Day Traders: The new land barons?

Well as you know from another thread, I have nothing against day traders in concept-- so long as people know they're in a day trading situation and don't lose money due to misinformation.

I think it is a BAD IDEA for Linden Lab to put the day trading option (Market Sell) above the standard sell option... especially without properly labeling or describing exactly what can happen, which is:

IF YOU USE THIS OPTION TO SELL L$ YOU ARE LIKELY TO LOSE YOUR SHIRT. THIS IS NOT THE REGULAR SELL OPTION. USE THIS ONLY IF YOU ABSOLUTELY HAVE TO SELL L$ RIGHT NOW.

That would be a little more honest.

The reality that I am seeing at least as of tonight is that the spread is narrowing and even dippinging into the lose money level (at least for now). This pretty effectively limits the Day traders if they are working on a fast turnaround.

I strongly suspect that the spread on average will get smaller as people begin to see how the system really works. That alone will drastically reduce the number of people Day trading on Lindex if it doesn't kill it almost completely.

Right now things are too new and too unsettled for any really meaningful data.

Thats Capitalism.... Deal with it..

"Greed is Good"
-Gordon Gecko

You know what? Some people do both. I build. A lot. That's why I'm here in SL. And I trade. A little bit. Because it's mentally stimulating mainly.

You have determined in advance what kind of people would partake in such an activity, and brought a preconcieved moral perspective to the issue, and this was the whole point of my post. The day trader will become the new target of community dissatisfaction, and will become as demonised as the land baron. Objectiveness will play little part in this, and generalising about people will play a very large part. As will the eternal quest to find a scapegoat for all percieved injustices and ills in SL.

edit: The service, btw, is liquidity. The limit buy orders are the price we are prepared to offer that service for. If you want to know why the price isn't great, it's the 3.5% fee that LL charges for selling on the Lindex. If demand for the L$ was greater than supply, we'd be falling all over ourselves to give you a great deal. As it stands, once you take fees into account, we are even now.

I believe ethics and people are more important than money. Those who put business above people (and what is right in dealing with others) deserve what they eventually get.

QFE

*claps*

Remind me again how that panned out for Michael Douglas in the movie?

Speculation generally dosen't cause either a bubble or crash in an economy. Generally speaking all speculators do is accelerate the underlying trends that existed prior to them getting involved. In the case of Lindex, the introduction of features have accelerate the already downward slope that existed prior to their introduction, by increasing the liquidity or efficiency of the market. Which in turn has accelerated the trend.

I do think the interface needs a bit of work and there should be more warnings to those people are looking to sell on Lindex, to be aware that there is such a wide spread. Also I don't think its efficient enough, the fees increases the spread for those who are looking to trade and diminishes competition as some potential traders may be put off from trading.

And what they get is even more money...

if money is the only thing important to you... then i wish you the best of luck. Snuggle with those piles of money at night and hope it keeps you warm.

The only benefit day tradering brings to SecondLife is more lindex fees to LL.

Regardless of day trading, the number of new USD going into the Lindex on a daily basis isn't going to radically shift, it will grow according to population and what the population feels the need to buy.

Ultimately, day trading means that fewer of those USD will go to content creators and service providers.

More will go to LL (more lindex fees being imposed). More will go to blood sucking leeches that contribute nothing but lindex fees to the success of SecondLife, and merchants/landbarons will get less of the pie.

Is it a trade off... or a sell-out on LL's part? Time will tell.

The easest way to stop it is make all sales Limited sell..
Then its up to the seller if they wanna wait or sell fast..

I think you will find that most of the day traders are short sighted and have no clue. They don't look at the big picture and only see the profits they make from day trading without taking into account how all their real estate and business ventures lost 30L to the dollar since they drove the market down. They have no clue how day trading is on the opposite spectrum to business and in reality they have a bigger vested interest in making the L stronger, not weaker. They have no idea that they are cutting their own throats.

You will find that most of them cry for cutting stipends and stuff like that and cry that LL needs to help them stop the nose dive of the linden while at the same time drive down the value of the L by their own doing since they can make a pittance of profit in it.

In the end when they finally wake up they will find they lost a lot of money by driving down the value of everything they own.

I take back the comments I made about this concept on another thread.

To be frank I just did not scroll down the page..................................

So, what we have is what the stock market calls Level 2 data, both buys and sells posted, to me very clearly understood. This is a good idea, period, and on this one I am on Lindens side.

I would point out it may be better to have the buys and sells displayed as a standard sets trading book, and if it can be managed via live streaming data, here is a link to a (static) example

http://images.advfn.com/imagesnew/2/gb/gfxbrochures/s_l2_basic.gif

As you can all see buys, sells, and trades, all displayed

It is an extremly good idea and congrats to Linden

Yeah, I think RBD forgets where that quote really came from. From IMDB:



So, RBD loves to quote a ruthless villain, whose speech was inspired by a slimeball that ended up having to pay the feds $100 mil. - pretty fitting actually.

Liquidity isn't a service we needed more of!

Currency speculation not only accelerates market pressures, but with every cycle it siphons off valuable points and furthers the decline.

Currency speculators are still criminals

Where is our Jesus avie when we need him? Throw the moneychangers out of this Temple LL, before it's too late.

The fees aren't worth the price to the rest of us, let's find another way to make LL profitable.

BTW I grew up in the home of an economics professor, have several economists in my family, speak about it every night at the dinner table, and have done undergraduate work in the field. Trying to justify the existence of these assholes by saying they offer "liquidity" as a service or that they only "accelerate the existing pressures" is misstatement of fact, and at the least grossly simplifying the situation. Trying to use a cool catch phrase here and there doesn't make you, or I for that matter, an economist. Even the jokers on here who post "I am an economist and" explain the whole slide of the linden away in traditional (dying) structural functionalist terminology. I am not attacking "the day traders" as a group, just as I would not attack "the land barons". Obviously LL made this practice legal and possible, and they will have to deal with the consequences.

To the original poster. 90% of these posts, though informed to differing degrees of accuracy, are not "gross generalizations" about the PEOPLE involved. They are gross generalizations about the economic PRACTICE in question. Many of these gross generalizations also happened to be characterized by their accuracy.

Obviously we live, RL and SL, in a capitalist society. That fact doesn't change the others, that govts have a right to control that capitalism as they see fit, and impose upon it some limits for the good of all. Until recently, currency speculation of this kind was illegal, hopefully someday it will be so again.

Molten Magpie

And all the problems it brings. You may not have hit that wall yet RBD, but you will. Sometimes it takes a while for a person to realize how futile it is to spend his every waking moment just collecting more money... but they always do, eventually.

King Solomon was the wealthiest man to ever walk the face of this earth. His summation of it all? "Everything is vanity." Obviously, money isn't the answer to happiness. It can make you think you're happy... until the big letdown that inevitably comes.

I believe the recent Enron case aptly shows what happens to those who put money above people and ethics. Well-deserved, I might ad. Made my day to see that justice won out for once.

Mind you, justice ALWAYS wins out, sooner or later. Whether it's men going to prison for ripping off their employees and investors, or whether it's a sad old man laying on his deathbed and suddenly becoming aware of how he's wasted his life... it eventually catches up.

As it was once pointed out, "The love of money is the root of all evil." And another pointed out, "Money can't love you back, nor will it mourn your passing."

The truth hurts does it Jamie? Oh..sorry I mean RBD.

It is always up to the seller if they want to wait or move fast. You have choices here, people.

To all those strongly against day trading... don't use market sell, simple as that. That is the easiest way to stop day trading. Feel strongly about is? Vote with your L$, use limit sell.

I strongly advise people do anyway. I would advise everyone to switch their settings from basic to advanced. You need all the information to make an informed decisiion. Market sell should not be the option presented on the basic setting, for very good reasons.

Unless:

-you urgently need the money here and now, and you have a very large block to shift, use limit sell. Especially if you're talking under 50k or so, if you offer best price on a limit sell, you can shift your Lindens in 5 minutes or so yourself. No need to pay a day trader to do that for you. The market will swallow it up, before anyone bothers to compete with you.

-you understand exactly what the difference is between a market sell, and a limit sell, use limit sell.

-you find getting less US$ for your L$ reasonable in exchange for an instant sale, and understand that in exchange for this the person buying hopes to make a small profit off the transaction, use limit sell.

-you have looked at the open buy orders, and calculated what you would get if you used market sell, use limit sell.

If you use market sell, do so in the understanding you are paying someone a fee in return for liquidity. You need never ever use this option. If you do, do so in full knowledge of what you are doing, that only you are responsible for that decision, and don't grumble after.

Somebody who trades on the Lindex to buy and sell L$ is a currency speculator first and a day trader only if they turn around and sell in the same day. As this market begins to mature you may find many more former day traders holding their L$ longer than 1 day waiting for the opportune moment to sell to reap the maximum profit. With the current Currency Trader Tier 4 you can only turn over $1000 every 20 days out of 30 so holding longer than 1 day could reap a larger profit depending on the direction to the market. For the record how many Currency Trader Tier 4s are out there. Myself I have to wait 2 more days just to be a normal resident and have already exceeded my $150 30 day limit by $450. And for the record I was turned down for my request of a tier increase before Second Life's Leading Economic Mind ask how it was even done.

And this is the problem Fade. Linden Lab has no such disclaimer on their webside such as you placed here. In fact, they almost seem to intentionally hide this fact. They put the Market Sell as the only option on the Basic screen. They place the Limit Sell under the Market sell on the advanced screen and they word the Market Sell definition in such a way that makes the customer think Linden Lab will sell their L$ for a reasonable price... which of course is not the case.

It has nothing to do with people having "full knowledge" nor being "responsible for that decision". It has to do with misrepresentation and bad documentation. And that is why so many people are up in arms about this.

Had there been a proper disclaimer such as "Market Sell is for those who wish to sell L$ now. Please be advised that you may receive significantly less in payment than you would if selling by Limit Sell"... then likely there would never have been a problem. But when the market is L317 in Limit Sell and Market sell trades at L411... there's just no excuse for that. And it's not the customer's fault... it's Linden Lab's fault for failing to properly explain the process. Face it, most people using the Basic interface do not fully understand how the market works... they just want to sell their L$ at a fair price.

Hopefully LL will change this oversight very quickly. Frankly, that should have been changed already... the first day that complaints started pouring in. I mean, how much does it take to put a disclaimer on a website? Write a disclaimer, pass it through legal, post it on the site. Not all that challenging.

I agree 100% that this is the problem Wayfinder, and that's why I tried to draw people's attention to this myself as best I could. I also believe, as you do, that there should be a disclaimer equally crystal-clear on their website. LL should look after their customer's interests in this simple fashion. I was tempted to post it in a thread of it's own, simply to create maximum awareness. I think tomorrow I'll post in answers on the Linden forum, asking them about this, I think it's important. It's too late here in Australia to throw the words together sensibly.

Yeah, it probably deserves a thread of its own. Here's the one that I sent to LL:

MARKET SELL:

CAUTION! This method is for the purpose of making an immediate sale. The seller will likely receive a lower payment than using the Limit Sell option. Please examine the presented L$/US$ ratio before agreeing to sell.

In fact, I would even add a line that says, At current Market Sell, your L$ will sell for approximately L$XXX per US$1.


I think that would be a fair and proper caution. Of course, other disclaimers could be worded equally well. The idea is to make the user aware before they agree to sell at 96L above current market.

Wayfinder, the other thing I was thinking, market sell should not be presented as an option on the basic setting at all, at least not exclusively. It should either have both options, or put them both on the advanced setting. The 'basic' user, would mostly be looking for limit sell, and a 'basic' user, should not be presented with an option such as market sell without clear information about what it means, and without all the information clearly available to them about what sort of price they would get via this as opposed to limit sell. The default should be limit sell, anything else is just setting someone up for a fall, IMO.