Trading Tips

Trading provides an opportunity to increase your income.

At the beginning of each period you will be allocated five units.

You have the opportunity to buy or sell units from other players.

Other players may, or may not, have different values for each unit.

You can make money buy selling a unit at more than its value to you.

Consider the following example value table:

QUESTION: Assume our example person currently has 5 units. What is the value of their 5th Unit ? (ANSWER: $6)

QUESTION: If our person could see that someone was in the market bidding to BUY a unit for $7, should our person sell to them? Would they make a profit or a loss ? How much ? (ANSWER: Yes, because they can get $7 for something that at the end of the period is only worth $6 to them. They thus are $1 better off by selling than by not selling. They MAKE A PROFIT of $1.)

QUESTION: What is the value for a 6th unit ? (ANSWER: $5)

QUESTION: If our person sees that someone is offering to SELL a unit for $3, should our person buy ? (ANSWER: YES, because an extra unit is worth $5, and can be bought for $3, leading to a profit of $2).

You buy or sell units one at a time. You can buy or sell each one at a different price.

For instance in this example, you may first sell one unit for $7, and then seek a higher price for the next one.

You cannot hold fewer than zero units.

There is nothing to be gained from holding more than ten units at the end of a period.

You are free to choose if, and at what price, to buy or sell units.

When you have read the above, please proceed to the next page.

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Last Modified: 18 October 2007