Tuesday 17 July 2012

Some Aggressive Trading Strategies

Everyone likes to be the next sell order. That's why people 0.01 isk each other constantly. 

This is especially important when the market is at a high. This could be due to a manipulation or natural market cycles, but sometimes sell prices are providing super high margins and its worthwhile to babysit sell orders to make sure that when players make purchases, they are buying your goods.

So there are two key strategies to maximise this:

(1) Multiple Sell Orders

A market order can only be modified once every 5mins. This is very restricting in the most competitive markets. As such, split up your stock in stacks, so you can modify orders more often. More tedious and more work, but sometimes worth it. 



(2) Be Aggressive

The best pvpers never undock! Sometimes when you are in a 0.01isk war, you can drive the price down to a point where its profitable or advantageous to buy out the competition and relist their stock. Sometimes you can turn a decent profit, other times you only break even but you can go to bed knowing that you will not be undercut as soon as you log off. 
To illustrate with a very small example (note: on my market window, I sort sell orders so the cheapest is on top)

I was babysitting some cap mods - I had little stock left and wanted to clear it at a good sell price:



I had the market to myself for a long while, but then a new sell order popped up.



When new orders appear, they often aren't monitored in the cap module market, so I assumed I could quickly undercut. But alas, this guy was obviously monitoring his sell orders. Ah well. let the 0.01isking commence. 


Eventually I realised given the slow turnover of the cap module market, that this guy wasn't going to give up. Ah well, I wanted to go out. Time to be more drastic. I dropped the price by 100,000 isk/pu




Maybe that big drop would put him off. Nope:



Hrmm. He's keen to follow me down. Let's take this further and cut a whole million of the sell price... and what do you know, he cuts his sell price by a whole million as well. 


Well if he is keen to make a sale, a sale he shall make:


And now the market is back under my control - and I will resell his mods for a profit:


K thnx bye!


One word of warning, I have bought out competitors and relisted and gone to bed in control of the market, only to next log in to see my sell orders drowned in a sea of new ones!



^ In cases like that, all you can do is wait for prices to recover!

Till next time, 

cheebs

Thursday 12 July 2012

When to chase the sell price

Anyone who has sold anything in a hub will know the frustration of sellers constantly 0.01isking each other. Its frustrating and drives many traders and manufacturers away from the industry.

However in my experience, while many people mindlessly chase the sell price down desperate to make a sale, being aware of the larger market perspective can help you make better informed choices on how to sell your goods. Having sold a lot of stuff in Jita, I thought I would share some tips on when to join in or avoid the 0.01 isk wars depending on whether you are a trader or a builder.

So to 0.01 ISK or not to?

(1) Know your item 

Sounds obvious but are you clear on what the exact cost was to build your item? Many people sell at build cost or below - why? They are liquidating assets/they got it for free/they don't know better. This is a buying opportunity for traders. For builders, figure out the sell price that you want and stick to it - there are very few reasons to sell at a loss and the market might currently be oversupplied, but the prices will rise again. An example is below - in pink are manufacturers who know what a profitable sell price is. Everything cheaper (ie above the pink) is being sold at a low price and would be a good target for traders to buy up and relist at the same price as the manufacturers. 



(2) Know your sales/brokers tax:

Its incredibly important. For example - I build 50 drakes. They cost 46mill per unit to build. The market is pretty saturated so the current sell price is only 47mill. I think to myself "Ok - not great margins but if I sell the drakes I'll make a tidy 50mill profit".

However, with my brokers and sales tax at 0.61 and 0.75% respectively, I pay almost 34mill in taxes, leaving me with a final profit of 16mill - a terrible return on ~2.3bill invested to build the ships. Unless you are desperate for liquidity, wait for prices to increase. 

(3) Redefine the Sell Price:

Ive discussed it in earlier posts - but if prices are trending slowly down, but the volume on the market is low - traders should buy up stock and redefine the sell price. Below is an example with nagas:


Buy up those lower-priced ships and voila - relist: 



The best part is that the new price point can stick - meaning the resale profits remain good for traders and the margins remain good for manufacturers producing that product:



(4) Know the mineral basket price index:

This is critical. As a trader or builder, you need to know which way the market is moving. If the Mineral Price Index (MPI) is trending down, then you might want to start 0.01isking. With the MPI dropping, the price of produced goods will follow. 
Pay particular attention to the minerals in your product. Nocxium spiking? Wont affect hurricane or tornado prices at all.
If the MPI is trending up, then you can list your products for sale at higher prices, knowing that with patience, the market will move up to meet it. For those interested:


People can be oblivious to these relationships between primary and secondary goods but being aware of the cost of components in crucial in determining the current and future sell prices of goods. 


That's it for now, but I'll talk about further strategies soon.






Friday 6 July 2012

Month 2 Profit Report

So another month has almost passed so I've put together the profit report for the last month by taking a snapshop last night of all the ISK invested through FCV. Results are a bit early (it's not actually the 8th, but I'm busy over the weekend) but they shouldn't disappoint:



Summary:
The profits for the 2nd month come in at around 35b and represents an increase in the value of FCV of 40.48% from the previous month, or ~52% since the project began.

Discussion: 
The profit for the month has been good and in line with expectations. The reactions towers have been getting decent profits, but the real success came from the manufacturing side. With the fluctuation is mineral prices recently, some great opportunities existed to push margins up more than usual. On DCUs alone, I made several billion through pushing the market sell orders about 15% higher than their normal high. Expectations for the next month are similar, providing market conditions hold up. However, sales can slow in the summer as people take holidays etc, so I'm expecting profits of more like 25b as opposed to 35b. 

Profit Distribution:
As can be seen from above, the amount of cash I'm sitting on is growing. However, I dont have the time or build slots to invest that ISK into further building. I would be interested to hear from investors on whether they would be interested in a one-off dividend later this summer, or to wait until the project ends in October to receive a much larger all-in-one repayment. 

Also please note that I haven't decided on what cut I am going to take from the eventual profits. Of the 80b original starting funding, I provided 13b while 67b came from external investors, so I could be considered an equal investor. However, I also sold shares on the basis that investments would return around 5% per month! In anycase, the project still has a way to go - but if anyone is interested in talking to me about the profit sharing - please get in touch. 

On a final note, if any current shareholders want out - I have a buyer who is interested in purchasing a few shares from someone. They would pay their July valuation: 1 share = 1.52b ISK. Get in touch if interested.

To clarify:
- 'Cash' section represents liquid ISK that is held in the corp wallet at the moment of the snapshot.
- 'Market Orders' represents the ISK value of all current buy/sell orders
- 'In Build' represents the build cost value of all items currently being manufactured
- 'Assets' represents the value of build materials (minerals, components) as well as the value of the tower reaction chain (i.e. the towers/silos etc) and their inputs


If you have any questions, feel free to comment on this blog or post in the FHC thread.

o/ cheebs

Monday 2 July 2012

You know someone's messed with the market...

... when the T2 version is cheaper than the T1! :)





Heheh.


Anyway, later this week Ill be posting profit numbers for the past month. Investors will be happy.

cheebs o/