The Daily Guide: Playing The Markets

Day 422, 08:52 Published in United Kingdom United Kingdom by wazcaster

Whilst for some eRepublikans, the path to riches lies in companies, or just working very hard, for many the path lies in the money markets. Though the prospect of gambling with your gold may seem daunting, The Daily Independent aims to show you how to make it as pain free as possible, by using some simple methods.

The most important thing to remember when trading on the markets is that you cannot hope to make a profit by simply taking up the offers that are already on the market. You have to put up your own offers. Though this means that you may find that gaining any profit takes hours, or even days, it can be well worth doing. Note that though you may start small, as your wealth grows, you may end up earning big, but to the same token, you could end up losing big.

The Straightforwad Method
The simplest method is the one which us least risky, but can still end up going pretty wrong if you aren't careful. For this to work you have to rely on the exchange rate either holding fairly steady or going up. If the exchange rate goes down, you're pretty stuffed.

Say there is an offer on the market for 100 GBP. If the exchange rate is 0.025GBP, it will cost you (100*0.025) 2.5 gold to buy the 100GBP offer. If you then post that 100 GBP for sale at an exchange rate of 1 GBP = 0.026 gold, you will get (100*0.026) 2.6 gold back, earning you a 0.1 gold profit.

This trade is the simplest way of making money, and it is only risky if the general trend for the currency is for exchange rates to decline. If you arent careful or invest in the wrong currencies, however, you can find that the nice profit you thought you'd get is suddenly unattainable, so you should still move with caution.

Scalping/Double Sell Method
This method works by overvaluing the currency and taking advantage of the general imbalance between the desirability of gold and the desirability of the national currency.

Say you put up an offer of one gold for 100 GBP, and somebody buys it. If you then sell that 100 GBP at an exchange rate of 1 GBP = 0.015 gold, you will get back (100*0.015) 1.5 gold, making a 0.5 gold profit. The risk which is involved in using this method is the time in between the two sales. If the offer of 1 GBP = 0.015 gold was taken up in between the time your offer of gold is bought, and the only offer available to you is 1 GBP = 0.009 gold, you would make a 0.1 gold loss, so only try this method if you are sure the currency you are trading in is stable.

Double Buy Method
This method takes advantage of the rare occurance where an offer for gold or currency is less than what that gold or currency can be purchased for.

If there is an offer up for gold at a price of 50 GBP, and the lowest offering of GBP for gold is 1 GBP = 0.015 gold. In this circumtance, you can purchase 55.55 GBP for 1 gold, using theGBP for Gold offer. Now if you buy one gold at 50 GBP you have made a 5.55 GBP profit.

The main downside to this method is that offers like these almost never come along, and there is still some risk even if they do. The main risk is that the undervalued offer will dissapear, or even that the currency - gold offer will dissapear. It is still worth doing the maths, though, just to make sure that the offers on the market aren't profitable.

Short Sell Method
This method, which takes its name from a similar method which stock market traders use to profit from falling share prices, is quite difficult to actually do, as it usually requires a loan to actually make it work. Added to this you also need to be sure that the exchange rate will go down rather than up.

Say that you have been loaned 100 GBP, and the exchange rate is 1 GBP = 0.02 gold. If you sell the 100 GBP for gold, you can earn two gold (100*0.2). Of course, you need to pay back the person who loaned you the money, but heres the clever (or not so clever, depending on how you look at it) part. If the exchange rate drops down to 1 GBP = 0.01 gold, you can buy 100 GBP for 1 gold (100*0.1). that leaves you with a profit of 1 gold. Now this example does of course assume that the loan is without intrest, although you could promise to share the profits.

This form of trade can be risky. If the exchange rate for the currency goes back up, you can be looking at a pretty hefty loss, so tread wisely when you are using this method, and if neccesary seek advice from more experienced traders.

Please note that all numbers and exchange rates used in this article are only examples, please do not try selling any gold or currency at the exchange rates mentioned here. The Daily Independent does not accept any liability for losses which you incur using any of these methods, and you must remember that any trade method can be risky. If you have any questions about trading on the monetary markets, or which method is the best to use, please come to