Ok, so i really want to avoid pumping and dumping, as it is illegal,
That sounds like a good plan
but, XBC is very volatile.
Yes, it is. What does that have to do with the discussion we are having?
So it is possible to buy low and sell high multiple times a day.
Yes. It is also possible to buy high and sell low multiple times a day. Timing a volitile and unpredictable market such as Bitcoin is an extremely difficult thing to do. In addition, every trade you make will probably have an exchange fee, and there will be a bid-ask spread you will have to deal with. This means that you have to do significantly better than random guessing, or all you'll be doing is earning money for the exchange service.
Thus basically generating free money.
It is not "free money". You are providing a service to the community, and you are purchasing risk.
Most retail businesses buy their inventory at wholesale prices, and sell retail prices. In other words, they "buy low" and "sell high". The difference is their gross revenue. They use some of this revenue to pay their various costs, and to purchase additional inventory to replace what has been sold. The remainder (if any) is their "profits". Are these businesses "generating free money"?
That can't be legal.
Buying items at the cheapest honest price you can get, and selling the items at the most expensive honest price you can get? Why wouldn't that be legal? If it isn't how could any retail business exist?
Is that considered pumping and dumping??
No. Pumping and dumping is lying and spreading false information to prey on the insecurities of others to artificially increase the price that you can sell at, and then selling at this artificially high price before enough people realize that the information you are spreading is fraudulent.
As an example. Imagine that you are in charge of the stories that make it on air on CNN. Imagine that you quietly purchase a few hundred thousand dollars worth of bitcoins at the current exchange rate.
Next you have your news anchors start broadcasting fake stories about how "Berkshire Hathaway has announced that they will be purchasing ten million dollars of bitcoins per month for the next 6 months". You then run some fake stories about how "sources have determined that Bill Gates plans to begin purchasing fifty million dollars of bitcoins starting next month". Finally, you run a fake story claiming that both Amazon.com and Walmart will begin accepting bitcoin as payment starting tomorrow.
This is called "pumping". You are lying, and fraudulently spreading false information with the intention of increasing the exchange rate.
All this fake "news" over the course of a day or two causes many people who are afraid that they might miss out on an opportunity to purchase as much bitcoins as they can afford. It probably even causes some to purchase more than they can afford. All this purchasing as caused the exchange rate to increase significantly. In another day or two, people will begin to realize that CNN was lying. Other news stations will interview Bill Gates, Amazon.com, Walmart, and Warren Buffet. Once people all realize that the stories were all lies, the exchange rate will come crashing back down as many people sell of the bitcoins that they have as fast as possible.
Realizing that your lie will only push the exchange rate high for a short time, you quickly sell every all the bitcoins you have very shortly after running your fake news stories. This sell off while knowing that the exchange rate is artificially high is called "dumping". You are essentially "dumping" a bunch of trash into the hands of those who don't yet realize that they've been fooled by your lies.
pump-and-dump isn't illegal because of the "free money" that comes from buying low and selling high. pump-and-dump is illegal because of the fraud that is involved in trying to falsely convince people that something is about to be much more valuable even though you know it won't.
