Join the new world

VIEW PART I

Thanks for your vote. Make sure to leave a comment if you disagree with something, or have any questions!

Monetary Market: How to benefit? (PART II)

Ok, so in Part I, we have seen what exchange rates are and what we can do on the monetary market. Now for the interesting part: How can we benefit from this knowledge? In PART II, I’ll focus on what you can do as individual investor. I might create a PART III to shortly cover the impact of exchange rates on companies.

2. Individuals/investors

My starting point for the way on how to profit was the eRep wiki (*4), but I’d like to add some others. I do not cover any foreign currencies, as the market NLG to foreign currency is really far from ideal. Therefore, only look for opportunities there, if you exactly know what you’re doing.

Of course, this doesn’t mean that you can’t invest in other currencies! Basically, if you understand trading NLG/Gold, it also goes for HUF/Gold, FRF/Gold, etc.

2.1 Accepting two offers

The easiest part is accepting two offers (so buying NLG and buying Gold). However, you won’t often have this opportunity, as it should only happen when exchange rates currently change, or when someone makes a typo when posting an offer.

You can use this if x is smaller that 1/y, where 1 G = x NLG and 1 NLG = y G.

I don’t get that myself too when seeing it, so in a short example, you could get profit when accepting the following deals:

Offer 1: 6000 NLG at 1 NLG = 0.016 G
Offer 2: 2 Gold at 1 G = 62 NLG

So the x = 62, and the y = 0.016. Is x smaller than 1/y? 1/y = 1 / 0.016 = 62.5, so yes. Then we should be able to make that profit.

If you have 124 NLG, you can use Offer 2. By buying 2 gold, you have 0 NLG left and 2 G. Then accept the other offer: use all 2 gold to buy NLG. You can buy (2 / 0.016 🙂 125 NLG.

There! You went from 124 NLG to 125 NLG in just two clicks! Easy money, but again: this won’t happen often.

2.2 Buying offers and selling later

So what does happen more often? Fluctuation in exchanges rates. This one is somewhat more complicated and more risky. If the current rate is 1 NLG = 0.016 G, and you expect it to go to 1 NLG = 0.017 G for whatever reason (for example: a monetary market attack, government intervention, …), you should buy as many offer of 0.016 as possible. As soon as all the 0.016 offers disappear from the market, you post an offer of 1 NLG = 0.17 G.

Let’s see how that works with again 2 G. First, you buy as many NLG as possible, so that’s (2 G / 0.016 🙂 125 NLG. Then keep the NLG, while you wait for the price to go up to 0.017 G, and then sell it. You’ll get 125 x 0.017 = 2.125 G! That’s a profit of 0.125 G.

Same goes the other way aroun😛 if you have a rate of 1 G = 63.5 NLG, and you expect it to become higher, you should buy all Gold, and sell (= post an offer) when the rate has risen.

However, please note that the rates might never rise. In that case, you won’t be able to sell with profit, so really only do this if you are sure that the rate will rise.

2.3 Placing two offers simultaneously

This is the most common used, as it is always possible. You’re not dependent on the offers of others here. Basically, it is the same as in 2.1, but here, we only post offers. Of course we make sure that:

x is bigger that 1/y, where 1 G = x NLG and 1 NLG = y G.

An example:
The best rate is 1 NLG = 0.016 G and 1 G = 64.1 NLG.

Just post two offers. You can do this at the same time, or post one after the other has been accepted. I’ll take the second situation as example.

I’ll start again with the 2 G. You can put this on the market with the following offer: 2 G at 1 G = 64 NLG. Now, that’s better than the offer that was on the market, so we expect a company or individual that really needs gold fast to accept our offer. You’ll just have to wait until somebody accepts, from time to time checking that it’s still the cheapest offer. If the 2 gold are sold, you have (2 x 64 🙂 128 NLG. Then, put the NLG up the market with an offer of 128 NLG at 1 NLG = 0.016 G – do not offer at 0.015 G, because then the “x” (64 on our first offer) would be smaller than “1/y” (1 / 0.015 = 66,67!). If this offer is also accepted, you’ll get (128 x 0.016 🙂 2.048 G. That’s a profit of 0,048 G, without having to work! Thank you, monetary market!

Now, the current rate is not 1 G = 64 NLG, so the first offer needs to be even lower, and you’ll have less profit. It would be the best if the difference between x and 1/y is as big as possible. You can view this when looking at all currencies in-game, but there is an easier way. Just visit http://ereptools.net/currencies/local and in the column ROI1G, there is a percentage. This percentage indicates how much you would gain or lose if you traded in this currency. The bigger the percentage the better! (*5) (*6) Currently, the ROI1G is only 1.5% for eUNL, but in eSwitzerland, percentage is way bigger: 16,89%.

Let’s see if I can find the same in-game:
eUNL: 1 G = 63.439 NLG vs. 1 NLG = 0.016 G. (x = 63.439 and 1/y = 62.5)
eSwitzerlan😛 1 G = 83.329 CHF vs. 1 CHF = 0.014 G. (x = 83,329 and 1/y = 71,43)

So, the difference is a lot bigger for eSwitzerland, which we also saw in the percentage. However, make sure you think for yourself also: if you’re working in a very small economy, your offers will not sell as quick. There are even some countries in the table (for example eBelgium) that do not exist anymore in-game, so you probably won’t sell that currency anymore at all.

2.4 Trading other currencies

I promised to focus on the eUNL market, but you can also make a profit sometimes when you trade gold into NLG, NLG into FRF and then FRF back into gold. However, I’d advise just to start with trading on one market. Refer to the wiki for more info.

So, good luck, you soon-to-be big investors!

(*4) http://wiki.erepublik.com/index.php/Monetary_Market_Speculation
(*5) http://userscripts.org/scripts/show/57258
(*6) http://ereptools.net/currencies/local