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In the back of everyone's mind there lies a premise or two that allow them to think in ways that may or may not make sense.

One particular idea plagues many people, not understanding how markets work they will entertain the notion of "cornering markets"

Earlier today an Org called "Loteria Federal" was engaged in some unusual activity. I believe them to be responsible for what was going on. Earler today the market was based around a BRL selling price of 0.021 and depending on your measurement the price was force to rise from about 50 to 80%. The best selling price of BRL for a few moments at least that I saw was 0.038 and I saw gold selling at approximately 31 BRL posted by Loteria Federal. I shouldn't have to remind you that Brazil is one of the largest countries in the game and therefore one of the most active and traded markets with a very large market capitalization. This totally collapsed back to its original price and its impact is but a small change in price as I am now typing this.

People with this kind of disposable income are either stupid, or having fun when they engage in this kind of behavior. I have heard fellow traders talk in these terms of changing a price of a currency to somehow make a profit. The price of a currency is just mysterious enough that somewhat experienced traders can believe this notion. While some engage in these kind of behaviors and some after finishing think that if they had some help or more money they could just make it work.

Allow me to explain some concepts that do not point to this working.

1.The faster you want to move from one commodity or currency to another the more of a premium you must pay. Obviously if you are wanting to cash out of a currency into gold you can sell your currency by waiting in line and taking what you get or discounting to move faster. and if you buy you must buy less and less competitive offers as the volume you want to move increases. This is a disadvantage for larger entities. but also the more of a premium you wish to pay the more you will be accommodated in your short term need.

2. for every buyer there is a seller and for every seller there is a buyer. price is not so fragile a thing as to be a whim of any one person. to influence the direction you must both possess the currency you want to decrease in value and you must be willing to force the change by offering a premium to the buyer. Once you run out of something you no longer control how cheaply it can be obtained. The price is determined by people who would rather have the other at the present exchange rate. anyone who thinks the price should be way different already has been satisfied because he has already exchanged and is holding on to what he considers most valuable and has no more say in the market price

3 The line between fail and win in money is easy to define. To actually make a measurable profit you must successfully return to the commodity or currency that you started with and have more. This shows clear cut advancement over not leaving that currency or commodity to begin with. For some simply getting what you want is the goal. But we are talking about a method to make rich people richer and that is defined by a completed circuit. Hoarding all of something so that the price of the first portion that you would sell would be high does not define the selling price of the whole lot to the very end. Nor would obtaining the whole lot be an easy proposition as the last bit of something is very expensive. By definition if it were an instantaneous auction the last bit would have to purchased at a premium over the selling price to ensure that it comes into your possession. all prices are not defined for forever by one transaction under extreme circumstances.


There is no such thing as successfully cornering a market though there is such a thing as properly guessing a market direction. If such behavior as attempting to pay a premium and distorting a market through much pressure were to actually pay off it is because the person helped the market go to where it was going to go anyway with or without his help as soon as the new circumstances came about. That said I do not generally engage in speculation as a means to make money but as a means to avoid loss. If a market were going to stay level there is no possible way to make money off of changing prices or buying all of something without encouraging someone else to commit economic suicide for you. Generally speaking there is much money to be made off of such people's stupidity.

http://en.wikipedia.org/wiki/Cornering_the_market