Monetary market speculation

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Speculating in the Monetary market is an inherently risky endeavour. That being said, profits can also be made.

General principles

Unless currency or gold is needed immediately, it is better to sell rather than buy. This is because exchange rates fluctuate, and if you hold a large amount of currency, there may never be a way out without loss.

Scalping or Double Sell Method

The standard method is used most in speculation. A profit is made from the difference in the Bid/Ask prices of the exchanges.

Example
The speculator puts up two offers in the currency market:
  1. Selling Icon - Gold.gif 1 GOLD for Icon - Money.png 1400 CC/Icon - Gold.gif 1 GOLD
  2. Selling Icon - Money.png 1000 CC for Icon - Gold.gif 0.001 GOLD/Icon - Money.png 1 CC

If both offers are successful, the speculator would have ended up with an extra Icon - Money.png 400 CC.

The risk for this method comes in between the two sales. Market conditions may decrease profit or even result in a loss.

Double Buy Method

In the Double Buy Method either currency or gold is being sold at less than what it can be purchased at; this almost always indicates that the seller made a mistake (instead of selling, he should have purchased, or sold at a higher price).

Example:

  • Person A (not you) is selling Icon - Money.png 1000 CC at a rate of Icon - Gold.gif 0.001 GOLD/Icon - Money.png 1 CC
  • Person B (not you) is selling Icon - Gold.gif 1 GOLD at a rate of Icon - Money.png 800 CC/Icon - Gold.gif 1 GOLD

Buying currency from Person A gives a rate of Icon - Money.png 1000 CC/Icon - Gold.gif 1 GOLD. Because Person B is selling at less than that, profit can be made from the difference in the rates by buying gold from Person B and trading it for currency purchased from Person A.

The beauty of the Double Buy Method is that the undervalued offering can be repeatedly purchased using the proceeds of the purchase until it is gone. Anyone who has even a little money can take advantage of this. In this example, they can simply purchase gold from person B, then immediately purchase currency from person A, and then use the currency to purchase gold again from person B until the offer is down.

This is an essentially risk-free form of investing. As such, such occurrences are rare, as speculators roaming the monetary market tend to discover them and clear out the offer very quickly.

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