Random Advice From One Trader to Another

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A Review Of Random Number Generators (RNG) On Blockchain

Randomness is a criterion to evaluate the security level of a system. Traditional random number generation is centralized and lacks an easy cost-effective way to verify the results or if there has been any tampering. Blockchain random number generators, on the other hand, solve this problem by leveraging the blockchain technology to bring transparency, fairness, verifiability, and tamper-resistance into the process of generating numbers. Let’s take a look at existing RNG solutions to identify the challenges that need to be conquered.

Randomness is an essential building block of many aspects of life ranging from theory such as security, cryptography, or computer simulation to forms of gambling like lotteries. Obtaining a true randomness source is always significantly challenging and a lot of effort has been devoted to constructing a good Random Number Generator (RNG). Traditionally, RNGs can be classified into two types: Pseudo-Random Number Generators (PRNGs) and True Random Number Generators (TRNGs). PRNGs utilize mathematical algorithms, which are considered deterministic. These RNGs are based on algorithms implemented on finite-state machines to produce pseudo-random determinism sequences from initial values called seeds in mathematical processes. TRNGs, on the other hand, derive randomness from various physical phenomena such as thermal noise, radio noise and so on. It is widely agreed that these sources behave in an inherently unpredictable and non-deterministic manner.

Many applications (such as those mentioned in this article) today not only require randomness in the unpredictability manner but also require public randomness which cannot be manipulated or in control of any organization. Traditional RNGs cannot resolve this since they are centralized (this article explains in-depth the terms centralization, and decentralization) and running solely on a local source and or under the control of a group of individuals or organizations. All this changed in 2009 with the invention of blockchain technology. Since then, the phrase “ blockchain random number” has been getting more and more attention from computer scientists. As a result, many attempts have been made to construct a blockchain-based random number generator. We will briefly discuss some of these solutions to clarify the current state of blockchain-based random number generation:

1. Block-hash

In the Block-hash approach, the hash of blocks or transactions is used as the source of randomness. As the hash is deterministic, everyone will get the same result. A block, once added to the blockchain, is likely to stay there forever, therefore, everyone can verify the correctness of the generated numbers.

Consider an example of a lottery service that adopts this method. The players first buy a ticket by placing their number before a specific time, say 7 PM every day. After 7 PM, the buying ticket phase is closed, the protocol proceeds to the next phase which is to determine the winning numbers for a ticket. This ticket is calculated based on the hash of the first block accessible for everyone on the Bitcoin blockchain after 8 PM. As we can see, at 7 PM, no one can predict the hash of the block at 8 PM which makes the service a sound one.

However, this hash is subject to manipulation by the miners guarding the blockchain. When the reward of the lottery is small, the miners have little motivation to tamper with the block but as soon as this amount is larger than the block reward plus the transaction fees, there is a chance that miners will start influencing the block-hash to generate their desired numbers. Thus, for high-stake randomness-based applications, this method is not a secure one. See more in this discussion.

2. Bitcoin Beacon

In this case, the Bitcoin blockchain is used to produce random numbers. The timestamps and transactions in Bitcoin pack a sustainably high entropy source. Entropy measures the “chaos” of a randomness source. The more “chaotic” the source is (the higher the entropy is), the more difficult to predict the number generated. Additionally, the SHA256 hash function and the Proof-of-Work algorithm are used to determine a random number. We know that PoW is computationally intensive, and non-deterministic resulting in the unpredictability of the RNG’s outcomes. This approach retains the same problem as the previous one since it does not properly deal with the risk of Block Withholding Attacks, where (financially incentivized) miners intentionally discard blocks they do not favor. On a blockchain, miners help secure the blockchain by running the Proof-of-Work algorithm and probabilistically receive rewards in the form of bitcoins for doing so. As a result, any attack on the random beacon would form an attack on Bitcoin itself. Therefore, this approach can only be secure up to a specific bound of monetary costs. In lotteries, when the reward is large, one can bribe miners to ignore specific blocks, consequently compromising the randomness. Another issue is that normal parties (non-miners) cannot take part in the generation process of these random numbers, which implies that fairness does not hold for this solution.

3. Oraclize

By design, Oraclize (recently renamed to Provable) is a data supplier that provides data for smart contracts and blockchain applications. In many scenarios, it is required to carry data from outside of the blockchain, but the nature of smart contracts does not help solve this problem. Oraclize comes as a rescue to make this scenario come true. As an intermediary, Oraclize collects data from external sources such as WolframAlpha, IPFS, etc, and then delivers the data to the applications in need. Regarding random numbers, Oraclize fetches data from random.org into blockchains. The solution, as its core, is a centralized data service. It argues that through the so-called Authenticity Proofs, everyone can verify that the fetched numbers are genuine and untampered. Obviously, in this model, one has to trust not only Oraclize but also the data provider, i.e which is random.org in the randomness case. We have not concluded on the plausibility of this solution. However, relying on trusted parties contradicts the philosophy of blockchain technology as a centralized service can be corrupted at any time. This makes Oraclize inefficient for applications that require high security and trustless between parties on the blockchain.

4. RanDAO

“Miners cannot be trusted” is the philosophy of designing RanDAO. In the first and second approaches, the random numbers are subject to being manipulated by miners on blockchains. RanDAO is a service whose aim is to construct a verifiably fair RNG on blockchains. They have come up with 2 solutions: the Commit-Reveal Scheme and the BLS Scheme. Here, we briefly introduce the former, which has been deployed since 2020. It is a Verifiable Random Number Generator. RanDAO commit-reveal scheme (RanDAO for short) is an RNG running on the Ethereum blockchain that allows many parties to participate in generating random numbers. Anyone with an Ethereum address can take part in the generation process, hence, fairness is guaranteed. The core idea is to allow participants to give their contribution to form the final outcome. As in its nature, RanDAO attempts to solve the problem of verifiability and fairness, not the problem of randomness as a whole. The protocol goes through three phases as follows:

  • Commit: Any participant i who wants to take part in the random number generation submits a commitment associated with the secret number si he wants to contribute.
  • Reveal: After the Commit phase has finished, i.e. everyone has submitted their commitment, participants need to reveal the secret number si.
  • Calculate: When everyone has revealed their number, the final random number will be calculated from a function f(s1,s2,…,sn) of all collected secret numbers.

The integrity of the generated numbers relies on the assumption that there is at least one honest party since the function f ensures that if one controls up to n-1 values of si, he still cannot manipulate the final outcome. However, the main problem of this protocol is that the last person to reveal the secret will be able to know the resulting random number beforehand and this person can refuse to reveal the secret value leading the protocol to termination without producing any outcome.

5. Publicly Verifiable Secret Sharing

The main focus of a publicly verifiable secret sharing (PVSS) is to generate publicly-verifiable, bias-resistant and unpredictable randomness in distributed environments. In this technique, a party holding a secret splits it into shares (verifiable by any third party) and distributes these shares to other parties. When everyone comes to an agreement to reveal the secret, shares are collected and once one is in possession of enough shares, he can reconstruct the secret. The number of shares enough to reconstruct the secret varies in different use cases (usually, this number is set to be half of the total number of shares). Therefore, most of the PVSS protocols require strong assumption on the number of honest parties, i.e. honest majority (more than half of the network is honest) to make sure that the secret is unpredictable whilst RanDAO only requires honest minority (at least one party is honest) to ensure the unpredictability. Another problem with this scheme is that the network communication complexity is high which prevents it from scaling out.

6. Verifiable Delay Functions

The idea of a verifiable delay function (VDF) was first introduced by Lenstra in the name of slow-timed hash functions and later formalized by Boneh. A VDF is a function that requires a moderate amount of sequential computation to evaluate (even using parallel computing), but once a solution is found, it is easy for anyone to verify that it is correct. One could think of a VDF as a time delay imposed on the output of some pseudo-random generator. This delay prevents malicious actors from influencing the output of the pseudorandom generator since all inputs will be finalized before anyone can finish computing the VDF. The main advantage is that an adversary cannot bias the output of the random beacon because it cannot calculate the result in the given time window. Recently, this notion has been drawing a lot of attention from researchers and especially, the Ethereum Research team is working hard on designing such an efficient VDF for Ethereum.

However, as one can see, one obvious drawback of this approach is at a large amount of time required to compute a random number (to guarantee the security of the protocol) and hence, only works well in applications where there is no time pressure. Another challenging problem is in designing a secure way of fetching input for the VDF.

7. Verifiable Random Functions

A verifiable random function (VRF) is pseudo-random functions that provide a non-interactively verifiable proof for the correctness of their output. In other words, a VRF is a pseudo-random function which, given an input, produces a random output along with a proof for correct evaluation. We can consider a VRF as a public-key version of keyed-hashing functions (e.g. SHA256 or Keccak).

Unlike the normal hash function in which everyone can compute the output given an input, in a keyed-hashing algorithm, only the one with the key can compute the hash. This provides a mechanism for authentication. However, an obvious drawback is that verifying the hash also requires the secret key. This limits the range of its use cases in cryptography. VRFs were created to fix this problem. Informally, a VRF is a form of a public-key version of the previously introduced keyed-hashing algorithm. It is associated with a pair of secret-public keys. In a VRF, only the person with the private key can compute the output, but anyone with the public key can verify its correctness.

A VRF-oriented approach to generating random numbers basically involves two parties: Alice and Bob. Alice is the one who has the input and Bob is the one responsible for calculating the random number and they want to eventually agree on a random number. Employing a VRF in this scenario guarantees the following:

  • Although Bob is the one who evaluates the VRF, it does not mean that he is able to adjust the result. To do so, he would need to change the input (which is control by Alice) or change his secret key (which leads to the corresponding public key being invalid). Thus, Bob cannot force the outcome to be a value in its favor.
  • Alice does not know the secret key of Bob, hence she is not able to know the random number prior to being calculated by Bob.
  • Bob’s calculation is proven by proof, therefore, Alice should not worry about the outcome being manipulated since she can double-check at any time using Bob’s public key.
  • The computation needed for generating a random number is extremely cheap which boosts up the system’s performance dramatically.

A VRF follows the philosophy of public-key cryptography and thus finds its applications in a wide range of cryptographic schemes, protocols, and systems. Ouroboros Praos and Algorand are two such famous representatives.

Conclusion

A lot of attempts have been made to design blockchain random number generators, however, existing solutions only deal with one or two aspects and fall short in other aspects. While some are too slow to generate a number, some do not satisfy the security requirements. Thus, to have an RNG that runs on a decentralized network and allows anyone to generate and audit the random numbers while still ensuring its security is significantly challenging.

This is where GINAR comes in. GINAR answers the shortcomings of other blockchain-based random number generators. GINAR is a multi-participatory RNG which allows many people to take part in the process of generating a random number. Each party/participant/person contributes a number and the final outcome will be calculated as the combination of all contributed numbers. GINAR leverages two most intriguing cryptographic primitives including Verifiable Random Functions (explained above ) and Homomorphic Encryption (introduced in this article) to deliver secure, fair, publicly-attestable random beacons. Besides, due to the simplicity of these primitives, GINAR is able to provide services to millions of users. In subsequent articles, we will explain in greater detail how GINAR offers solutions to many of these problems.

GINAR applies Blockchain technology to random number generation, which guarantees to provide secure, fair and transparent random numbers at an impressive speed and volume for businesses wanting to leverage unpredictable, tamper-resistant and verifiable digits; especially for lottery and online gaming operators. As a Software as a Service (SaaS) provider of Random Number Generator, GINAR provides the capability to integrate into other systems by HTTPs service which is simply adaptable to any platforms (Windows/Mac/iOS/Android, etc.).

An Investor’s Desktop Guide To Trading – Part II

Read Part-1 Here

Currently, it seems that nothing can derail the bull market. Trade wars, weakening economic growth, deteriorating earnings, and inverted yield curves have all been dismissed on “hopes” that a “trade deal” will come, and the Federal Reserve will cut rates. While the last two items may indeed extend the current cycle by a few months, they won’t change the dynamics of the former.

Eventually, this cycle ends. Of that, there is little argument. It is the “when,” that is tirelessly debated.

As I have often stated, I am not bullish or bearish. My job as a portfolio manager is simple; invest money in a manner that creates returns on a short-term basis, but reduces the possibility of catastrophic losses which wipe out years of growth.

In the end, it does not matter IF you are “bullish” or “bearish.” The reality is that the “broken clock” syndrome owns both “bulls” and “bears” during the full-market cycle. However, what is grossly important in achieving long-term investment success is not necessarily being “right” during the first half of the cycle, but by not being “wrong” during the second half.

The second half of the cycle IS coming.

This is why, in times like these that we have to follow our investment rules. Those rules allow us to grow capital but reduces the risk of massive drawdowns when the cycle turns. While there are many promoting “buy and hold” strategies, it is interesting that not one of the great investors throughout history have ever practiced such an investment discipline. In fact, they have all had very specific rules they followed which helped them not only to make investments, but also when to sell them.

So, in following up with part one of this series, here are some more rules from great investors which we can all learn from.

William O’Neil’s 23 Trading Rules

William J. O’Neil is one of the greatest stock traders of our time, achieving a return of 5000% over a 25-year period. He uses a trading strategy called CANSLIM, which combines fundamental analysis, technical analysis, risk management and timing. CANSLIM is an acronym and stands for:

C: Current quarterly earnings per share (up at least 25% vs. year-ago quarter).

A: Annual earnings increases at a compound rate of no less than 25%.

N: New products, new management and new highs.

S: Supply and demand. Stocks with small floats experience greater price rises, plus big volume demand.

L: Leaders and laggards. Keep stocks that outperform and get rid of the laggards.

I: Institutional ownership. Follow the leaders.

M: Market direction. Three out of four stocks follow the trend of the market. When the intermediate trend is bearish, don’t invest.

Here are the rules:

  1. Don’t buy cheap stocks. Avoid the junk pile.
  2. Buy growth stocks that show each of the last three years annual earnings per share up at least 25% and the next year’s consensus earnings estimate up 25% or more. Most growth stocks should also have annual cash flow of 20% or more above EPS.
  3. Make sure the last two or three-quarters earnings per share are up by a minimum of 25% to 30%. In bull markets, look for EPS up 40% to 500%.
  4. See that each of the last three-quarter’s sales is accelerating in their percentage increases, or the last quarter’s sales are up at least 25%.
  5. Buy stocks with a return on equity of 17% or more. The best companies will show a return on equity of 25% to 50%.
  6. Make sure the recent quarterly after-tax profit margins are improving and near the stock’s peak after-tax margins.
  7. Most stocks should be in the top five or six broad industry sectors..
  8. Don’t buy a stock because of its dividend or P/E ratio. Buy it because it’s the number one company in its particular field in terms of earnings and sales growth, ROE, profit margins, and product superiority.
  9. Buy stocks with a relative strength of 85 or higher.
  10. Any size capitalization will do, but the majority of your stocks should trade an average daily volume of several hundred thousand shares or more.
  11. Learn to read charts and recognize proper bases and exact buy points. Use daily and weekly charts to materially improve your stock selection and timing.
  12. Carefully average up, not down, and cut every single loss when it is 7% or 8% below your purchase price with absolutely no exception.
  13. Write out your sell rules that show when you will sell and nail down a profit in your stock.
  14. Make sure your stock has at least one or two better-performing mutual funds who have bought it in the last reporting period. You want your stocks to have increasing institutional sponsorship over the last several quarters.
  15. The company should have an excellent new product or service that is selling well. It should also have a big market for its product and the opportunity for repeat sales.
  16. The general market should be in an uptrend and either favor small or big cap companies.
  17. The stock should have ownership by top management.
  18. Look for a “new America” entrepreneurial company rather than laggard, “old America” companies.
  19. Forget your pride and ego; the market doesn’t know or care what you think.
  20. Watch for companies that have recently announced they are buying back 5% to 10% or more of their common stock. Find out if there is new management in the company and where it came from.
  21. Don’t try to buy a stock at the bottom or on the way down in price,and don’t average down
  22. If the news appears to be bad, but the market yawns, you can feel more positive. The tape is telling you the underlying market may be stronger than many believe. The opposite is also true.
  23. 37% of a stock’s price movement is directly tied to the performance of the industry group the stock is in. Another 12% is due to strength in its overall sector. Therefore, half of a stock’s move is due to the strength of its respective group.

Richard Rhodes 16 Investing Rules

  1. The first and most important rule is – in bull markets, one is supposed to be long. In a bull market, one can only be long or on the sidelines. Remember, not having a position is a position.
  2. Buy that which is showing strength – sell that which is showing weakness. The public continues to buy when prices have fallen. The professional buys because prices have rallied. The rule of survival is not to “buy low, sell high”, but to “buy higher and sell higher.”
  3. When putting on a trade, enter it as if it has the potential to be the biggest trade of the year. Don’t enter a trade until it has been well thought out, a campaign has been devised for adding to the trade, and contingency plans set for exiting the trade.
  4. In bull markets, add to the trade on minor corrections back into support levels. In bear markets, add on corrections into resistance. Use the 33-50% corrections level of the previous movement or the proper moving average as a first point in which to add.
  5. Be patient. If a trade is missed, wait for a correction to occur before putting the trade on.
  6. Be patient. Once a trade is put on, allow it time to develop and give it time to create the profits you expected.
  7. Be patient. The real money in trading is made from the one, two or three large trades that develop each year. You must develop the ability to patiently stay with winning trades to allow them to develop into that sort of trade.
  8. Be patient. Once a trade is put on, give it time to work; give it time to insulate itself from random noise; give it time for others to see the merit of what you saw earlier than they.
  9. Be impatient. As always, small loses and quick losses are the best losses. It is not the loss of money that is important. Rather, it is the mental capital that is used up when you sit with a losing trade that is important.
  10. Never, ever under any condition, add to a losing trade, or “average” into a position. If you are buying, then each new buy price must be higher than the previous buy price. If you are selling, then each new selling price must be lower. This rule is to be adhered to without question.
  11. Do more of what is working for you, and less of what’s not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit.
  12. When sharp losses in equity are experienced, take time off. Close all trades and stop trading for several days. The mind can play games with itself following sharp, quick losses. The urge “to get the money back” is extreme, and should not be given in to.
  13. When adding to a trade, add only 1/4 to 1/2 as much as currently held. That moves the average price of your holdings less than half of the distance moved, thus allowing you to sit through 50% corrections without touching your average price.
  14. Think like a guerrilla warrior. We wish to fight on the side of the market that is winning. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don’t need to fight at all.
  15. Markets form their tops in violence; markets form their lows in quiet conditions.
  16. The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.

Ed Seykota’s 21-Investment Guidelines

  1. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading.
  2. If I am bullish, I neither buy on a reaction, nor wait for strength; I am already in. I turn bullish at the instant my buy stop is hit, and stay bullish until my sell stop is hit. Being bullish and not being long is illogical.
  3. If I were buying, my point would be above the market. I try to identify a point at which I expect the market momentum to be strong in the direction of the trade, so as to reduce my probable risk
  4. I set protective stops at the same time I enter a trade. I normally move these stops in to lock in a profit as the trend continues. Sometimes, I take profits when a market gets wild. This usually doesn’t get me out any better than waiting for my stops to close in, but it does cut down on the volatility of the portfolio, which helps calm my nerves. Losing a position is aggravating, whereas losing your nerve is devastating.
  5. Before I enter a trade, I set stops at a point at which the chart sours.
  6. The markets are the same now as they were five to ten years ago because they keep changing – just like they did then.
  7. Risk is the uncertain possibility of loss. If you could quantify risk exactly, it would no longer be risk.
  8. Speculate with less than 10% of your liquid net worth. Risk less than 1% of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth.
  9. I usually ignore advice from other traders, especially the ones who believe they are on to a “sure thing”.The old timers, who talk about “maybe there is a chance of so and so,” are often right and early.
  10. Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top
  11. Trend systems do not intend to pick tops or bottoms. They ride sides.
  12. The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system. There are old traders and there are bold traders, but there are very few old, bold traders.
  13. The manager has to decide how much risk to accept, which markets to play, and how aggressively to increase and decrease the trading base as a function of equity change. These decisions are quite important—often more important than trade timing.
  14. The profitability of trading systems seems to move in cycles. Periods during which trend-following systems are highly successful will lead to their increased popularity. As the number of system users increases, and the markets shift from trending to directionless price action, these systems become unprofitable, and under-capitalized, and inexperienced traders will get shaken out. Longevity is the key to success.
  15. Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible.
  16. I don’t think traders can follow rules for very long unless they reflect their own trading style. Eventually, a breaking point is reached and the trader has to quit or change, or find a new set of rules he can follow. This seems to be part of the process of evolution and growth of a trader.
  17. Trading Systems don’t eliminate whipsaws. They just include them as part of the process.
  18. The trading rules I live by are:
    1. Cut losses.
    2. Ride winners.
    3. Keep bets small.
    4. Follow the rules without question.
    5. Know when to break the rules.
  19. The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance.
  20. If you can’t take a small loss, sooner or later you will take the mother of all losses.
  21. One alternative is to keep bets small and then to systematically keep reducing risk during equity draw downs. That way you have a gentle financial and emotional touchdown.

But, did you spot what was missing?

Every day the media continues to push the narrative of passive investing, indexing and “buy and hold.” Yet while these methods are good for Wall Street, as it keeps your money invested at all times for a fee, it is not necessarily good for your future investment outcomes.

You will notice that not one of the investing greats in history ever had “buy and hold” as a rule.

So, the next time that someone tells you the “only way to invest” is to buy and index and just hold on for the long-term, you just might want to ask yourself what would a “great investor” actually do. More importantly, you should ask yourself, or the person telling you, “WHY?”

The ones listed here are not alone. There numerous investors and portfolio managers that are revered for the knowledge and success. While we idolize these individuals for their respective “genius,” we can also save ourselves time and money by learning from their wisdom and their experiences. Their wisdom was NOT inherited, but was birthed out of years of mistakes, miscalculations, and trial-and-error. Most importantly, what separates these individuals from all others was their ability to learn from those mistakes, adapt, and capitalize on that knowledge in the future.

Experience is an expensive commodity to acquire, which is why it is always cheaper to learn from the mistakes of others.

Importantly, you will notice that many of the same lessons are repeated throughout. This is because there are only a few basic “truths” of investing that all of the great investors have learned over time. I hope you will find the lessons as beneficial as I have over the years and incorporate them into your own practices.

v0.34:Trading

Trading in Dwarf Fortress first occurs in the first autumn after establishing your fortress, with the arrival of the Dwarven caravan. Trading is a good way to acquire resources that are not available or are rare in the local area. It also allows for more freedom in selecting starting gear or purchase of additional skills for the expedition party, because items can always be obtained through trade later.

Trader is the term used at your trade depot to refer to your fortress representative when dealing with merchants in a visiting caravan ( r – “Trader requested at Depot”). As a profession, the term applies to visiting merchants and dwarves whose highest skill is Appraiser.

Contents

Trade Depot [ edit ]

Building a trade depot is a pre-requisite for trade with caravans that arrive at your fortress.

While it may be convenient to build a Trade Depot outside at first, it is usually a really good idea to move it inside or build walls, bridges and other fortifications around it to protect caravans and your goods from animals (guzzlers), thieves and goblins.

Everything that is on your map belongs to you, except:

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  • the items that are on merchant animals and wagons
  • the items that are on the trade depot (they belong to the caravan until they are moved out of it)
  • items worn by non-fortress units are initially forbidden, but can be claimed via unforbidding and dumping them

Trading Flowchart [ edit ]

Suggested trading procedure
Arrive at fortress location
Create goods Build Trade Depot
Check depot is accessible
Wait for caravan
Set goods to be traded Wait for caravan to arrive at depot and merchants to finish unloading Wait for the diplomat (if any) to reach your leader
Wait for goods to be hauled Turn your leader’s labors off so he doesn’t get distracted
Conduct meetings with the diplomat
Request trader at Depot
Turn your trader’s labors off so he doesn’t get distracted
Trade
Turn trader’s and leader’s labors back on
Retrieve bins from Depot to reuse

Trader to depot [ edit ]

Before you can begin trading, your fortress’s representative trader must be at the trade depot. Select the trade depot with q and then r equest the trader. Be sure that b reads “Only broker may trade” if you want your broker to represent your fortress. If it reads “Anyone can trade”, a random, probably unskilled dwarf will volunteer to conduct the trade. Pressing b will toggle this setting. Once your trader has arrived, select the depot again with q and enter the t rade menu. In the trade menu select the items to offer from the right and the desired items from the left. All caravans have a weight limit which cannot be exceeded, and the allowed additional weight is displayed in the lower right corner. If your broker (specifically, not necessarily your trader) has at least Novice or better Appraisal skill, the value of all items will be displayed. Once the proposal is ready, press t to propose the trade, but merchants will not agree unless they make adequate profit. Be sure to use trade, not offer o , as this will make a gift of the selected items. The amount of acceptable profit is determined by the trader’s skills and the merchant’s mood, described below. Merchants may attempt to propose counteroffers if they do not accept the proposal, which can then be accepted, rejected, or further amended by the trader.

With more experienced traders or pleased merchants, even marginally profitable trades can be successful, and counterproposals can be rejected safely, offering the same trade again. Note however that a low profit margin for the traders may not be desirable – it has been suggested that both export and profit numbers influence the size of next years caravan and, in the case of the dwarven caravan, immigration numbers. Verify

Goods brought by caravans rarely have base quality higher than superior, and decorations on a good rarely exceed superior as well.

Trading cue colors [ edit ]

  • Brown Items have been created (or modified) by your fortress. They can be traded away or offered as a gift.
  • Gray Items were created by another source. They can be traded, but if one of these items has been selected, the entire selection cannot be offered as a gift.
  • Purple Items are under a no-export mandate. If they are traded away it will result in disciplinary action (see justice) against the dwarf that brought the item to the depot.
  • Green Items have just been gifted to the caravan and they will not trade it back.
  • Red Items have been seized from another caravan and cannot be traded as is; you will need to decorate them or turn them into other items for them to become “valid” trading items.

Note that containers (barrels, bins, etc.) will be displayed according to the origin of the container, not the contents. So a foreign barrel holding locally-produced beer will display as foreign (white). Once you v iew the container, the locally-made contents are displayed as local (brown).

Merchant mood [ edit ]

If your trader has Novice or better Judge of intent skill, there will be a line added below the merchant’s dialogue describing the caravan’s attitude. Their attitude rises with successful trades (especially if they get lots of profit) and falls when you propose deals they don’t like.

  • (trader) seems ecstatic with the trading
  • (trader) seems very happy about the trading
  • (trader) seems pleased with the trading
  • (trader) seems willing to trade (Default, at least for humans)
  • (trader) seems to be rapidly losing patience
  • (trader) is not going to take much more of this
  • (trader) is unwilling to trade

The happier you make a merchant, the less profit margin he will demand in a trade. If merchants reach the lowest level, no further trade will be possible, and they will immediately pack up and leave your depot. Since annoyed traders are more likely to reject deals, you should be generous in initial negotiations. Skilled negotiators seem less likely to offend traders with unsuccessful deals.

An easy way to capitalize on this mood system is to perform several partial trades. First trade for a few items, offering goods twice the value of the items you ask for (e.g. offer 2000☼ for 1000☼ of his stuff). This will likely make the merchant ecstatic about trading with you. Exit the trade screen, unpause briefly, and then return to trading with a vengeance. With the merchant in such a good mood, he is more likely to counteroffer than reject a trade outright.

Seizing items [ edit ]

Pressing s from the trade menu will seize the selected items of the merchant’s. If you seize goods from a caravan, the merchant will respond “Take what you want. I can’t stop you.” and then leave immediately without the seized goods. Items cannot be seized from the dwarven caravan, and other races will not buy goods stolen from one of their caravans (then marked in red) unless they are tricked into asking for them via counteroffer, or the items are “laundered” by decoration or used to create other goods. Seizing goods will hurt diplomatic relations, but is not grounds for an automatic siege.

Pressing the seize button while no goods are selected will result in the merchant interpreting your seizure as a joke. This apparently does nothing to benefit or hinder your trading.

As a side note, if you deconstruct your trade depot with a caravan in it, all the caravan’s items will drop to the ground, to be readily hauled away by your Dwarves. This does not mark the items as stolen, and the caravan will leave. However, next year’s caravan is partly based on the profits from the previous year – so if you are relying on that race’s caravans for needed items, you’re hurting yourself in the long run. Verify

Another way to steal without marking as stolen is to forbid the trade depot just before they leave, causing them to leave their goods at the depot. Verify

If you establish your hospital at the moment the first elven caravan arrives, or if you add the first coffers to it, your dwarves will take all of the cloth and thread they can carry off of the elves.

Note that the civilization attached to a particular caravan will keep track of the value of items the caravan was carrying when they set out to trade, and they will compare this value with the value of items they return home with. Regardless of what method you use to confiscate items from a caravan, even if you came to possess the goods through no fault of your own (an ambush killed the caravaners, for example) the parent civilization may decide that you stole from them and send a siege instead of a caravan the following year. It is prudent to take measures to protect caravans visiting your lands!

Offering items [ edit ]

o You can also give away items, as gifts to the leaders of the civilization you are trading with. This presumably helps relations between yourself and the other faction, though there is not yet a clear correlation between the value of the offerings and the improvement to relations. The exact effects of offerings on trading are unknown but it is believed due to the offerings’ net trade value being counted towards the traders’ profit, possibly with a modifier (possibly a multiplier of more than 1 as a bonus or less than 1 to compensate for the improved relations) Verify , which in turn increases the quantity and variety of trade goods brought by next year’s caravan. Also the King requires offerings to be made before his arrival. You cannot offer items that were not made at your fortress; the traders do not want your spare Goblinite clothes..

Unless you are looking for fun, under no conditions should you offer or trade items which are wooden or used wood in their creation (glass, for example) to elves, as this will insult the traders, and may cause them to leave or even damage relations enough to provoke a war between you and the elven civilization you traded with. They will be equally insulted by you trading back their wood-related items.

Miscellaneous Trading Advice [ edit ]

  • Thieves and thieving critters tend to follow caravans. Expect assaults and intruders.
  • Be careful about asking traders to bring lots of individual lightweight items (such as meat and fish) as it can result in traders taking a very long time to unload their goods. Unless the path to your depot is extremely long, though, this is unlikely to cause significant problems. Verify
    • On a similar note, if you have sold a large number of low value goods (such as all the loincloths and cloaks scrounged from a siege,) it can take a caravan months to pack it all up, to the point where they’re still on the depot when the next one comes. An incoming caravan can occupy the same depot and trade with you, but if they both try to go through your entry tunnel at the same time they will become gridlocked against each other, resulting in the destruction of wagons and loss of trade opportunities.
  • Create your trading depot inside your fort, preferably in the beginning. Place a 3-tile wide path (which must be free of obstructions such as stairways, traps, minecart tracks and boulders) to the entrance of the fort and position war dogs along it (chains do not block wagons); this will help to protect the traders and keep the depot close to your supplies. The war dogs will also catch any stealthy enemies who try to sneak in through the trade entrance.
  • All caravans will bring extra food (meat and edible plants), wooden logs, and cloth/leather (for making clothes) if the supplies of your fortress are low enough, independent of whether or not you requested them. This does not apply in the case that the weight limit is exceeded by (other) items you requested. The supply situation, as observed by traders, is based solely on the number of unforbidden items in your fortress, stockpiled or not; thus, it is possible to trick caravans into thinking your supplies are low by forbidding all of your relevant stocks immediately prior to their arrival.
    • In order to avoid this behavior, you should make sure that, for each dwarf in your fortress, you have the following unforbidden items:
      • 5 pieces of food – meat, fish, plants, or “other” in your Status screen (even though “other” includes inedible items)
      • 1 wood log
      • 5 pieces of cloth, pieces of leather, or complete sets of pristine clothing (shirt+pants+shoe)
  • Define your trade depot as a burrow. When traders arrive, you can add your broker or another dwarf, perhaps one you want to train in trading, to the burrow. They will head to the depot immediately, and stay there until you remove them from the burrow.
  • Each trade you make (regardless of value) will increase your trader’s skills by 50, distributed among Comedian, Flatterer, Intimidator, Judge of Intent, Negotiator, and Persuader. Each skill seems to gain around 5-15 experience points, but the sum will always be 50. The skill gain occurs as soon as the “t” button is pressed – if the offer is rejected, the dwarf will still gain 50 points. If the same offer is subsequently accepted, no additional skill will be gained.
  • Selecting “only broker may trade” ensures that you will start negotiations with a decently-skilled trader, but also requires a significant wait while your broker makes his way to the depot (possibly months if he is “on break”). Selecting “anyone can trade” will result in a poorly-trained trader arriving immediately. Once your fortress is producing enough goods to buy out the caravan, waiting for your broker is unnecessary; allowing your commoners to trade spreads out the trading skill gains and eliminates the micromanagement of trying to get your broker to the depot in a timely manner.

Caravans [ edit ]

Each friendly race will send a caravan per year, linked to one season, which is autumn for dwarves, summer for humans, spring for elves, and winter for goblins. It is rare for your civilization to be on peaceful terms with goblins, however. In the first year, only a dwarven caravan will arrive, although it will only arrive in late autumn, about a month later than in previous versions. Caravans will only show up if that race considers the fortress site accessible (as denoted on the embark screen), with the exception of dwarves, who always arrive unless they are extinct. Verify Caravans appear to enter the map from a random direction which does not coincide with the relative direction of the originating civilization, and they may appear from different directions or z-levels each year. Caravans may leave without trading if it takes too long to reach the trade depot. Caravans will embark on their journey back exactly one month after their arrival, whether they have succeeded in reaching the depot or not.

Note that if traders or their animals are prevented from leaving, they will eventually go insane.

Also worth mention is the pathing behavior of the entire caravan. If one member of the caravan reaches a block in their chosen path (i.e. a raised drawbridge that was lowered when they entered the map) the entire caravan will re-path, instead of encountering the obstacle one by one. This behavior can be useful when attempting to free “stuck” wagons–a trader on foot encountering an obstacle will cause the stuck wagons to turn around and path to a different exit, if available.

Dwarves [ edit ]

The dwarven caravan:

  • arrives in autumn.
  • carries metal bars, leather, weapons and armor, food and booze, and more. Dwarves alone may bring steel and steel goods. They can still bring steel (and steel goods) and pig iron bars even if they do not have access to iron, but will not bring iron products.
  • is heavily guarded.
  • sends a liaison who will speak with the Expedition leader, Mayor, Baron, Count, or Duke to negotiate an import-export agreement (unless the Monarch is present).
  • influences the number of immigrants received (if the caravan leaves intact).
  • will not cause sieges when repeatedly destroyed or lost.
  • is the only caravan to arrive during a fortress’ first year.
  • always arrives regardless of embark location unless the dwarven civilization is extinct.
  • cannot have its goods seized from the trade menu.
  • may not arrive if your civilization lacks any notable figures.

Elves [ edit ]

The elven caravan:

  • arrives in the spring.
  • carries cloth, ropes, various above-ground seeds, plants and their byproducts, logs, wooden goods & weapons, clothing and armor, and may carry tame exotic creatures.
  • Is unguarded.
  • does not accept some items in trade:

Elven traders do not like to be offered any tree byproducts. Forbidden items include:

  • Wooden items (including subterranean mushrooms such as tower-caps)
  • Items derived from wood – ash and charcoal, as well as lye, potash, and pearlash
  • Items made from clear and crystal glass (due to the pearlash used) – green glass appears to be perfectly acceptable
  • Items decorated with any of the above materials
  • Obsidian shortswords (since they have wooden handles)
  • Soap (made with lye)

Offering or trading forbidden items will cause the mood of the trader to drop rapidly, causing them to refuse to trade any more that season and leave immediately. Additionally you will be called uncouth, crude, and barbaric for not understanding their customs.

However, stone and metal items, even when charcoal is used in production, are acceptable (since the elves are unfamiliar with metalworking, and do not know that charcoal is used to make metal items). Items made from silk are acceptable, as are all non-wooden plant-derived products such as cloth and thread. Items made of bone (totems too), horn, shell or leather are acceptable, so are meat and fish. You can also transport your goods to the trade depot in a wooden bin, as long as you do not try to sell the bin. Living animals are acceptable, as long as the cage or trap is not made of wood.

Be especially careful with reselling decorated items from other caravans, as non-wood/glass items may have decorations of wood or clear/crystal glass. All such items that elven caravans sell are also unacceptable to sell back to elves, as the dwarves have no means of proving that they were made in an “elf kosher” way.

Because they do not utilize wagons, elven caravans have a much smaller weight limit than dwarven and human ones, making trading heavy items like furniture problematic.

“Once a beautiful tree, and now? It is a rude bauble, fit only for your kind.”

Humans [ edit ]

The human caravan:

  • arrives in summer.
  • carries metal bars, sand, leather, cloth, wood, food and booze, ropes, waterskins, quivers, backpacks, metal weapons and clothing and armor, cages and a few domestic animals.
  • carries only large-sized clothing, which is unusable by dwarves.
  • is moderately guarded.

Goblins and Kobolds [ edit ]

A goblin caravan will only arrive if you mod the game, primarily because their entity lacks the entity tokens needed to make use of pack animals and wagons. That, and one of the tokens (presumably babysnatcher) makes them hostile to all non-goblin civilizations. These same caveats apply to kobolds.

The goblin caravan:

  • will arrive every season, four times per year
  • unguarded
  • brings mostly food and cloth
  • does not send a liaison or a guild representative
  • does not make import/export agreements

Nobles [ edit ]

Outpost liaisons (from your own civilization) and foreign Merchant Nobles (if added with the TRADE responsibility) will arrive with the caravan to speak to your noble dwarves (and they will speak to those dwarves, even if they have to wait at their bedside in the hospital for months after the caravan has left), appearing on the map edge at the same time as the caravan (though in a different location). Meeting with them allows you to request specific items for the next caravan to bring (at a premium price) or take requests for production for the next caravan (for which the merchants will pay a premium).

Current trade agreements can be viewed through the Civilization menu ( c ). These trade agreements are cleared when a liaison of the corresponding civilization enters the screen, so they are generally not accessible after the caravan has arrived.

In the event that your leader is replaced, killed, or taken by a strange mood, the liaison may decide to leave your fortress “unhappy”. Curiously, this will not occur if your leader is otherwise unable to perform the “conduct meeting” task. You can currently lock a liaison in a room and he will wait years to attend the meeting your noble is constantly conducting (and all subsequent diplomats appear to wait in line for the first to finish); this behavior is presumably a bug.

Whether having successfully met with your leader or given up, a liaison who has decided to leave but is prevented from reaching the map edge will eventually go insane.

Destruction [ edit ]

If caravans are destroyed (intentionally or unintentionally), the items may remain for use. Traders caught in a cave-in will flee as if they were attacked, but will leave all the items dropped by the caravan behind. Pack animals carrying items are affected just like a normal tamed mule and must be killed in the cave-in for them to drop items on the ground. It is however much more likely that the pack animals will only be stunned or rendered unconscious, and flee shortly after recovering from the hit.

While caravans can defend themselves, they don’t like being ambushed. An encounter with unfriendly creatures resulting in the death of any merchant or pack animal will cause them to retreat and forget about trading with you for the season. Repeated caravan destruction (intentional or unintentional) will strain diplomatic relations and may result in a siege.

Ambushing or seizing a caravan and letting a survivor escape seems to have a more detrimental effect than simply annihilating the whole caravan.

Caravan Delay [ edit ]

If a caravan has arrived at your trade depot and is unable to leave for about two months after they finished packing up their goods, the merchants and animals will go insane. This can result in a bunch of merchants attacking your dwarves, or just standing around moping until they starve to death. It is not known for certain if this hurts diplomatic relations, but most likely it’s the same as any case where the entire caravan fails to return home.

If you have locked the caravan into your fortress to hold out against a siege, it’s a good idea to station a squad of soldiers near the trade depot in case the merchants go berserk. You may also want to make the depot a restricted area to encourage civilians to go around it. Alternatively, you can design the trade depot using drawbridges, so that it can be sealed off from the rest of the fortress during a siege.

If you want the merchants to leave safely, you can build four or more tunnels to each corner of the map, connected to your fortress only by drawbridges. As long as there is no other way to enter and exit your fortress, invaders and merchants will both go towards any tunnel that you activate. You can lock the merchants into the trade depot, and then open a tunnel entrance on one side of the map to make the invaders head towards that tunnel. When they get close to it, you can close it, and then open the entrance on the other side of the map, and let the traders out of the depot. If your fortress and depot are in the middle of the map, this will give the traders quite a head-start to get away.

Merchants can leave the map from any map edge– including underground map edges. If an unobstructed path through your fortress reaches an edge, then blocking an overland path will cause the merchants to travel underground. This can be useful, if you’re suffering a prolonged siege; it can also be dangerous, if your underground regions are less secure than your surface.

Caravan guards cannot be starved, dehydrated, or driven to insanity if prevented from leaving, their employers and animals will however.

If an large amount of items is sold / offered to the caravan, it may take a while to load it all, especially if you chose to keep your precious bins and traded your items individually.

Bugs [ edit ]

  • Aggressive, untrainable creatures (captured goblins, for example) cannot be traded; when a dwarf attempts to move the caged animal to the Depot, the creature is set free.
  • If your hospital isn’t already stocked with the specified amount of thread/cloth, your dwarves will carry off as much from the caravan as they need to fill it. Bug:66
  • Caravans show up very late in the season. Bug:1756
  • One outgoing trade caravan can run into another incoming trade caravan, leading to them getting stuck in the entrance to your fortress, wagons breaking, trade failing, and other problems. Rarely, this can even happen out in the open, when they are surrounded by plenty of space to maneuver. Bug:5687
  • Killed caravan guards can’t be memorializedBug:5755
  • If a caravan attempts to leave in late Winter/early Spring, they may try to path over any large frozen body of water. If the water thaws while the caravan is on it, the caravan will become magically stuck in mid-air for the majority of the year (until the water refreezes). At this point, if they are still alive, they will leave the map normally.
  • When merchants leave with an animal, the merchants seem to be dragging their beast of burden instead of leading it. If the animal is incapacitated but not dead, the merchant will continue to walk at the same speed, dragging the unconscious beast
  • If a merchant’s chosen map edge exit is guarded by a hostile creature (including those on a restraint), the merchant will wander back and forth repeatedly and eventually go insane rather than path to an alternate exit.

Loyalty cascade [ edit ]

If you order your military to kill merchants from your own civilization, a bizarre result of the way loyalty is handled makes the members of your military who attacked the traders become enemies of your civilization, but members of your fort’s government (dwarves of this faction are referred to as separatists). As enemies, they attack your other dwarves (citizens), but as members of the fort, they still follow orders. Allowing citizen militia dwarves to attack the separatists will give them opposite loyalties of the separatists, (i.e. loyal to civ, not to fort), or loyalists, who do not follow orders. And then, if a separatist or loyalist kill a citizen, they become enemies of the civ and fort, making them Renegades, who are essentially complete enemies of the citizens.

To prevent the cascade from spreading, order the original separatists away from the fortress and let them fight amongst themselves. If the results are renegades, it is okay to allow other dwarves to kill them (by stationing them nearby). If the results are separatists/loyalists, then you will need to separate them somehow.

How to Read Options Quotes

How To Trade Options

Your broker will have all the quotes you’ll need to trade listed online. If you’re an active trader, you’ll have all the free, real-time quotes you need through their online service.

The Chicago Board Options Exchange (CBOE) is another source for option quotes. At CBOE.com, you’ll find a free 20-minute delayed screen. For different fee levels, you can get real-time quotes and even real-time streaming quotes.

HOW TO TRADE OPTIONS:
– What Are Options?
– What Are Options Contracts?
– Price of Options
– How to Read Options Symbols
– How to Price Options
– How to Read Options Quotes
– Understanding Options Risk
– Common Mistakes to Avoid
– Options Trading Strategies
– Choosing an Options Broker

Open Interest and Volume

Option volume and open interest are two pieces of options information that are related but markedly different. Volume is a daily record of the session’s trading activity at a particular option call or put strike. Whether a trader is buying or selling an option contract, it counts as part of the day’s option volume. Volume starts every session with a clean slate at zero and increases throughout the day.

Open interest, however, is a rolling tally of the total number of option contracts open and active at each strike, representing all options that have not been closed or exercised. The number does not change throughout the day but rather adjusts overnight once trades are tallied, exited positions are closed, and new positions are added.

Let’s look at a simple example. Open interest on the Target (TGT) October 60 call is at 1,000 on Monday morning. That day, Trader A buys to open 10 contracts at this strike and Trader B sells to close 30 contracts at this same strike. Volume would be 40 at Monday’s close but when open interest is adjusted early Tuesday, it slips to 980, due to the addition of A’s 10 new contracts but the subtraction of B’s 30. Open interest dropped by a net value of 20 contracts.

One complexity with open interest is that it may not change at all (or change only very slightly) despite notable volume. While some chalk this up to day traders, who are entering and exiting positions over the course of the same day, others point out it is likely caused by options changing hands from one trader to another.

For example, if Trader B had sold her options directly to a new market participant (Trader C), rather than selling them to close, open interest would have moved to 1,010, as the same option contracts remain on the books, just in different hands. So while B may have exited her position, C came in as a new buyer to buy these same positions, and Trader A still adds his 10 contracts.

This can be a confusing process, but a trader (whether beginning or advanced) can learn a lot by watching the daily volume and open interest patterns shift each day.

Expiration Cycles

When you’re looking at securities that have options traded on them, you’ll notice the expiration dates and how they change from stock to stock. When a security begins to trade options, it’s randomly assigned one of three expiration cycles. That’s because there are so many stocks and securities trading options that it would be very difficult for the option market makers to keep track of every single call and put, at each strike price, for each month of the year.

So they created three common cycles to which the stocks are assigned:

• January, April, July and October
• February, May, August and November
• March, June, September and December

The easiest thing to remember is this rule: There will always be current-month options (the “front-month”), and there always will be options for the very next month. The only exceptions are if a security is delisted.

For example, if it’s early May and you want to trade a Netflix (NFLX) option, you’d find May options available (called current, or front-month) as well as options in the June series.

One easy way to find out whether an option is available is to look at the options chain, which is available through your broker or on the finance pages at Yahoo! and Google. The options chain provides a list of all the months and prices that are available for a given security. At the top of the chart below you’ll see that, in May, there are options for May, June, July and October 2020, January 2020 and January 2020.

Expiration Dates

One great thing about trading options is that it’s all about making the most of volatility in a relatively short period of time. That means you hold the options only from the trade open date until their expiration date (and sometimes not even until then).

Technically, options on stocks expire on the third Saturday of every month. But because the markets aren’t open then, options actually stop trading the third Friday of each month. So if you own a July option, you have from between the day you purchased the option until the third Friday of July for it to become profitable. On a few occasions, the underlying stock or ETF trades after the market closes on Friday of expiration week, which can cause some action in your option.

During the time you own the options contract, you can exercise your right to sell the option, you can choose to buy the underlying stock at the agreed-upon price (e.g., if you purchased a GOOG March 590 call, then you can buy stock for $590 a share, even if the stock is trading at $600, as long as you do so before the third Friday in March, when the options contract expires). Lastly you can choose to do nothing and the option will expire worthless without penalty to you .

Below you’ll find charts with the expiration dates for 2020, 2020 and 2020. Remember, because the market is closed on Saturday when the options technically expire, they actually stop trading the Friday before.

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