You buy $ 100 with BRL 1000. You tell your broker, you’ll pay him back later the BRL, for a fee. That’s a “short”.
You package it in a bet that says “whatever the difference is in BRL when I pay you back, we will do it 10x”. That’s “leverage”, alternatively also “insane stock market gambling nonsense”.
The tariffs get announced. You can now get BRL 10.2 for $1, because that’s how the stock market thinks it’s should be. You pay back your debt in BRL with $98. The difference of $2 gets increased 10x because of that bet. Congratulations, You made $20 with insider trading.
Usually you try to hide these things among the general stock market noise and not trade so much money, that it makes a visible dent in the evaluation of an entire fucking currency. It’s common place, but as usual with Trump, just more on the nose, more blatant and just more fuck you.
so somebody brought alot of USD and exchanged it for brazil money after the tariff geting a bunch of money? slightly confused
$1 is worth BRL 10.
You buy $ 100 with BRL 1000. You tell your broker, you’ll pay him back later the BRL, for a fee. That’s a “short”.
You package it in a bet that says “whatever the difference is in BRL when I pay you back, we will do it 10x”. That’s “leverage”, alternatively also “insane stock market gambling nonsense”.
The tariffs get announced. You can now get BRL 10.2 for $1, because that’s how the stock market thinks it’s should be. You pay back your debt in BRL with $98. The difference of $2 gets increased 10x because of that bet. Congratulations, You made $20 with insider trading.
Usually you try to hide these things among the general stock market noise and not trade so much money, that it makes a visible dent in the evaluation of an entire fucking currency. It’s common place, but as usual with Trump, just more on the nose, more blatant and just more fuck you.
Forgive my ignorance, but in this scenario doesn’t the broker then lose this $20 in the “returned” lower value BRL?
Why would a broker make trades like this? Why is a broker even lending money? It just seems like sanitised gambling with extra steps.
It is. It’s a gamble and the broker knows the odds are in his favor. Unless ofc you know the odds today won’t be because, you know, cheating.
thank you for explaining, my familiarity with this topic is low!