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Seminole Sun
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Posted - 2011.06.10 13:04:00 -
[31]
The only possible scam I can see is this
Go to some backwater place (a high-sec island would be perfect)
Place a buy order for something (A Phobos as an example) for well above the market value (let's say $200 mil) and you do this from a wallet that just barely has enough to cover the escrow.
Now place a buy order from a legitimate wallet at the same station at a below market price (let's say $150 mil).
Hope somebody buys a shiny new Phobos in Jita and brings it to you to fulfill the $200mil order.
Hope that person tries to fill and can't and then sees the "second best" and decides that's good enough.
Now you've got a Phobos that you bought for $150 mil and you can sell back for $170 mil in Jita.
Seems like an awful lot of work to go through. And it's awfully speculative (that trader could just say "screw it" and leave with the Phobos.
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flakeys
The Great cornholio's
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Posted - 2011.06.10 13:11:00 -
[32]
 Originally by: Seminole Sun
The only possible scam I can see is this
Go to some backwater place (a high-sec island would be perfect)
Place a buy order for something (A Phobos as an example) for well above the market value (let's say $200 mil) and you do this from a wallet that just barely has enough to cover the escrow.
Now place a buy order from a legitimate wallet at the same station at a below market price (let's say $150 mil).
Hope somebody buys a shiny new Phobos in Jita and brings it to you to fulfill the $200mil order.
Hope that person tries to fill and can't and then sees the "second best" and decides that's good enough.
Now you've got a Phobos that you bought for $150 mil and you can sell back for $170 mil in Jita.
Seems like an awful lot of work to go through. And it's awfully speculative (that trader could just say "screw it" and leave with the Phobos.
The scam goes something like this:
Buy some tags for 20k each clearing the regional market off them.Set up a buy order at 200 mille using margin trading and then spam jita local that you sell them for only 100 mille a piece.Either that or set up a station buy order in another local station.
Same thing as the old:Buy tags for 20k each clearing the regional market off them , relist for 100 mille each and spam jita local with a WTB contract for those tags at 200 mille each.Once someone buys your tags imediatly kill your WTB contract.More risky but does the trick.
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Doeko
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Posted - 2011.06.10 13:24:00 -
[33]
Originally by: Akita T
Meh, in a way, "Margin Trading" is indeed not quite properly descriptive... but then again, what WOULD be more appropriate ? "Deposit Haggling" ? "Escrow Reduction" ? Doesn't sound that much better, and doesn't really describe it in that much more detail either.
Escrow reduction would be a proper name. Maybe something fancy like Escrow Negotiation. Does describe exactly what it does while margin trading is not even comparable to escrow reduction.
If it were *actual* margin trading then you would be filled the full order regardless of your ISK balance and you would have the amount of ISK you don't have loaned to you until you sell the items. If it worked like that then it would be more fair as well as scamming would be impossible.
Anyway, I guess the posters here do not agree with that markets should be fair and transparant (i.e. no "fake" orders should be possible) which is silly. Scam in contracts all you like for all I care, but the market shouldn't be like that.
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Capitalist DeSandre
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Posted - 2011.06.10 13:41:00 -
[34]
Originally by: flakeys
Originally by: Seminole Sun
The only possible scam I can see is this
Go to some backwater place (a high-sec island would be perfect)
Place a buy order for something (A Phobos as an example) for well above the market value (let's say $200 mil) and you do this from a wallet that just barely has enough to cover the escrow.
Now place a buy order from a legitimate wallet at the same station at a below market price (let's say $150 mil).
Hope somebody buys a shiny new Phobos in Jita and brings it to you to fulfill the $200mil order.
Hope that person tries to fill and can't and then sees the "second best" and decides that's good enough.
Now you've got a Phobos that you bought for $150 mil and you can sell back for $170 mil in Jita.
Seems like an awful lot of work to go through. And it's awfully speculative (that trader could just say "screw it" and leave with the Phobos.
The scam goes something like this:
Buy some tags for 20k each clearing the regional market off them.Set up a buy order at 200 mille using margin trading and then spam jita local that you sell them for only 100 mille a piece.Either that or set up a station buy order in another local station.
Same thing as the old:Buy tags for 20k each clearing the regional market off them , relist for 100 mille each and spam jita local with a WTB contract for those tags at 200 mille each.Once someone buys your tags imediatly kill your WTB contract.More risky but does the trick.
Instead of camping your WTB contract to be ready to cancel it, just set up a normal market buy order with a huge minimum volume. Min Volume is a commonly overlooked attribute to market orders. This is how scammers can post buy orders for higher prices than their own sell orders in the same station.
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Laurent Savard
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Posted - 2011.06.10 14:05:00 -
[35]
The vast majority of people use the Margin Trading skill as intended.
You thought you could cheat someone else and got burned. I don't have a lot of sympathy.
The way the scam works is someone puts up a Buy Order for some generally worthless item but is willing to pay a lot.
Then their alt puts up a Sell Order for said item at a high price, but much less than the Buy Order.
Wannabe Donald Trump comes along, and assumes the buyer and the seller are idiots, and will make a quick buck off their stupidity. So he vastly overpays to purchase the Sell Order.
Smug at his own keen market acumen, he attempts to unload his overpriced, worthless goods to the Buy Order, but it fizzles because the "Buyer" doesn't have any ISK in his Wallet.
Our heroic Trader who wanted to make his fortune off the foolish is now shown himself to be the fool! 
My God, man! They didn't even have to spam a contract local in Local! You yourself pored through the market and/or contracts to find this scam, put two and two together, and outsmarted yourself. 
The myriad other threads on the same damn subject in this forum did not clue you in, so who exactly do you think will be clued in by your own tale of woe? 
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Dethmourne Silvermane
Gallente
Saiph Industries
SRS.
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Posted - 2011.06.10 14:37:00 -
[36]
It makes me chuckle that people are ok with misdirection in all other sorts of PvP, but "The market window must remain honest!"
To be honest, I only rageface at things like corp theft and other con-man style robberies, where the con has spent effort at getting his/her mark to be trusting, then abusing that trust. Though ironically I don't get bothered at the spy game, so I guess in that regard I'm a bit hypocritical in that I'm ok with intel being stolen, but not physical (virtual) assets.
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Akita T
Caldari Navy Volunteer Task Force
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Posted - 2011.06.10 14:41:00 -
[37]
Originally by: Doeko
If it were *actual* margin trading then you would be filled the full order regardless of your ISK balance and you would have the amount of ISK you don't have loaned to you until you sell the items. If it worked like that then it would be more fair as well as scamming would be impossible.
On the other hand, an exploit to multiply your existing liquid ISK would have just been created instead.
_
Make ISK||Build||React||1k papercuts
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Chevalleis
The Legendary Conquest
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Posted - 2011.06.10 14:53:00 -
[38]
Originally by: Akita T
Edited by: Akita T on 10/06/2011 14:48:21
Originally by: Doeko
If it were *actual* margin trading then you would be filled the full order regardless of your ISK balance and you would have the amount of ISK you don't have loaned to you until you sell the items. If it worked like that then it would be more fair as well as scamming would be impossible.
On the other hand, an exploit to multiply your existing liquid ISK would have just been created instead.
Before you get to ask "what? but how?", here's a quick description.
Main has 10 bil ISK.
Alt#1 is trained for margin trading L4 (31.640625% in escrow needed). Main transfer 10 bil to Alt#1. Alt#1 puts up huge margin order for something useless at 31.6 bil ISK. Main "sells" the item to Alt#1. Alt#1 wallet is now -21.6 bil ISK and can be left to rot.
Main has 31.6 bil ISK.
Alt#2 is trained...
Main has 99.8 bil ISK.
Alt#3 ? Main 315+ bil ISK.
#4 ? 997+ bil ISK
5 ? 3+ trillion ISK.
6 ? 9+ trillion ISK.
7 ? 31++ trillion ISK.
...you get the idea.
That wouldn't be a bad thing at all.
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Akita T
Caldari Navy Volunteer Task Force
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Posted - 2011.06.10 15:19:00 -
[39]
Edited by: Akita T on 10/06/2011 15:21:15
Originally by: Chevalleis
Originally by: Akita T
exponential ISK exploit
That wouldn't be a bad thing at all.
:blinks incredulously:
_
Make ISK||Build||React||1k papercuts
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Claire Voyant
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Posted - 2011.06.10 15:29:00 -
[40]
How long would it take for us all to get a bazillion isk?
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Cista2
Hydra Investment Fund
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Posted - 2011.06.10 15:33:00 -
[41]
Scamming? In my EVE? I am truly shocked.
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"Signatures" trade chatroom / Universal Railways |
Patri Andari
Caldari
Thukker Tribe Antiquities Importer
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Posted - 2011.06.10 15:37:00 -
[42]
The skill itself is not a scam, albeit some people have found many "creative" ways to use it. I myself hope CCP leaves it just as it is.
Magin trading has been very good to me! 
Patri
I'll Roshambo You For That Titan! |
SencneS
Rebellion Against Big Irreversible Dinks
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Posted - 2011.06.10 16:08:00 -
[43]
Originally by: Akita T
Before you get to ask "what? but how?", here's a quick description.
Main has 10 bil ISK.
Alt#1 is trained for margin trading L4 (31.640625% in escrow needed). Main transfer 10 bil to Alt#1. Alt#1 puts up huge margin order for something useless at 31.6 bil ISK. Main "sells" the item to Alt#1. Alt#1 wallet is now -21.6 bil ISK and can be left to rot.
Main has 31.6 bil ISK.
Alt#2 is trained...
Main has 99.8 bil ISK.
Alt#3 ? Main 315+ bil ISK.
#4 ? 997+ bil ISK
5 ? 3+ trillion ISK.
6 ? 9+ trillion ISK.
7 ? 31++ trillion ISK.
...you get the idea.
You would never need to dispose of the alts. If Margin Trading worked like this, you could build up gazillions on a single account in the matter of a few hours.
Main 500mil ISK
Alt #1 Margin Trading 4
Alt #2 Margin Trading 4
Main gives #1 500mil
#1 Sets up a buy order for 1,580,246,913.58 ISK
Main sells to #1 Buy order Main gets 1,580,246,913.58 ISK
#1 Alt is -1,080,246,913.58 ISK
Main gives #2 1,580,246,913.58 ISK
#2 Sets up a buy order for 4,994,360,615.76 ISK
Main sells to #2 Buy order Main gets 4,994,360,615.76 ISK
#2 is -3,414,113,702.18 ISK
Main gives #1 4,994,360,615.76 ISK
#1 Wallet is now 3,914,113,702.18 ISK
#1 Sets up a buy order for 12,370,532,194.54 ISK
Main sells to #1 Buy order Main gets 12,370,532,194.54 ISK
#1 Wallet is now -7,376,171,578.78 ISK
Main gives #2 12,370,532,194.54 ISK
etc etc..
Every time you basically triple your ISK but your debt is only twice as much, with two alts you triple the triple which covers the debt of the previous alt.
You could get a bazillion ISK in the matter of an hour in a remote system, would even be better in an outpost and something unusual and cheap like soil or something.
Amarr for Life |
Velicitia
Open Designs
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Posted - 2011.06.10 16:26:00 -
[44]
Correction to the subject ...
"EVE" should be renamed to "CCP Approved Scamming"
to keep things on topic... yeah, you were had, BUT you sorta scammed yourself ("the buyer and seller are fail! I'll make millions!!")
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Claire Voyant
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Posted - 2011.06.10 16:31:00 -
[45]
Why can't I stop thinking about the time that George W. Bush was told that 3 Brazilian soldiers had been killed in Iraq?
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Doeko
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Posted - 2011.06.10 16:36:00 -
[46]
Yes obviously the margin mechanic is way too complicated and EVE's markets are way too illiquid (any RL provider of margin would not provide margin for items trading on the EVE market due to illiquidity so I don't see why CCP should) so I wasn't suggesting it should function like that. I was just saying that's how it would function if it were actual margin trading.
I think I might try this scam. I'll just clear out the market in some item, setup buy orders (it doesn't even have to be an alt. Why would I use two characters? Can be exactly the same one...) and enjoy the wannabe trader tears.
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Cpt Fina
Red Dwarf Mining Corporation
space weaponry and trade
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Posted - 2011.06.10 17:20:00 -
[47]
Originally by: Doeko
EVE's markets are way too illiquid (any RL provider of margin would not provide margin for items trading on the EVE market due to illiquidity so I don't see why CCP should) so I wasn't suggesting it should function like that. I was just saying that's how it would function if it were actual margin trading.
How can you possibly know this?
And liquidity is far from the main primer for brokers when deciding wether to provide margin trades.
The personal net balance of the client is by all certainty much more important. Volatility spikes is another phenomenon that usually important for margin ratess.
I really don't know how you just make a blatant statement like that.
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Claire Voyant
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Posted - 2011.06.10 17:31:00 -
[48]
Edited by: Claire Voyant on 10/06/2011 17:34:09
Originally by: Cpt Fina
Originally by: Doeko
EVE's markets are way too illiquid (any RL provider of margin would not provide margin for items trading on the EVE market due to illiquidity so I don't see why CCP should) so I wasn't suggesting it should function like that. I was just saying that's how it would function if it were actual margin trading.
How can you possibly know this?
And liquidity is far from the main primer for brokers when deciding wether to provide margin trades.
The personal net balance of the client is by all certainty much more important. Volatility spikes is another phenomenon that usually important for margin ratess.
I really don't know how you just make a blatant statement like that.
Good point. Probably the best equivalent for margin trading in Eve is a collateralized loan. My broker will loan me 50% of the value of my stock and change me a pretty hefty rate of interest. If I came to MD to request a loan and offered 200% collateral, a fair interest rate, and the option of the lender to sell the collateral to pay off the loan if in his judgment the value of the collateral fell below 200% of the loan and I didn't add more collateral in time, I think I might get a few takers.
The real problem would be automating the system because then smart people like Akita would sploit it.
Edit: Damn those smart people, they ruin it for the rest of us!
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Wyke Mossari
Gallente
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Posted - 2011.06.10 17:38:00 -
[49]
@OP
The marginal buy is not the scam that is bait, the scam is actually carried out when the victim buys the over priced goods in the first place.
The scam exploits market ignorance of true value, and is actually no different from most aspect of EVE PvP.
AIH there are (at least) two good ways a skilled trader can turn these opportunities to their own advantage.
Originally by: Doeko
so I don't see why CCP should (provide liquidity)
Wrong, It is the traders that provide the market liquidity through ESCROW deposits. It is a game mechanic as a proxy for RP doesn't change the fact the most traders will have much more ISK on deposit in ESCROW than every get called on at any point.
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Doeko
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Posted - 2011.06.10 17:59:00 -
[50]
Originally by: Cpt Fina
Originally by: Doeko
EVE's markets are way too illiquid (any RL provider of margin would not provide margin for items trading on the EVE market due to illiquidity so I don't see why CCP should) so I wasn't suggesting it should function like that. I was just saying that's how it would function if it were actual margin trading.
How can you possibly know this?
And liquidity is far from the main primer for brokers when deciding wether to provide margin trades.
The personal net balance of the client is by all certainty much more important. Volatility spikes is another phenomenon that usually important for margin ratess.
I really don't know how you just make a blatant statement like that.
Are you saying you could quickly dump quantities of a reasonable portion of the average daily volume of pretty much any module into buy orders and get an average price which is at all close to "what they're worth" (maybe the 20 day MA)? I hope that's not what you are saying, that would be silly.
Nobody in EVE is trustworthy and neither is their net balance (could be transferred to another account in a heartbeat) so that criterion just doesn't apply. The only remaining one would be liquidity.
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Claire Voyant
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Posted - 2011.06.10 19:33:00 -
[51]
Originally by: Doeko
Originally by: Cpt Fina
Originally by: Doeko
EVE's markets are way too illiquid (any RL provider of margin would not provide margin for items trading on the EVE market due to illiquidity so I don't see why CCP should) so I wasn't suggesting it should function like that. I was just saying that's how it would function if it were actual margin trading.
How can you possibly know this?
And liquidity is far from the main primer for brokers when deciding wether to provide margin trades.
The personal net balance of the client is by all certainty much more important. Volatility spikes is another phenomenon that usually important for margin ratess.
I really don't know how you just make a blatant statement like that.
Are you saying you could quickly dump quantities of a reasonable portion of the average daily volume of pretty much any module into buy orders and get an average price which is at all close to "what they're worth" (maybe the 20 day MA)? I hope that's not what you are saying, that would be silly.
Nobody in EVE is trustworthy and neither is their net balance (could be transferred to another account in a heartbeat) so that criterion just doesn't apply. The only remaining one would be liquidity.
I think the confusion is that he interpreted your statement to mean liquidity was main or only reason why RL brokers would not provide margin for Eve trades. (This realization may be why he deleted his post.) You both appear to agree that the lack of trust in Eve and the ability of RL brokers to come after your other assets are another huge difference. A complete list of differences between Eve and RL capital markets would be long and pointless, but I think we can all agree that liquidity is not the only one.
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Cpt Fina
Red Dwarf Mining Corporation
space weaponry and trade
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Posted - 2011.06.11 02:25:00 -
[52]
Edited by: Cpt Fina on 11/06/2011 02:28:20
Originally by: Doeko
Originally by: Cpt Fina
Originally by: Doeko
EVE's markets are way too illiquid (any RL provider of margin would not provide margin for items trading on the EVE market due to illiquidity so I don't see why CCP should) so I wasn't suggesting it should function like that. I was just saying that's how it would function if it were actual margin trading.
How can you possibly know this?
And liquidity is far from the main primer for brokers when deciding wether to provide margin trades.
The personal net balance of the client is by all certainty much more important. Volatility spikes is another phenomenon that usually important for margin ratess.
I really don't know how you just make a blatant statement like that.
Are you saying you could quickly dump quantities of a reasonable portion of the average daily volume of pretty much any module into buy orders and get an average price which is at all close to "what they're worth" (maybe the 20 day MA)? I hope that's not what you are saying, that would be silly.
Nobody in EVE is trustworthy and neither is their net balance (could be transferred to another account in a heartbeat) so that criterion just doesn't apply. The only remaining one would be liquidity.
And I hope you're not telling me that price impact when moving large orders (which happens in real life û it's a big reason why we have upstair trading) is the only aspect to liquidity. Even as you conveniently leave out two major factors of liquidity; 1) Immediacy and 2) Depth you don't even cover the whole of the 3)width accurately û when moving average sized orders for example, one doesn't look at price impact of the order but the effective ticksize of the market.
That said you leave out important factors, few of which I mentioned above, when you describe why a broker wouldn't wawnt to supply margin deals.
Thirdly, you boldly state how illiquid Eve markets are without having provided any evidence of this. You know, you'd have to compare eve to the most illiquid IRL markets that provide margin trades (some stocks on the OMXS30 for example experience periods with no û read, no û liquidity, but margin trades are provided nonetheless). After that you'd have to provide support for you claim that the lack of liquidity is the reason whywe don't see real margin trading in Eve, and not any other variable that plays into that descision irl.
Lastly, I want to agree with you that trust plays a huge role in Eve and is IMO one of the main reasons why we don't se an "advancement" of the financial market. By this I mean that Eve lacks hugely in civil law û the binding characterisic of a contract is largely negated by the fact that we have very few means to enforce them, unlike rl.
edit for grammar
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Flaming Candle
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Posted - 2011.06.11 08:39:00 -
[53]
The perceived problem here is not that margin trading exists, it is that someone can setup a buy order with a minimum volume that they cannot cover with the amount of isk in escrow.
How about adjusting the escrow so that it covers the minimum volume.
For simplicity's sake, say margin trading means that you have 25% of the value of a buy order in escrow.
place a buy order for 10 tags, valued at 100m isk each.
If the minimum volume is 1 then 250m is taken from the wallet (25%)
If the minimum volume is 2 then 250m is taken from the wallet (25%)
If the minimum volume is 3 then 300m is taken from the wallet (30%)
If the minimum volume is 4 then 400m is taken from the wallet (40%)
If the minimum volume is 10 then 1000m is taken from the wallet (100%)
The amount required from the minimum volume is maintained in escrow, so as soon as the minimum volume cannot be covered by the amount in escrow, more isk is taken from the wallet. If there is not enough money to cover, the order is removed.
I can see that this will not completely remove the problem, but it might mitigate the effect. The scammer can setup a buy order for 10 as above and sell 10 for 90m each, the victim will still pay 900m but be able to sell a minimum of two to the scammer.
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Rhivre
Caldari
TarNec
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Posted - 2011.06.11 09:14:00 -
[54]
Surely this scam works the same way as the "selling X minerals at (insert silly price)".
It functions by the "victim" thinking "Wow, what an idiot, putting a buy order that high for something not worth it LOL free monies!"
Btw, it may be profitable for the "victim" if they keep 24% in mind
There was a whole threadnaught about this last year:
Linky 1
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Doeko
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Posted - 2011.06.11 09:16:00 -
[55]
Edited by: Doeko on 11/06/2011 09:17:11
Originally by: Cpt Fina
Edited by: Cpt Fina on 11/06/2011 02:28:20
And I hope you're not telling me that price impact when moving large orders (which happens in real life û it's a big reason why we have upstair trading) is the only aspect to liquidity. Even as you conveniently leave out two major factors of liquidity; 1) Immediacy and 2) Depth you don't even cover the whole of the 3)width accurately û when moving average sized orders for example, one doesn't look at price impact of the order but the effective ticksize of the market.
That said you leave out important factors, few of which I mentioned above, when you describe why a broker wouldn't wawnt to supply margin deals.
Thirdly, you boldly state how illiquid Eve markets are without having provided any evidence of this. You know, you'd have to compare eve to the most illiquid IRL markets that provide margin trades (some stocks on the OMXS30 for example experience periods with no û read, no û liquidity, but margin trades are provided nonetheless). After that you'd have to provide support for you claim that the lack of liquidity is the reason whywe don't see real margin trading in Eve, and not any other variable that plays into that descision irl.
Lastly, I want to agree with you that trust plays a huge role in Eve and is IMO one of the main reasons why we don't se an "advancement" of the financial market. By this I mean that Eve lacks hugely in civil law û the binding characterisic of a contract is largely negated by the fact that we have very few means to enforce them, unlike rl.
edit for grammar
I don't know why you are so adamant about attacking my points, but you seem still confused. I thought it went without saying that depth in EVE markets is not adequate and that especially the velocity of orders is very low (I take it this is what you mean by immediacy, so the market will be very slow, perhaps weeks, to rebound to equilibrium after a shock, while manufacturers or mission runners jump on supplying at inflated prices or people start to notice the cheapness). I had placed this in the previous post but as I said I thought it would go without saying.
Trust plays no role in EVE in the sense that there is none. Thus the ONLY risk criterion for providing margin trades is liquidity. When providing margin for illiquid stocks or a futures contract the broker will look at his relation with the customer. If the customer is a $10,000 account who wants margin for $20,000 in an illiquid stock (and this is extreme, even much much more friendly-looking ratios will not work) it's not going to happen. But if said customer wanted $120,000 worth of Spooz that would be no problem because the margin there is about 1:15 and the broker doesn't give a **** who you are because the market is liquid and has very high velocity.
There is maybe 0.000001% chance in the Spooz that one moment the prices will be X and the next moment (a moment which goes by quicker than their computers can do their risk and position value calculations) Y where Y falls so far below the value of X that the broker is at risk of loss. In EVE most markets, the chances of this happening is 100% and since there is no trust to alleviate this no broker would supply margin.
Also, I think I've already clarified that this goes for pretty much everything except minerals, most PI and most moon gunk and only in Jita. I think it may be worth it to provide margin in these items for station trading if the interest rate were adequate.
This is a pretty pointless discussion by the way.
On a sidenote, while dark pools and such are used to cross size in RL, those are obviously only used by institutions (i.e. the single most trustworthy customer) so I don't see how that fits in with this. We have no financial institutions in EVE and certainly none that are trustworthy. I think the upstairs market for liquid items is pretty small in EVE although I wouldn't know that for sure.
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Ghoest
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Posted - 2011.06.11 10:13:00 -
[56]
There is a fairly simple way to fix or at least greatly limit this scam.
Any time you cant cover an order you made you lose the margin trading privilege for a month.
Wherever you went - Here you are.
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Cpt Fina
Red Dwarf Mining Corporation
space weaponry and trade
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Posted - 2011.06.11 11:20:00 -
[57]
Originally by: Doeko
Edited by: Doeko on 11/06/2011 09:17:11
I don't know why you are so adamant about attacking my points, but you seem still confused. I thought it went without saying that depth in EVE markets is not adequate and that especially the velocity of orders is very low (I take it this is what you mean by immediacy, so the market will be very slow, perhaps weeks, to rebound to equilibrium after a shock, while manufacturers or mission runners jump on supplying at inflated prices or people start to notice the cheapness). I had placed this in the previous post but as I said I thought it would go without saying.
IÆm not attack you. ItÆs you who made the claim and IÆm simply questioning it.
And now youÆre making another claim that you seemingly have no basis for. By which measure, by what standard do you measure the market depth in Eve to make such a claim that it is not enough?
Immediacy isnÆt a term that IÆve come up with; itÆs the established terms used to describe that constituent part of liquidity. It refers to how quickly trades of a given size can be executed at a given cost.
Originally by: Doeko
Edited by: Doeko on 11/06/2011 09:17:11
Trust plays no role in EVE in the sense that there is none. Thus the ONLY risk criterion for providing margin trades is liquidity.
Wow, thatÆs big leap you are taking there.
First off, if it were true that there is ZERO trust in eve û NO means to enforce any contracts. If the guy I lend money to doesnÆt have to pay back and there are no negative consequences for him not paying back, then it doesnÆt matter what he invests in. You would have a complete breakdown of the law of contracts û the borrower would have no incentive to pay the lender back. So we donÆt even have to discuss what the borrower might or might not invest in.
Originally by: Doeko
Edited by: Doeko on 11/06/2011 09:17:11
When providing margin for illiquid stocks or a futures contract the broker will look at his relation with the customer. If the customer is a $10,000 account who wants margin for $20,000 in an illiquid stock (and this is extreme, even much much more friendly-looking ratios will not work) it's not going to happen. But if said customer wanted $120,000 worth of Spooz that would be no problem because the margin there is about 1:15 and the broker doesn't give a **** who you are because the market is liquid and has very high velocity.
Secondly you again ignore crucial factors for providing margin trades like solvency (personal capital / collateral) and price volatility.
Originally by: Doeko
Edited by: Doeko on 11/06/2011 09:17:11
There is maybe 0.000001% chance in the Spooz that one moment the prices will be X and the next moment (a moment which goes by quicker than their computers can do their risk and position value calculations) Y where Y falls so far below the value of X that the broker is at risk of loss. In EVE most markets, the chances of this happening is 100% and since there is no trust to alleviate this no broker would supply margin.
Thirdly, what you are describing here is price volatility (one of the factors I listed in the previous post). The risk of the borrower becoming insolvent due to fluctuation in assetprices. Now, liquidity is a one of many sub-categories of price fluctuation but as a lender you look at the variance of the asset prices before you look at the reasons behind said variance. If a lender decides whether to lend to a client or not he looks at the historical price volatility before he looks at the underlying factors of price volatility which might be everything from an Arabic uprising or investors taking home profits (û hence why price volatility should be listed before liquidity).
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Cpt Fina
Red Dwarf Mining Corporation
space weaponry and trade
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Posted - 2011.06.11 11:22:00 -
[58]
Edited by: Cpt Fina on 11/06/2011 11:26:34
Originally by: Doeko
Edited by: Doeko on 11/06/2011 09:17:11
On a sidenote, while dark pools and such are used to cross size in RL, those are obviously only used by institutions (i.e. the single most trustworthy customer) so I don't see how that fits in with this. We have no financial institutions in EVE and certainly none that are trustworthy. I think the upstairs market for liquid items is pretty small in EVE although I wouldn't know that for sure.
Upstairs trading is made specifically to alleviate price impact on some rl stock exchanges. The very phenomenon you discredited the eve market with. What I am saying is that price impact are a problem on rl markets (hence upstairs trading) alwell as in eve.
If you want to use the price impact as an argument youÆd have to quantify it and compare it with rl markets.
So, to conclude
1)You have yet to provide any evidence of why liquidity is the sole factor in decisions of providing margin trades.
2)You have yet to provide any evidence of that the eve market is less liquid than the most illiquid markets where margin trading is provided.
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Covert Kitty
Amarr
ISK Solutions
SRS.
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Posted - 2011.06.11 13:54:00 -
[59]
The OP is a moron. I like the margin trading skill. I do however think that CCP needs to purge or mark buy orders that will fail in some way.
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Vaerah Vahrokha
Minmatar
Vahrokh Consulting
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Posted - 2011.06.11 14:36:00 -
[60]
Originally by: Cpt Fina
2)You have yet to provide any evidence of that the eve market is less liquid than the most illiquid markets where margin trading is provided.
I don't want to enter in yet another MD wikipedia experts thread, but I'd like to point out how a quick glance to most EvE markets data tells that the markets are liquid about as much as low liquidity stocks.
Looking at an OHLC chart would reveal that even some EvE markets considered liquid, show an amount of gaps, large candles and tall candle shadows / wicks that suggest low liquidity.
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