"LindeX" - Linden Currency Exchange Begins Public Testing

Glad to see there's now a minimum for sell orders now. I could imagine someone new to the system and not having read all the fees selling $0.30 worth of L$s, and ending up with no money for it (or even worse, selling $0.20 worth of L$s, and ending up having to pay LL 10 cents for the priviledge of doing so!)

I should point out that the 24hr sell limit is now US$500 instead of US$100.

Cheers,
Lawrence

It is how GOm did it and this is one of the biggest problems I have with any system someone tries to do this way.

Currently these exchanges (loosely used here) are borked.

Technically, unless you are a MM in the RW/RL you wouldn't be doing trades like this OTC, you would be going through a broker and/or said MM.

Those guys assume the risk on the actual availables.

IOW, in your scenario you currently would get screwed if you got beat to the punch.

In real life two things could happen depending on the market you are investing in:

A) The MM or broker would tell you those positions are moved, and no longer available

B) The third party would sell/buy at your rate given you executed the order prior to the pip/price shift.

A is typical in commodities/stock markets.
B is indicitive of using third party systems where you are trading on the reserves said MM or broker has available to them and not trading against what the actual exchange says.

A is risk, while B has security built in.
A is great since there is a transparent layer between you and the market value, where as B is typically slower moving since you are playing behind the actual trading going on.

Quite frankly I am all for more security on my trades (buy/sell) rather than worrying if I make an extra pip/0.02 cents/etc... on executed orders, especially since the Linden doesn't move like other commodities/stocks/currency exchanges (i.e. a few cents up or down per second).

I attribute these "markets" (gom/lindex) more akin to something like IGE with a dynamic element over the course of the day.

Man I gotta get a new broker

This is a HUGE issue. If there was a way to add money to this balance, instead of having many small charges to an account, I would be much happier. Also, if you hae money in your account, why can we not use it to buy more L$? If I sell this L$ this month, and never use it all, but next month, after all my tier is paid, why can't I buy L$ back with that same money? I would think that the fees for LL would be less also.

A few requests of Lawrence:

1. Could these transactions appear in Account History as a unified transaction instead of split across the number of partials you needed to fill the buy?
   
2. Could they appear as something other than "unknown transaction"?
   
3. Could you drop the 3d chart junk from the leftmost graph?
   

Thanks. It worked as expected on my small test purchase. I'll even add that the interface was rather clean and very much targeted toward the casual purchaser; chosing "how many do you want to buy" or "how much do you want to spend" and then getting the reciprocal amount is quite task oriented. It took a moment to switch from thinking of blocks and doing the mental arithmetic that was an historical artifact. Listing as L$/US$1 makes a lot more sense than L$1/US-mills for the non-market-fascinated player.

Hmmm this is not good My bank is going to keep phoning me up every time I try and trade in that case. And its just not worth the risk.

You should be able to trade using your US$ account balance or at least be able to deposit US$ into the balance to trade with.

So make your own trader's service. Hank Ranos has already open sourced his historically-high-quality exchange code. Too much work think you? You are probably right. You can either decry the removal of your penny-ante gambling game or make a virtually-real-one on the SL platform. Good luck.

Well, it's not so much gambling as you think it is Malachi.

When a spread exists that is because the market is inefficient. You can trade in an inefficient market without gambling. WEll, it is a bit of a gamble, but a gamble like poker is.

Your odds are better than chance (if you have the technique) so you can generally profit.

Trading on the NYSE / NASDAQ is gambling because those markets are generally efficient, that is, everything is pretty much priced at what it should be.

People fool themslves into thinking they can trade those markets, but, they can not unless they are very very advanced and can find very advanced inefficiencies. It's possible, but you need to have a PHD and the resources of a bear sterns team at your fingertips, or whatever.

The L$ is nicely inefficient. Especially when some kindly individual comes a long and whacks the market with an impatient sell off. You can generally grab their money and then sell it back to the market in small chunks.

This is, btw, exactly what land barons do. They look for people who don't want to wait around to sell their land and then buy it and patiently sell it off at a better price.

Now, land barons provide a service in the land market - they provide market driven liquidity. Without them prices would be a little crazy, or so we all suspect would be the case. I'm pretty sure it is the case. most people don't want to wait around for their next tier payment.

Now, there is no tier payment in L$ world so maybe people won't be in such a rush to sell. Though, let's face it, we do have RL bills to pay and some people may be forced to sell for other reasons.

This is a problem because of the way Peter and Philip have set up this market, it's very illiquid. Traders can not perform arbitrage without racking up huge transactions on their CC cards, not to mention paying all those 30 cent fees. Not to mention the lack of buy limit orders (which, btw, will be pointless if you keep that CC thing in)

Without traders, we may find that it's very volatile. People won't even do arbitrage between SLX / IGE / wherever and Lindex because it's just too painful with all the roadblocks put into place.

This volatility will lead to an unstable feeling about the L$, and it will also lead to weird effects when trying to make a purchase because the prices will be spread out so much. Everytime you go to buy something it might never match up with your actual quoted price because it's too easy for the market to move up and down.

Is this how it will play out? Who knows. But it's really fascinating to talk about it because this is a very very powerful simulation of what we find in real life.

Well its something that has been growing in the back of my mind on doing. But I think any system to trade needs to go beyond what is currently being done namely a straighforward exchange of currency. LindeX has potential as a trading platform but well we shall see how the fast forwarded development of it works out, it would be great to tie in any full blown trading platform directly into LindeX for example via an API.

In general I think any full fledge market needs to include some of the other weapons in the investment arsenal. So potentially currency pairs, shorting, margin trading etc... Then some of the more riskier investment options like futures, options and spread betting. Stop Loss orders are another requirement.

Finally to help SL businesses and ventures minimise FX Risk, there has to be some mechanism to hedge currency.

At the end of the day traders or investors are needed in some form or another. The liquidity of any market is determined largely by the myriad of individuals all trading away. Its why the forex market in real life is the most liquid of all markets ($1.5 trillion dollars of trading volume a day), because of every single entity trading on it ranging from large corporations and banks to individuals.

If SL Exchange's plans work out, we may have a market shortly:

http://www.slexchange.com/modules.php?name=Forums&file=viewtopic&t=865

Yeah hoping some time soon, cause they said it would be in beta over the weekend and I would be able to get in, but so far no other word.

Instead of all this speculation, why doesn't someone just do the math?

ok then, I'll do it...

Let's assume a £3.50 selling price, reasonable for the past few weeks, and a buyer with $100 to spend.

I'll do 3 scenarios, GOM at tier 0, GOM at tier 5 and LindeX.

Buyer pays $97.63 into GOM, balance $94.50 after PayPal deductions.
27k * 3.5 = $94.50

Player can buy L$27,000

Tier 0 seller.
Seller recieves 27 * (3.5-.12) = $91.26 Which he can withdraw to basic PayPal account free of charge.

Tier 5 seller
Seller recieves 27 * (3.5-.02) = $93.96 Which he can withdraw to basic PayPal account free of charge.

LindeX
(27K * 3.5) + .30 = $94.80 (charged to CC via SL account)

Seller recieves (27 * 3.5) * 0.965 = $91.19 (Current withdrawal fee via PayPal $5)


So to sumarise:
Buying 27k on GOM would cost $97.63 including PayPal charges
Buying 27k on LindeX would cost $94.80

Selling GOM Tier 5 : $93.96
Selling GOM Tier 0 : $91.26
Selling on LindeX : $91.19 (minus withdrawal fee)


Point to note, the commission charge on GOM was FIXED. on LindeX it is 3.5% thus the amount paid INCREASES as the price goes up....

You forgot the other 2.9% for the lack of mass pay on GOM.

Another VERY important note
is that if you are a trader then
you put your money in GOM once,
then buy/sell/buy/sell/buy/sell/etc
with no more paypal fees and at .02 tier

with LindeX you continually have
higher trading fees.

Also, to minimize loss, a trader would
put US$250 in to GOM at a time, not $97.

As only a buyer of L$ I've never traded, I defintely like LindeX better than any of the other places I've bought from. The simplicity is refreshing. With that being said why the constant comparison to GOM? They are no more, they gave up and closed. No sense in comparing when there is something no longer to compare too, IMHO. **applauds** LL again.

MJ

Because, as you just said, you are not a trader. Some people do/did trade quite a bit with GOM and found that to be a way in which they enjoyed SL outside and inside of SL.

Just because you didn't do it does not mean it should just disappear now that GOM is gone.

Beyond that, SLexchange is doing a GOM type system (this weekend) so.....

You obviously missed my point. Why compare to a company that is no more...if you are going to compare...compare to another place that is open and trades L$ currency.

MJ

Oh I agree.

We don't want to replace GOM because that's not the point.

However, we may need market makers in order to provide liquidity.

It remains to be seen, I guess. It's a curious financial experiment.

Actually I didn't miss your point, I just found it irrelevant.

The comparisons continue because:

A) GOM doesn't close until 10pm today (so it is technically still going)
B) GOM had several good things about it we would like to see evolve in the next product/service
C) None of the other services IGE/AC/Slexchange have a market system in place as of yet, so how can we talk about what doesn't exist?

On top of what Alexander said...

GOM was *THE* exchange up until now.
If we're going to be working with and
considering any new exachanges, they
will certainly be compared to what the
traders have been use to over the last
year or so.

It will be very interesting to see how
the SL exchange currency trading works.
Sounds like they will have quite a few
more nice features than the LindeX
(for us traders).

Having more OPTIONS is always a good thing.

And just in case anyone missed it, the scoop from Apotheus over @ SLExchange on the new market system they are doing:

Quick status update:

Based on my progress yesterday and today I believe closed testing (those who have contacted me) will begin early on Sunday. I expect the testing period to last only a day or two and we should have a crude, working market available to the public by Wednesday at the latest.

Functionality at launch will include:

1. Market and limit buy and sell orders.
   
2. Partial fills of any size down to L$1.
   
3. US$1 minimum order to start. Can probably go lower than that, but I'm not sure it's practical to bother.
   
4. Finer price control than GOM has/had using "standard" RL forex rates and terms.
   
5. ACID-compliant transactions (no possibility of erroneous transactions).
   
6. Spread-based fees instead of commissions. Standard spread is still uncertain.
   
7. USD Withdraw via PayPal Mass Pay to reduce fees.
   

Functionality that will come very soon if not included at launch:

1. Trading history that is separate from standard account balance history. Also available as CSV download for analysis.
   
2. Order expiration.
   

Functionality that will come if there is demand (the logic is already on paper for all of these):

1. Trailing stops.
   
2. Order triggers.
   
3. Margin trading.
   
4. Short sells.
   
5. Alternate forms of payment to reduce or eliminate deposit fees and allow payments much larger than the daily limit set by our risk management system.
   

http://www.slexchange.com/modules.php?name=Forums&file=viewtopic&t=865

Just as I find yours irrelevant. To each his/her own I suppose.

A) GOM is only open for people to cash out.
B) GOM did have several good things about them and let us all down by closing. So Good Riddens I say.

C) If none of the other services have a market system in place then I say that LL is gonna be very successful then.

And you think SL uses mass pay? I have yet to here this one way or the other. If someone can point to the answer, I would like to know. Also, to the small time seller, this does not matter, they only have basic accounts and therefor don't have the 2.9% PAYPAL fee. I bet there are many more small sellers then there are big time sellers. I would also guess that the small time seller is only selling about enough to cover tier fees.

A basic account on paypal can recieve upto $500 USD a month, if you are making more then $500 a month, then you are making more then, I would guess, 99% of all sellers and buyers.

Um, no you can actually still trade till 10pm EST today.

You are obviously not a fan of GOM in the first place.

I find your post(s) to be more about a vehement dismissal of anything not LL rather than productive discussion on potential, positive growth.