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Limit buy question.

Kazanture Aleixandre
Here I am.
Join date: 5 Oct 2005
Posts: 524
05-25-2006 12:56
New limit buy lindex is wonderfull but has a "small" problem.

the difference between "limit buy" and "limit sell" best rates are just a little above of the 3.5 % LL fee to make profit. "limit buy" are being used by daily traders to make small profit. This is not wrong maybe.
But;

let me explain with an example:

best sell rate: 320
best buy rate: 340

then a guy is buying 350000L$ at 340/usd for $1000.

then selling this 350000L$ at 321/usd. to fast sell, so he/she can buy L$ again to sell.
And he/she is getting 1050usd for this sell and buying again 350000L$ at 341/usd. because traders see the rate is at 321/usd then pulling the best buy rate to 341/usd. to make profit again.

This will continue, and L$ will loose value daily 5-6 points.

This is not a big problem for me actually because in my opiinion because of the lack of supply/sink balance at economy L$ will lose value in one way or another, this is only making it faster.

My question is; do you see such daily L$ traders as a problem for the economy and will take necessary actions for it or not?
Torley Linden
Enlightenment!
Join date: 15 Sep 2004
Posts: 16,530
05-25-2006 13:17
Asking about this...
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Kelly Linden
Linden Developer
Join date: 29 Mar 2004
Posts: 896
05-25-2006 13:50
Your example is a little bit backwards. Using your numbers:

best sell rate: 320
best buy rate: 340

To buy right now you must buy at the current sell rate - the rate that others are selling. So:
then a guy is buying 350000L$ at 320/usd for $1093.

Then if he wants to turn around and sell immediately he must sell at the rate people are currently buying:
selling 350000L$ at 340/usd for $1029.

This poor trader just lost $63, or ~6%. He didn't make money.
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- Kelly Linden