker view, the exchange data is the source we trust.
Legal Disclosures
3rd Eyes publishes impersonal market research and signals only. All signals are identical for every subscriber - no advice is tailored to any individual's financial situation, account size, or risk tolerance. 3rd Eyes does not hold discretionary trading authority over any subscriber's account, does not execute trades on behalf of subscribers, and does not act as a Commodity Trading Advisor (CTA) as defined under the Commodity Exchange Act. 3rd Eyes operates under the publisher exemption from CTA registration pursuant to CFTC Rule 4.14(a)(9).
Trading Kalshi event contracts involves substantial risk of loss, including the possibility of total loss of all capital deployed. Past performance - published and exchange-verified at /track - is not indicative of future results. Losses do occur; the stop-loss system is designed to limit, not eliminate, losses.
Hypothetical and projected performance figures (e.g., bankroll calculator outputs) are for educational illustration only and do not represent actual or guaranteed trading results.
Signals are for US-legal, CFTC-regulated weather contracts: Kalshi, and the identical contracts carried by Coinbase and Robinhood. Subscribers execute on whichever of these they hold an account with, and verify availability and compliance in their own jurisdiction. 3rd Eyes signals do not constitute legal, financial, or regulatory advice.
© 2026 3rd Eyes. All rights reserved. This document may be shared freely in unmodified form. Do not alter or misrepresent the methodology or track record.