I would be surprised if this did not quickly lead to the revocation of his time turner, but presuming he asks McGonagall and it’s deemed responsible that is also an option.
The foreign exchange(i.e., currency) market is both very liquid and very volatile. With advance knowledge of major changes from a Time Turner, it’s easy to make very fast exponential growth of your seed money—even a 1% change per day, in any direction, multiplies your money by a factor of 12 every year(or x3 million before he graduates Hogwarts). Of course, anyone with that sort of record would get investigated hard and fast, but a more cautious approach can still result in absurd growth.
And there is leverage, so you can invest 100 $, but get profits or loses like you invested 10000 $. So if theres 100x leverage, and 1% profit to make on currencies each day, you can double your money every day.
So to turn 100 galeons to 100000 galeons Harry would need 10 transactions with 1% profit each.
True, but there’s no way an 11 year old would have access to 100:1 leverage, even with derivatives. LTCM wasn’t much higher than 100:1, and they’re just about the all-time kings of leverage. There’s things like regulatory limits and credit checks to contend with here.
Edit: Silly me, I should actually have read your link. I’m used to limits on equity leverage, apparently forex works damn near an order of magnitude higher. Disregard the above.
I was in an equity mindset, where the rules are much tighter, because the underlying assets are so much more volatile. Doing that sort of leverage there would require you to post some pretty hefty collateral(likely beyond the means of Prof. Verres) and be in a low-regulation jurisdiction for it to even be legal(which the UK is not).
Arbitrage trick is overengineering. Just trade on forex and use time turner to go back and choose the deal.
With 40 000 galleons even going back a few minutes could suffice.
I’m loving the idea that time travel is being proposed here as the simpler, less over-engineered solution to making a bunch of money.
I would be surprised if this did not quickly lead to the revocation of his time turner, but presuming he asks McGonagall and it’s deemed responsible that is also an option.
You sir, are a genius.
Didn’t get. Could you explain?
The foreign exchange(i.e., currency) market is both very liquid and very volatile. With advance knowledge of major changes from a Time Turner, it’s easy to make very fast exponential growth of your seed money—even a 1% change per day, in any direction, multiplies your money by a factor of 12 every year(or x3 million before he graduates Hogwarts). Of course, anyone with that sort of record would get investigated hard and fast, but a more cautious approach can still result in absurd growth.
And there is leverage, so you can invest 100 $, but get profits or loses like you invested 10000 $. So if theres 100x leverage, and 1% profit to make on currencies each day, you can double your money every day.
So to turn 100 galeons to 100000 galeons Harry would need 10 transactions with 1% profit each.
http://www.investopedia.com/ask/answers/06/forexleverage.asp#axzz1qS7tVBFp
True, but there’s no way an 11 year old would have access to 100:1 leverage, even with derivatives. LTCM wasn’t much higher than 100:1, and they’re just about the all-time kings of leverage. There’s things like regulatory limits and credit checks to contend with here.
Edit: Silly me, I should actually have read your link. I’m used to limits on equity leverage, apparently forex works damn near an order of magnitude higher. Disregard the above.
Harry has a father who is quite respectable. He could act through his father.
I was in an equity mindset, where the rules are much tighter, because the underlying assets are so much more volatile. Doing that sort of leverage there would require you to post some pretty hefty collateral(likely beyond the means of Prof. Verres) and be in a low-regulation jurisdiction for it to even be legal(which the UK is not).