Why Tax Exchange is always rising?

[Rya Nitely]

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Pamela Galli wrote:

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Oh you thought we were trying to come up with something we could DO about this? Because whether we know who is doing this and why, or not, the fact remains that we can like it or lump it, we are not going to affect it in any way.

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I think your response is aimed more at what Qie was suggesting.

[Qie Niangao]

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Rya Nitely wrote:

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Pamela Galli wrote:

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Oh you thought we were trying to come up with something we could DO about this? Because whether we know who is doing this and why, or not, the fact remains that we can like it or lump it, we are not going to affect it in any way.

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I think your response is aimed more at what Qie was suggesting.

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Hmm. I wonder what you thought I was suggesting. I only meant to blather about the semantics of "willing" as it applies to market participation. I certainly didn't intend to suggest that individual sellers should band together and withhold L$s from the market in hopes of lowering the exchange rate. You're quite right: that's doomed.

I think equally doomed was the attempt, back near the recent peak, to attract buyers to the market with group notices about the opportunity to buy L$ for cheap. Thing is, it appeared to work -- it was pretty much the peak -- so it could well be repeated and if it happens to coincide with another peak, it'll become a full-fledged cult of superstition.

Artificial market actions tend to backfire eventually, whether they're trader manipulation or some more benevolent common action. Buying a lot now means less demand later; withholding sales now means pent-up supply later.

[wherorangi]

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Rya Nitely wrote:

But this market isn't significantly influenced by buyers, because the vast majority of buy orders are at market (in the viewer). Most SL buyers are not even aware of the exchange rate or that their orders go through an exchange. They think they're buying L$ from LL. If the price of L$ went up too significantly then they'd start feeling ripped off and they might start buying less. But with this recent change, they'd be just as comfortable paying the higher price of 248.

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i think you underestimate the knowledge of most SL users who spend their RL money on L$ to buy stuff in SL

most people who do buy L$ (apart from brandnew people), do know that they are buying on Lindex spot market, and they do so bc they want it now today

they only buy about $10-$20 worth at a time. Those shoes, that mesh body, that new skin, that fab new outfit, that amazing garden set, house furniture, tip jar, hair fair, etc, cant wait until tomorrow

 

 

[Rhonda Huntress]

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Rya Nitely wrote:

 

The LindeX doesn't work like RL markets because It's not actively traded.

Demand is relatively constant, the daily volume is relatively constant, and the vast majority of buyers don't specify a price, but most sellers do. If this happened in a real market the price of Lindens would go up because sellers would have control, until it became too expensive and then demand would decrease, leading to a reversal. Then we would see the normal waves, like in real markets.

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And this is different from what is happening to the yen, euro and/or USD in real life how?

You can buy yen and set a buy price.  If the market reaches your set buy price, the trade goes through.  Most people just accept whatever is the current rate at their bank just like buying L$ through the viewer.  Sellers have as much control of L$ as they do with yen.  If someone else wants to sell at a lower value ... it goes lower. 

We can speculate on what is happening and why.  How many people are dumping L$ to pay for the grandfathered rate?  How many people are spending more of their summer time outside of SL?  Is now a good time to buy and wait for the holiday rush to sell?  How will Sansar''s release afect S; wouldn't this be the best time to sell before the value drops like a hanged man? 

It may be a smaller market and LL does has the ability to sway the market by withholding or releasing more shares than your typical government is willing to do but the en result is the same.  The market sets the price.

[Pamela Galli]

I knew someone who did trading on the Lindex. 

[Bobbie Faulds]

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Rya Nitely wrote:

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Bobbie Faulds wrote:

Not any more mysterious than any currency exchange. The cost of one currency compared to another. That fluctuates daily. If you went to a bank tp purchase any foreign currency, they look up the current rate so what you get today could be more or less than what you get tomorrow and different next week. Some people actually do use buy and sell orders on the Linden exchange just like they do with RL money exchanges. 

If you were to buy British pounds now, while they are low, then wait a bit, once Britain stabilizes and the value starts to rise, you could then exchange them for US currency and make money on it. 

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Except that RL currency exchanges are

not

mysterious. There are sound reasons for major

 

fluctuations. Central banks don't have a 'we don't know' approach to it. They

do

know, and the media will let us know. There may be normal and insignificant ups and downs around a certain point from day to day, but what we're experiencing with the LindeX is unexpected and unusual. Even Ebbe agreed with that.

The LindeX does not work like a normal currency exchange. If it did, it would not have remained flat for 4 years. We would see waves. One of the main reasons is because it's not actively traded like normal currencies are, where both buyers and sellers are setting prices. Most of our buyers are passive, and buy at whatever price, like if you go into a foreign exchange to buy pounds - the price you pay is determined by active traders.

The LindeX price is not determined by active trading, like normal markets are.

 

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LL keeps a tight control and have stopped trading before when there are too many fluctuations to keep merchants from loosing value, much like the NYSE stops trading if the numbers drop more than a certain amount. You may not have been here, but the Linden currency went into a bit of a free fall when gambling left and the inworld banks collapsed. LL stepped in and stopped trading on Lindens for almost 24 hours to let things calm down. That's also about the time they purchased the old  secondary marketplace that competed with the Linden sponsored marketplace. It enabled you to purchase Lindens through them as well and had much higher purchase caps on newer players. 

[Rya Nitely]

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Bobbie Faulds wrote:

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You may not have been here,

but the Linden currency went into a bit of a free fall when gambling left and the inworld banks collapsed. LL stepped in and stopped trading on Lindens for almost 24 hours to let things calm down. That's also about the time they purchased the old  secondary marketplace that competed with the Linden sponsored marketplace. It enabled you to purchase Lindens through them as well and had much higher purchase caps on newer players. 

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I've been here since 2007. I came in the huge wave of new members that also washed you in, and Pamela and many others. Since then I've been active almost everyday. I was a merchant in Xstreet, and I was a part of SL history as it unfolded, as well as all the drama that it generated in these forums.

 

[Phil Deakins]

Noob!

[Rya Nitely]

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wherorangi wrote:

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Rya Nitely wrote:

But this market isn't significantly influenced by buyers, because the vast majority of buy orders are at market (in the viewer). Most SL buyers are not even aware of the exchange rate or that their orders go through an exchange. They think they're buying L$ from LL. If the price of L$ went up too significantly then they'd start feeling ripped off and they might start buying less. But with this recent change, they'd be just as comfortable paying the higher price of 248.

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i think you underestimate the knowledge of most SL users who spend their RL money on L$ to buy stuff in SL

most people who do buy L$ (apart from brandnew people), do know that they are buying on Lindex spot market, and they do so bc they want it now today

they only buy about $10-$20 worth at a time. Those shoes, that mesh body, that new skin, that fab new outfit, that amazing garden set, house furniture, tip jar, hair fair, etc, cant wait until tomorrow

 

 

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It takes about 5 minutes for a limit buy order at the top. From what I know of consumers in SL, every linden counts. I get long IMs asking for refunds of 100L or even less. As a consumer I was the same. I would um and ah over a 100L purchase. I know my customers do this. In the time it takes them to decide to part with that money they could have placed a limit buy order and saved that amount. 

Perhaps they need educating, then we can get more of a real market going. Buying $20 at 266 would get you about L$150 more than at market. I think there would be many more people who would do it if they knew. I didn't know when I was a consumer, my partner didn't know and none of my friends knew, because we shared tips and advice. If we knew we all would have done it.

[Qie Niangao]

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Rya Nitely wrote:

Perhaps they need educating, then we can get more of a real market going. 

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It would definitely benefit L$ buyers to adopt the habit of limit orders.

It's kind of a zero-sum game, though. L$s bought with limit orders are filled from market sell orders. Taken to the absurd extreme, if buyers only got L$s by limit orders, sellers could do no better than the best of those limit buy orders.

Presumably that would tighten the bid/ask spread, but I don't have a strong intuition whether it could really stay tighter than the 3.5% Lindex selling fee. 

[Rya Nitely]

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Qie Niangao wrote:

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Rya Nitely wrote:

Perhaps they need educating, then we can get more of a real market going. 

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It would definitely benefit L$

buyers

to adopt the habit of limit orders.

It's kind of a zero-sum game, though. L$s

bought

with limit orders are filled from 

market

sell orders. Taken to the absurd extreme, if buyers

only

got L$s by limit orders, sellers could do no better than the best of those limit buy orders.

Presumably that would tighten the bid/ask spread, but I don't have a strong intuition whether it could really stay tighter than the 3.5% Lindex selling fee. 

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You're right. It would make little difference, because buyers are not doing it to trade it later. They're buying to use it - this is passive buying, it's not trading. And that's why this is not working like the forex or stock markets.

I don't trade currencies but it looks pretty much the same as trading in the stock market. You buy when the price falls, then you hold until the price recovers enough to give you a profit. This controls the market price. Fees are not so important because the aim is to get that back plus profit when you sell. So, buyers dive in at low prices, demand increases and a frenzy of buying occurs which drives the price back up again. When the price goes up those traders who got in early will start selling to take profit, thus driving it down again. The only trading that goes on with the LindeX is when that fee spread gets too wide, which is hardly ever.

So, when a currency goes down, like the pound, trading will correct it to some extent. We don't have that here - if it goes down it stays down. There's no point waiting, because there's no active trading that will take it back again.

That's why the reason behind it is important, more important than in real world markets, where we can feel comfortable that the more the price goes down the more likely there will be a correction, through trading.

Edit to add: Thinking about it, I do have experience with the currency market. I hoard my US$ in Paypal until the AUD drops to the low 70s. When it's above 74 cents I accumulate US$ and hold it. This can take months. then I withdraw when it falls to around 71 cents (which was not long ago), now it's gone back to around 74 cents - and I'll watch it. British sellers would be very happy with the pound right now, and it's a good time for them to exchange US$ for pounds. That's a normal market, where you get those opportunities. The LindeX doesn't work like that, not unless you take a gamble that something unusual will happen in years to come and you hoard your L$ until then.

 

[Rya Nitely]

I'm not saying we should have trading, because that could get out of control in such a small closed economy, as mentioned earlier. Perhaps it should be like inworldz system, no market, just set prices. Why not? It seems to work there.

[wherorangi]

the way the RL currency market works is that the buyers and sellers are brokers

as ordinary customers we buy off the brokers, and sell thru them

we dont get to trade on our own account on the RL market unless we are a registered money broker, which we can become if we can show the exchange operator (and RL regulators) that we are provably sufficiently wealthy to pay our bills on time

this is the difference between SL and RL currency exchanges. There are no brokers on Lindex anymore. Used to be until LL killed the 3rd-party exchange operators (brokers)

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just add about why kill the 3rd-party brokers ?

it has to do with the FINCEN regulations in the US. The US Justice Dept and US Treasury have been pretty active globally in recent years on ensuring that any company dealing in USD is 100% FINCEN compliant

under FINCEN, for LL to continue allowing us to buy L$ for USD and cash out to USD then LL are required to know exactly who it is they receive and give USD from/to

under FINCEN is also the chain of trust

basically this means that if a company receives/gives USD to/from a broker (or any 3rd-party) who in turn gives/receives USD to their own clients, then under the law the company can be confident that the broker is also FINCEN compliant (that they also know exactly who their clients are)

when not the company can be liable when the broker/3rd-party is unable to show to the company that they, the broker, are also FINCEN compliant

https://www.fincen.gov/financial_institutions/msb/

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it might be that a 3rd-party L$ broker could show that they are FINCEN-compliant, however the law requires that the company has a policy in place to regularly and actively review their FINCEN partners policies on the chain of trust issue.

so LL maybe decided (dunno exactly) that it wasnt worth the staff resources and time necessarily required to do this

  

 

 

[wherorangi]

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Rya Nitely wrote:

I'm not saying we should have trading, because that could get out of control in such a small closed economy, as mentioned earlier. Perhaps it should be like inworldz system, no market, just set prices. Why not? It seems to work there.

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is about volume. Inworldz, or any other world tbf, doesnt have the volume that SL has

at fixed price then what happens if as a major estate owner earning in L$ and nobody buys them off us ? LL still want their USD tiers

if we cant lower the price bc needs must, then we basically completely stuffed. As opposed to a little bit stuffed

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can make a case that LL could/should accept L$ as tier payments. The difficulty with this is that the staff and suppliers expect payment in USD. In the total sum of all things then LL would break even

However is a cashflow issue with this. LL would have to carry a USD cash reserve way greater than they currently need do now

 

 

 

[Rya Nitely]

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wherorangi wrote:

the way the RL currency market works is that the buyers and sellers are brokers

as ordinary customers we buy off the brokers, and sell thru them

we dont get to trade on our own account on the RL market unless we are a registered money broker, which we can become if we can show the exchange operator (and RL regulators) that we are provably sufficiently wealthy to pay our bills on time

this is the difference between SL and RL currency exchanges. There are no brokers on Lindex anymore. Used to be until LL killed the 3rd-party exchange operators (brokers)In RL

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In RL I buy and sell through a broker, Commonwealth Securities (or CommSec). I pay them a fee to buy and sell. It's not complicated, just need to register and give them your bank account details, just like when you register with Paypal.

I pay my broker a fee whenever I buy and sell, just like I pay a fee to LL when I sell Lindens. In that sense, LL is sort of acting as a broker, aren't they?

Edit to add: With online trading it's very simple. Brokers don't play a big role. You buy and sell through them, but you have full control, and can make the instant decisions yourself, on a live market.

[Rya Nitely]

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wherorangi wrote:

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Rya Nitely wrote:

I'm not saying we should have trading, because that could get out of control in such a small closed economy, as mentioned earlier. Perhaps it should be like inworldz system, no market, just set prices. Why not? It seems to work there.

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is about volume. Inworldz, or any other world tbf, doesnt have the volume that SL has

 

 

 

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But that's just it, the LindeX volume has been stable for many years, and more importantly demand and supply are neatly met (until this recent 'unusual' behaviour).

There is a good reason why demand and supply are stable - just use this as an example. Someone wants to buy a mesh body, they bring in US$ to buy L$. The mesh body merchant gets that L$ and then sells it for US$, that US goes out again to Paypal or tier. It equals itself out. Someone wants to sell land, the buyer bring in US$ to buy that land, then the seller sells it for $US and it flows out again - either as tier or to Paypal. There are no significant amounts of hoarded L$ in SL, no bank acccounts holding large sums. What comes in goes out again, and things remain stable. Volume is stable because the user base is stable. Demand and supply are stable because what comes in goes out again - it's equal.

[Rya Nitely]

I haven't really thought out the fixed rate idea, so there could be good arguments. I only brought it up because Inworldz has such a simple system. No Market, and when I put in a request to sell, the next day it's in Paypal.

[wherorangi]

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Rya Nitely wrote:

But that's just it, the LindeX volume has been stable for many years, and more importantly demand and supply are neatly met (until this recent 'unusual' behaviour).

... example ... There are no significant amounts of hoarded L$ in SL, no bank acccounts holding large sums. ...

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this basis of the example, we dont know this for sure

what we dont know either is who might have shedloads of USD/L$ balances and is now actively day trading on the Lindex ?

what we do know is that up until 31 July 2015 there were large buyers of L$ actively on the Lindex (3rd-party resellers/brokers)

what we dont know is did all of those brokers just walk away when their operations were shut down ? Or have some of them since decided recently to come back and get into day trading ?

and/or if so has that encouraged other day traders who used to be very active on Lindex back in the day to return also, now that there is margin to made again ?

 

 

[wherorangi]

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Rya Nitely wrote:

I haven't really thought out the fixed rate idea, so there could be good arguments. I only brought it up because Inworldz has such a simple system. No Market, and when I put in a request to sell, the next day it's in Paypal.

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the owners have assumed all the risk in this case. If there is a run on I$ (tokens) for any reason, then the owners will either have the cash in trust to honour/redeem their tokens, or they dont and their enterprise will be bankrupted

 

[wherorangi]

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Rya Nitely wrote:

In RL I buy and sell through a broker, Commonwealth Securities (or CommSec). I pay them a fee to buy and sell. It's not complicated, just need to register and give them your bank account details, just like when you register with Paypal.

I pay my broker a fee whenever I buy and sell, just like I pay a fee to LL when I sell Lindens. In that sense, LL is sort of acting as a broker, aren't they?

Edit to add: With online trading it's very simple. Brokers don't play a big role. You buy and sell through them, but you have full control, and can make the instant decisions yourself, on a live market.

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just pick up on this as well

LL are the exchange operator. Similar to a RL bourse operator

in a more RL sense the Lindex is the equivalent of a commodities market exchange. The L$ in this sense is a commodity

even on the RL bourses there is a seperation between the exchange operator and the brokers

in terms of forex (and commodities) then the broker aggregates the smaller orders from their clients and places them in a  block. The size of the min. block is determined by the bourse operator

is some assumed risk for the brokers when they do this. Is a period (sometimes only micro-seconds on fully-automated systems with brokers who have large client bases), while waiting for a block to fill. For us the users, then the broker will take this risk on a win some lose some basis. A few min. blocks either way each trading session is no biggie for them

is the same with banks who most of use as brokers to buy/sell foreign currency. They will buy/sell to us at whatever the last market buy/sell price was according to their own period schedule. If the market moves for or against their schedule then if the loss/gain for them on our relative tiny order, is within acceptable margin then they assume that risk as not a biggie for them

+

if we make small market bets way outside what our broker thinks is reasonable then they wont even place the bid on the market itself. They will just hold it on their own books.

as far as we and they are concerned our arrangement to buy/sell isnt with the exchange operator. Is between the broker and us. Which is the law

the exchange operator has zero exposure to risk, as the risk by contract law is entirely borne by the brokers

in this sense Inworldz owners are acting as a broker. LL owners are acting as a exchange operator. LL is quite clear and has always been clear to us about this

 

[Rya Nitely]

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wherorangi wrote:

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Rya Nitely wrote:

But that's just it, the LindeX volume has been stable for many years, and more importantly demand and supply are neatly met (until this recent 'unusual' behaviour).

... example ... There are no significant amounts of hoarded L$ in SL, no bank acccounts holding large sums. ...

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this basis of the example, we dont know this for sure

what we dont know either is who might have shedloads of USD/L$ balances and is now actively day trading on the Lindex ?

what we do know is that up until 31 July 2015 there were large buyers of L$ actively on the Lindex (3rd-party resellers/brokers)

what we dont know is did all of those brokers just walk away when their operations were shut down ? Or have some of them since decided recently to come back and get into day trading ?

and/or if so has that encouraged other day traders who used to be very active on Lindex back in the day to return also, now that there is margin to made again ?

 

 

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Someone or someones would have to accumulate and hold vast amounts of L$, then create a profitable spread by buying up those top levels, and then dump their load on the market. I don't think it makes financial sense. But maybe.

They'd need a level 4 trading limit, and LL would know who they are. So, it would be no mystery to LL what was happening. They'd need to create a decent tradeable buy/sell spread, and as we've seen the spread corrects itself quickly because others start taking advantage, like you said. We did see this happen.

To make this financially worthwhile, you'd need large sums of money and extreme patience, because that trading opportuntiy is gone so quickly. But, it's an explanation. There are much easier ways to make money than hoard it as L$ and then dump it on this market. Just buy some good dividend yielding shares in companies. People with large amounts of money know this.

[wherorangi]

back in the day there were quite a few day traders on the Lindex. bc of the margins that could get if play it well

over the street in their archives is lots of chat and stuff about  day trading the Lindex. Lots of the people in the chats were day traders, as well as chat from merchants and estate owners and rental barons

aome of the day traders were into it just to only make $5 or $10 a day profit or less even. Just bc they could and bc they wanted to and was fun for them to try beat the market

same way as back then, some people were into day trading mainland parcels. For lots of people just bc was fun and maybe hopefully to make $5-$10 profit a month just to pay the tiers on their own little parcels. And maybe buy a new outfit once a week or something

when is lots of people doing this (and there were) then it adds up to quite a lot of money and price movement

+

ps

most of what I have said all here is what I learned from being in the chat with them over the street. All the stuff about FINCEN and how all this stuff works I learned off those people

 

[Rya Nitely]

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wherorangi wrote:

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in terms of forex (and commodities) then the broker aggregates the smaller orders from their clients and places them in a  block. 

 

 

 

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No blocks. When i place my relatively small order through Commsec it appears separately in the market. It doesn't go in as part of a block. I can see my order, and I can see where it is in the queue. It's even highlighted for me. I can watch my order going up in the queue, or down as people jump in ahead of me with better offers. And this will tell me if I need to change my bid or wait (it's a shame we can't see our orders in the LindeX market).

But there are rules - minimum orders of $500 (even this will apear on its own in the market), and also they won't accept prices too far from the market price.

I don't know how it works in New Zealand. I doubt it would be any different to Australia.

And yes LL are the stock exchange, broker, Central Bank, government, police, politicians, everything in one. When LL wear the politician hat - you can believe them if you want to :smileywink:.

[Rya Nitely]

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wherorangi wrote:

 

aome of the day traders were into it just to only make $5 or $10 a day profit or less even. Just bc they could and bc they wanted to and was fun for them to try beat the market

 

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If this market was tradeable I would be trading it. I'm a trader. :smileytongue:

[wherorangi]

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Rya Nitely wrote:

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wherorangi wrote:

 

aome of the day traders were into it just to only make $5 or $10 a day profit or less even. Just bc they could and bc they wanted to and was fun for them to try beat the market

 

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If this market was tradeable I would be trading it. I'm a trader. :smileytongue:

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you keep saying this, and yet you keep dumping your L$ for pretty much the worst price every time

eta

i dont mean to be mean but how many trades of $AU500 do you place on the ASX each day ?