How to make money the next time there is a huge spread.

Be a L$ baron.

Do what anshe, and other land barons do. Profit by making a market and doing currency arbitrage.

Put in massive buy orders above the wanted price and then once you've bought them, start putting in massive sell orders below the for sale price.

Buy low, sell high - the spread will be available for you to do that. By being like a land baron, you are profiting but also helping the market tighten up an undesirable spread.

Be a L$ barron? Interesting thought. However it is not possible to be a L$ barron in the same way as a Land barron.

Why?

I have always said in the many land barron posts that I have no problem with 'barrons' buying cheap IN WORLD land and re-selling it. It helps the people selling and they can then put smaller plots together to make better ones or whatever...

The problem I have with land barrons is buying land in bulk for cheap on the auctions. This is land that 'normal' users could have bought at that cheap price, but are now forced to pay the marked up price.

The difference here is that there is no equivalent for L$. I can't Email LindenLab and offer to buy L$250,000 for $20. Well I could but I know what the response would be

And purchases I make can only be from other users who wish to sell, and likewise for sales.


You also have to remember that there are 3 types of users trading on GOM.
1). Those wishing to cash in their L$ to earn US$ (maybe to pay for land tier)
2). Those wishing to buy L$ for use in-world. (mayber new users or people needing money for projects)
3). Day traders that buy/sell/buy/sell


Types 1 and 2 don't always even out. It would be pure chance if at any given time there were equal amounts of people wishing to cash out and buy in. Day traders provide a pool of both L$ and US$ for the others to trade in.

The day traders may at first appear to be like the land barrons, but are a requirement to keep the market fluid. Without day traders you could be waiting a long time for your sell order to be filled so you can pay your land tier fees...

But the day traders are not L$ barrons.

IGE Wheeling tried that. If my math is right, he has lost 10's of thousands of US$ trying.

- Ace

You can't be a L$ baron. Just ask any real world currency trader. Unless you have all the money in the world, you can prop up a currency if others are looking to get out. Your best bet in currency trading is to gauge the direction of the market and buy or sell into it.

naaaaah.. I enjoy being a human being much more.

No, it *is* exactly the same thing.

Land and Currency are *exactly* the same thing. Land is even worse than currency, because you can buy land directly from LL.

Also, other players can quickly flood the market with both land and currency by selling their positions.

IGE's wheelings mistake is simple, btw - they got way into deep.

To be a proper l$ baron you need to understand demand and direction (similarly with land .. buying more land than people are going to demand is a big mistake) and to drop your position when the position shifts too far for it to recover.

Actually, there is a slight discount you get for land because of partitioning expense that you have to go to which you'll get paid for.

um land = resource which = servers which = limited supply

L$ = infinate as it can be created from thin air.

And the next person that argues that it can't think of this...all a linden has to do is mystype 10000 for 1000 and wala 10000 lindens created out of thin air vs. a Server is needed to make a new sim. Think about it your brain will finally grasp the concept and wala...Money does grow on Trees in SL.


Shadow

Except that LL has committed to never selling currency directly, whereas they'll sell land to anyone who buys it for 1K / per sim.

So, in fact, land is less scarce than currency.

See even Blaze gets it.....Geesh

I should. I profitably buy sell stocks, bonds, currency and gold on a regular basis.

Damn, you could help me out then

I just did..

Thats right, they should never sell currency directly. It would be a conflict of interest. LL would be on par with a "money tree". Whenever they need cash, they just sell it for 100% profit.

Blink....falls over in shock....Alby acutally understood me...

It isn't just a coincidence, btw, that there is usually always a 3% spread on the GOM market.

Generally when it's a moving market, the spread increases as people are less willing to do arbitrage. But if you believe the market is stabilising, that's a great time to jump in and profit off the spread.

I get it SW, I'm a diciple of the Econ 101 church. :0' LOL

LL should consider itself the Government of SL. And being the Government, its creating L$ as nothing more than a form of currency for players to trade it for goods and services. LL sets the number of L$ printed/created. Its up to the players to decide the L$'s valuation in relation to the USD.

If LL not only controlled circulation amounts, but initial valuation, they would have effectively created a "Money Tree". So when their bank account runs low at LL headquarters, all they would have to do is issue some more L$ notes and profit. Kinda like Uncle Sam telling you, if you wanted some more money, pay him in Gold and he'll give you greenbacks.

LL's needs to make sure it ONLY generates L$ currency for the purpose of player to player trading of goods and services. The trading itself will determine the L$'s value to the USD based on Supply/Demand economics. Now if LL wants to earn some money, it can then Tax players for their L$ in the form of Sales Taxes, Income-Stipend Taxes, Land Taxes, whatever.. And then sell L$ itself on GOM for USDs. But LL needs to be very careful in this realm. Because they can unwittingly cause Inflation or Deflation.

Question:

Why does the spread rarely go below 3%? Is it just becaues the market is mostly dictated by traders who can't profit off of anything less than the GOM fee?

Or, is there a profit to be made when the spread does decrease below 3%?