LindeX Trading for Dummies

Hello all,

First a little background: I'm not much of a gamer, but I got an SL account a couple weeks ago after hearing so much about it. After depositing $25 USD and paying the $9.95/mo premium account fee, I've been able to recoup the initial account fee by trading L$ on LindeX. Since then, I've been completely obsessed with the L$ market and barely login to SL anymore.

I'm NOT a trader of any kind IRL, but I've always been fascinated with economics and currency markets. I now see SL as a way for me to get practical hands-on experience trading currency without having to worry about losing large sums of money. At the same time, I realize that inexperienced traders such as myself are contributing to the destabilization of the market and complicating other trader's lives.

I've been lurking on this forum since discovering the LindeX and there seems to be no shortage of ill-feeling towards noob traders. What I think might help the situation is for the experienced currency traders (SL or RL) to provide some basic education to noobs in a central resource (advice, links to good websites, etc). You certainly don't need to give away all your secrets, but help us start on the right path from the start so we don't complicate your lives in the future.

I'd be more than happy to combine the information into a guide and have it freely available for everyone to access. All I need is good content to get me started.

Let me know your thoughts.

-M

Maxwell,

Welcome to SL and the forums. while a new player myself, I have been giving free advice to traders both on the old LindeX and the new one. Feel free to use anything I have said in your guide. It is easy to find a members previous posts by clicking on his name. Do not feel any guilt about doing anything wrong, the LindeX is a free market and you can do anything you wany even if it irritates other players. The most important thing to remember is make a profit and have fun. Don't worry about what other players say some of it is smoke and mirrors. Some say one thing and do the opposite. Good luck trading.

Trading for fun requires nothing more than basic math and Excel.

Let's say:
BA is the amount of L$ you put a buy order for
BR is the rate for your buy order

The following formula will give you what the break even sell rate would be:
BA/(((BA / BR) + 0.3)/0.965)

Off course that rate would just mean a break even. So you'll have to make sure you've a better rate. If we take SR as Sell Rate (we assume you resell all the L$ off course) then we get:

Profit = ((BA / SR)*0.965) - ((BA / BR) + 0.3))

If you put these together in Excel and have a field for the 3 variables you can play around and see for yourself what kind of profit you could make. The "hard" part is predicting what the best buy rate is you can get and what the ideal sell rate is you can get afterwards.

Thanks Svar! I have already started editing down posts in this forum for potential use as content. Once I have a draft, I'll post it here for some peer review.

There are a couple things that still aren't clear to me in the LindeX. For instance...

1) I'm still confused as to why 110 people have open sell orders for L$1 / US$1 when it's obvious that no one in their right mind would buy at that rate (same goes for the 2 people with buy orders for L$999999 / US$1.00). While these are obvious extremes, the same goes for the 19 people trying to sell at L$200/US$1. What's the point? It seems to me that they're only hurting themselves by taking that money out of their available funds to trade with.

2) The queue. It's my understanding that if multiple people are trying to, say, sell L$330/US$1, the first person who places the order is first to have that order filled. Since the LindeX does partial fills, no other person in line can get an order filled until all of the previous person's L$ are sold, correct?

3) Tied to #2, I've read a number of posts who say that orders in smaller amounts are executed quicker than larger blocks. How can that be if the queue works as it should?

-M

Thanks Blakar! What do the 0.3 and 0.965 values represent?

This takes into account the 3.5% tax that the seller pays on the transaction.

If you're going to trade L$, you'll end up paying $.30 USD and 3.5% in L$ for both sides of the transaction.

The 0.3 is the 30 cent fee for buying L$
The 0.965 is based on the fact that you pay 3.5% fee on every sell you do.

For your other questions:
1) Some use it to "store" their L$ safely. So strange sell orders are mostly people who want to avoid that they spend it. Some of the strange buy orders are due to a few people making mistakes on the first days. Others are probably just their for "fun". In the end you should not look at either. They have no real meaning and don't influence your trading decisions.

2) Correct or at least that's what I have perceived until now

3) I assume people are referring to the fact that if you put L$ 100000 up that it'll be gone faster than L$ 1000000 simply because it takes the market longer to chew thru 1000000 L$. If you want to sell 1000000L$ putting it up in 10 different pieces doesn't hurt you on fees (it's 3.5% regardless of amount) and you can each time set it at the best rate for that moment. Off course it's a lot more time intensive.

Thank you!

1)
At one time limit sell and limit buy orders were matched to each other so people are hoping sombody makes a mistake and sells or buys at a huge loss. I don't think the Lindex works like that anymore.

2)
The Lindex works on a first in first out basis to my knowledge and I have sold very large blocks with over 1 million behind me some of which were very small.

3)
I don't believe this to be true but I think people do so break up large blocks into smaller ones. I have seen single sellers post 1 million L$ orders before but you cant't tell the size since the LindeX reports on the sellers not the number of orders at any one rate.

Arbitrage


In economics, arbitrage is the practice of taking advantage of a state of imbalance between two or more markets: a combination of matching deals are struck that capitalize upon the imbalance, the profit being the difference between the market prices.


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Formula I have been using is this:

Inv = investment
br = buy rate
sr = sell rate

Margin (profit) = -(sr * (inv + 0.3 * sr) - 0.965 * br * inv) / sr

Can anyone confirm that? My numbers have been off by about 3 to 9 cents at times, but I've been blaming that on rounding errors.

In regards to trading, one thing to consider is that you have to fid as much profit as possible into your tier limit. For instance, if your limit is $2000US a month, that means you can trade $100,000L, or about $300US, 6.66 times (or 2000/300. should've mentioned this yesterday ). If each of your trades are done really whickly on really tight margins, you may end up making very little on the total trades. If you are patient and follow the market, you can estimate where abouts the sells and buys will reach up to, and undersell both buy and sell orders. Keep in mind that changes in just $1l can have a huge impact on your profits. For example, $100k sold and bought for 330 and 346 respectively gives you a profit of about $1.75L. If the margin tightened by just 1, your profit drops to about 770. If by 2, it's down to less than $500. So watch the market and be patient. You only have so many trades available to you.

Oh man, Rasah that was one of the secrets and now you gave it away.

Thanks Rasah! Sorry Svar

See, now you are having fun and that is what SL is all about for me.

Don't think it will affect things much. Will just make the marrket spread out a little bit, time-wise

I think you have an extra "sr" term in there, as it's written I get some really strange results:

Margin (profit) = -((sr * (inv + 0.3)) - 0.965 * br * inv) / sr

I think that's what it should be, go ahead and say it if I'm wrong That said, it must take a ton of money to make decent returns on the LindeX market, I've been running some numbers and I don't know if it would be worth it to start with less than at least $100US, maybe more?

~JP

Jakob,

As far as i can tell your equation is correct. And no less than $100 is not worth it.. heck $2000 may not be worth it either. According to my formulas trading with the values of 346 buy and 330 sell, you will net 23.25 floating up to $2000 (although in $500 chunks or so).

If you can float $100 tentimes per month you will receive $11.50..

I may play it a little bit, but its not going to make me rich

Checked again. Yeah, there seems to be a Lindex rounding error on the %3.5 sales fee which causes the function to fluctuate a bit.

No matter what numbers you try in the sell orders, your caculations of
Selling / Price * 0.965
will not equal to what the Lindex sell order gives you.