Marketing

( 1 Vote )

In honour of passing a trading milestone (1 billion in personal assets \o/) I'd like to release to the Eve-O community a guide that I wrote when I'd just started playing and was still a nublet in Eve University. I've left it mostly unedited. It contains approaches to trading that I don't necessarily follow anymore but it helped me organize my thinking about trade when I was brand new and thought a wallet balance of 10 million ISK was enormous. Later E-Uni pilots have told me that it helped them, so I'm reporting it here in the hopes that it'll help you.

I also welcome any comments or advice from any other traders, master or newbie.

Hope you enjoy...

PLEASE NOTE: When I talk about trading here I am talking almost exclusively about trading player items. NPC trade goods is an area that I have almost no knowledge of at all. I started out by trying to make a decent profit off of selling loot from missions and then kind of got carried away, so my experience is focused around the kinds of items that I've encountered, more or less at random.

---

Part One: What Everyone Should Know
For players with no interest in the market, these two things are all that you need to know:
-How to place buy orders in advance for things that you know you'll need.
-How to place sell orders for loot that you don't want so that you get the most ISK out of it.

Assuming that you've made it through the tutorial, you probably have some hazy recollection of the market screen when you bought that single unit of ammo or something from a station somewhere and then had to fly out to get it. It's very possible that since then you've never opened the market window except to buy things as soon as you needed them. You've probably also been selling things by right-clicking on them and selling them for whatever price the game shows you. This is a very expensive way to live!

If you've played other games, you are probably used to NPC vendors who buy things from you at one price and who offer things for sale at another price. There are NPCs who buy and sell things on the Eve market, but the vast majority of the trades happen between players. When you right click on that module that you have no use for and click "sell" some other player buys it from you and then uses it or resells it to someone else, probably at a profit. When you buy something, another player was probably selling it, and for more than they bought it from some other player. This is nice for them, but not necessarily the best thing for you.


Buy and Sell Orders
The way that these other players are able to profit from your buying and selling is through buy and sell orders. These are standing orders to buy or sell a certain item at a certain price. Every single one of us gets the ability to place up to 4 buy or sell orders at once without training any skill. Even if you have no interest in trading or making ISK off the market you should be taking advantage of buy and sell orders.

Buy Orders
Take stock of your situation: are there certain consumables that you find yourself buying often? Ammo or drones for example. If there are, you should have a buy order up for this item.

-Set aside some ISK.
-Dock at your favourite station.
-Open up the market window, click on the search tab and type in a good chuck the name of the thing that you're using a lot of and hit "Search".
-Choose your item from the list. The market details will pop up next to the search box. It will look like a lot of numbers. Ignore them for now.
-Look for the part that says "Active Buy Orders" and then find the 'price' column. Click on that until it sorts the active buy orders by price from highest to lowest (this'll take one or two clicks, depending). The highest price on that list is probably lower than you are used to paying.
-Look for the button called "Place Buy Order" and click it. A window will pop up and there are a bunch of fields that you can fill in.
Choose the price that you want to pay (it should be lower than you are used to paying but higher than the highest active buy order), put in how many you want to get (for ammo, a big number is good here).
-Choose a range (that's how far you are willing to fly to pick it up - station is you want it to come to you - solar system to 2 jumps is what I suggest depending on how expensive the item is (I'll travel further for a new frigate than will for 100 Antimatter Charges).
For duration, always choose the maximum. If an order expires you lose your brokerage fee anyway and you can cancel at any time with no penalty beyond losing your broker's fee.

The game will calculate how much it'll cost you, the broker will tack on a fee and once you hit buy, the ISK will get taken out of your wallet and put in escrow (not to be confused with escrow missions). When some player right clicks on the 100 units of ammo that they didn't want and sells it, the ISK will come out of escrow and the ammo will come to you. The reason you chose a buy price slightly higher than everyone else's is because whoever has the highest buy order gets the goods.

With that done, you can go off and do some missions or take some classes or whatever you like to do while the broker buys up items on your behalf. You can keep track of where your items are located using the assets window. If you set your range wider than a single station, you'll find that your stuff is spread out all over the place. What I like to do is let things pile up for a bit and then every now and then, empty my cargo hold and do a quick collecting run to all the stations that have my items, fly them back to my home station and dump it all in my hangar.

You can monitor your buy order in your wallet window (check the orders tab). Sometimes you'll notice that your order isn't bringing in any items. This is probably from someone outbidding you.
-Bring up the market details on the item (use search or better yet, add the item to your market quickbar) and sort the buy orders from highest to lowest. If your order is not at the top of the list then you've been outbid.
-Check how many items the higher bidder wants. If it's a few, then you can probably wait it out. If it's a lot, then consider increasing your bid.
-Switch to the 'my orders' tab, right click on your buy order and choose 'modify order'. Put in a number that is higher than their bid and then click 'modify'. The broker will charge you another fee and the difference between your old bid and new bid will be deducted from your wallet.

If you are still the top bidder but you aren't getting any items, consider widening your range. Unfortunately, you'll need to put up a new bid to do this. You can cancel your old bid to get the ISK back (you'll lose the broker's fee though).

Sell Orders
If you are a mission runner, you probably have a lot of random loot lying around in your hangar, or you have been selling it as fast as you get it. If it's lying around, then you have lots of ISK locked up in junk you don't need. If you've been selling it immediately, you've probably been selling it for less than it's worth.

Sell orders work the same way as buy orders, except that instead of wanting to be the highest bidder, you want to be the lowest bidder so that your sale will be the most attractive).
-Right click on the item you want to sell, choose 'sell this item'. A window pops up.
-Click "Advanced" and click the Magnifying Glass
-Sort the sell orders by price from lowest to highest (opposite of buy orders sorting).
-Choose a duration (the max duration is the correct answer here).
-Choose a number that's lower than the lowest number (it's probably higher than the price you would have been paid). The game will calculate the price by multiplying the price by the number for sale and then subtracting sales tax and a broker's fee. IMPORTANT: With very cheap items (i.e. ammo), it is possible that the resulting ISK number will be LOWER than your 'immediate' sell price would have been. In this case, do not place the order. Either sell the item the non-advanced way or wait to collect more of the item and then sell them as a batch.

You can monitor your sell orders the same way as your buy orders and modify them as needed, if you find that your items aren't selling.

For players with no interest in the market, that should cover all that you need to generally save yourself some ISK and pay for that shiny cruiser faster than most people. However, some of you will find yourselves getting frustrated with having only 4 buy/sell orders available or will find yourselves eyeing the large gaps between the lowest sell orders and the highest buy orders... For those players, pick up some of the trading skills (Trading and Retail are a good start) and join me in Part Two.

Part Two: Concepts of the Marketplace
The way to make ISK in the marketplace is by buying things for one price and then selling them for a higher price. Anyone can do this, the question is whether you can do it at a rate that makes it worth your time. What you want to do is set things up so that you are making more ISK through buying and selling than you would have made by doing something else during that same period of time. There is no point to spending fifteen minutes making a sale that nets you 1,000 ISK when you could have collected 50,000 ISK in mission rewards and bounties instead.

How much ISK you are making as a trader depends on a few different factors. How much ISK did you start with? How much profit are you making on that ISK? How often are you making that profit? How much effort does it take to turn that profit? As you make decisions about what trades to make and which trades to ignore, there are some concepts that you need to understand so that you can think like a trader.


Working Out Your Profits
To work out how much profit you are making on a sale, take the ISK you take in from a sale, subtract the cost to buy it and then divide the result by the cost to buy it. Multiply the result is by 100 to get the percentage profit.

(Sale Price - Buy Price)/Buy Price x 100 = Profit%

For example, say you buy chickens for 150ISK, and sell them for 200 ISK. You are making (200-150)/150 = 50/150 = 0.3333 = 33.3% profit. Well, almost. You have to also factor in brokerage fees (1% each way) and sales tax (1% on the sale). A good rule of thumb is to just get the profit and then subtract 3 from it. This isn't exact, but it's a good approximation. So our trader is really making around 30.3% profit on those chickens. Not bad.


Compound Profits and the Rule of 72.
The nice thing about trading is that if you can avoid spending your profits, you can reinvest that ISK into more trades, earning even more ISK. Earning profits on your profits is a form of compound interest and it adds up very quickly. Imagine that you have 1,000 ISK and you are earning 10% profit on it every day. A week from now, you will spend all of your profits on candy for orphans. Trader B (your evil competitor) is making the same kinds of trades, but he is spending his profits on Exotic Dancers right away. After a week (7 days), let's compare the two of you.

You
Start: 1,000.00 ISK
Day 1: 1,100.00 ISK (1,000 + 100)
Day 2: 1,210.00 ISK (1100 + 110)
Day 3: 1,331.00 ISK (1,210 + 121)
Day 4: 1,464.10 ISK (you get the idea)
Day 5: 1,610.51 ISK
Day 6: 1771.56 ISK
Day 7: 1,948.72 ISK
Total profit: 948.72 ISK (94.9%)

Trader A
Start: 1,000 ISK
Day 1: 1,000 ISK +100 ISK of exotic dancers
Day 2: 1,000 ISK +200 ISK of exotic dancers
Day 3: 1,000 ISK +300 ISK of exotic dancers
Day 4: 1,000 ISK +400 ISK of exotic dancers
Day 5: 1,000 ISK +500 ISK of exotic dancers
Day 6: 1,000 ISK +600 ISK of exotic dancers
Day 7: 1,000 ISK +700 ISK of exotic dancers
Total Profit: 700 ISK (70%)

Thanks to your savings and reinvestments, you are now 248.2 ISK richer than trader A. In fact, by the time Trader A has 1,900 ISK, you will have 2,358 ISK. And when Trader A has reached 2,300ISK you will have reached 3,452 ISK. And when Trader catches up to 3,400 ISK (24 days from the start date) you will have 9,850 ISK!

A good rule of thumb for understanding compounding profits is the rule of 72. Take 72, divide it by the percentage profit you are making per unit of time (profit per day, per week, per month) and the result will be roughly how many units of time it will take to double your ISK. Using our candy for orphans example above, 72/(10% profit per day) = 7.2 Which is slightly over 7 days. The rule of 72 starts to break as your profit climbs past 25% but it still gives a good sense of how you're doing.

In other words, if you can earn a 10% profit every day in Eve (very easy) and resist touching any of that income, you will double your ISK every week.

Speeding Up Your Earnings
As I said at the start, trading on the market is only really worth it if you are making ISK faster than if you were running a mission or mining or what-have-you. There are four main ways that you can do this. The first two are covered by the rule of 72. Increase the profit or increase the rate of turnover to shorten the time between your ISK doubling. You'll need to play around with finding a balance between sheer profits and the rate. Someone who is able to make 10% profit every half day will double their ISK every 3.6 days. Someone who is making 15% profit but only every day will double their ISK in 4.8 days. Sometimes it's better to make less profit faster.

The last two considerations are how much ISK you have to invest in trading (doubling 1,000 ISK is not nearly as impressive as doubling 10,000,000 ISK) and how much babysitting you have to do to keep the ISK flowing. For the first, you'll want to work on getting a good starting capital to invest in trading. I've found that running missions is a good way to start, and of course, taking advantage of the very generous Eve-U scholarships is a great way to get kickstarted. For the babysitting this all depends on how much time you want to spend staring at market data and how much time you are willing to spend hauling things between stations. That's really up to personal choice, but for me, I'd rather be out running missions or defending the Pill than hauling Civilian Afterburners 13 jumps.

The second nicest thing about trading (after compound profits) is that you can do it while you are doing other things. After you go to a station and set up a bunch of buy and sell orders you can leave and do a second activity and watch the ISK flow in from two sources at once. You'll be out in the asteroid fields, blowing up Veldspar and your broker will be busy buying and selling on your behalf. Let me tell you, it's very satisfying to have your wallet button blinking constantly, no matter what you are doing, as the ISK pours into your account.

In Part Three I'll talk about how I got started applying these concepts to Eve and some tips and tricks that I've learned.

Part Three: Stuff That's Worked for Me
There are a lot of good trading threads in the Eve Official forums, but they all seem to give the impression that the people doing the trading are starting with enormous bankrolls. This is super intimidating if you are new like me. The other big problem with learning to trade is that everyone avoids saying where they are making their ISK for fear that there will be an enormous influx of competition and the market in that item will crash. The related problem is that there are a LOT of items for sale in Eve and it's very, very confusing if you're new. Browsing the market is an exercise in frustration as most items are out of your price range when you're getting started (heck, a frigate probably seems expensive). On top of that, you don't have much in the way of ISK to spare.

My solution to all of these problems is the same: Run combat missions (Security or Internal Security agents give a lot of these) and collect all of the loot. This means that you'll have to train up some combat skills but in my opinion it's totally worth it. Level 1 missions are generally very easy, they give you a steady flow of income (rewards +bounties) and a lot of research material. Find yourself a level 1 Security or Internal Security agent that's in a populous system (I've had a lot of luck in Oursulaert and, when I moved to Eve-U, Jita) blow up pirates and open every single loot can and haul whatever's inside it home.

After a few missions, you will have a hangar full of stuff that you don't want and some ISK set aside. The ISK is for making your first buy orders (you need to buy something in order to sell stuff). The reason you've been hoarding all of this stuff is that loot from level 1 missions is probably in your price range. It forms your first set of sales leads.


Figuring Out What to Trade/Healing the Market
Pick an item at random, ammo is a good place to start. Right click on it, and select "View Market Details" order the sell orders from lowest to highest and the buy orders from highest to lowest. In my opinion, this should be your default view of market details. What you are looking for is the percentage difference between the lowest sell order and the highest buy order ((sell minus buy)/buy). I am willing to bet if you are looking at random ammo that you looted, that this percentage is a very big number. If it's not, ignore it for now and move on to the next item in your hangar. Eventually, you will find something where the highest buy price is far below the lowest sell price. Big gaps between buy and sell orders is a indication of a place where the Market is broken.

When I say that the market is broken, what I mean is that there is no clear agreement on the value of an item (how can a small shield booster be worth both 200 ISK and 5,000 ISK in the same place?). The Market wants to things to be bought and sold for more or less the same price. When you find a huge discrepancy between buy and sell orders (and you will) this means that someone is making insane profits at the expense of both the people selling to that person and the people buying from that person. As a trader, it is practically your duty to close that gap and bring the market to balance. The way you do this is simple: Place a buy order that is noticeably higher than the highest buy order and then when you have a bunch of the item, sell it for noticeably lower than the lowest sell order. This will have the effect of narrowing the gap (reducing profits) but you will be rewarded by being the one who buys and sells the most orders. If all goes smoothly, you will soon find yourself with a pair of open buy and sell orders with some percentage profit (15%-50% is a good amount - remember to subtract the broker fees and taxes!) between them. As your buy order gets used up, you will place a new one and the same for your sell order. It's not uncommon to look at your transactions and see right on top of each other two of the same item, one bought and one sold from two different people. Those people could have sold directly to each other but instead the item went through you and the difference between those prices went straight into your pocket!

The reason I suggest that you take a look at ammo first is that there are a lot of players like you who are going on missions and coming home with 100 charges of something-they-don't-use. Because ammo is so cheap, it's not worth putting up a sell order for it (the broker's fee often completely wipes out any benefit of putting up the order). So other traders will put up a buy order for some tiny price and catch hundreds of players' 100 ammo sales and then resell the ammo for 5 or even 10 times that amount. If you swoop in and buy the ammo for twice as much as the highest buy and half the lowest sell you will often still be making 100% profit on your trades. Yet you're doing everyone a service! The sellers aren't being completely ripped off and the buyers are getting better deals. Of course, this probably won't make the player with the buy and sell orders that you're ducking between very happy.


Trading is PvP
If you can stay as the highest buyer and lowest seller, you will become the only person in your area that is buying or selling that particular item (to what extent you will dominate your area depends on how far you are willing to travel to pick up your items and how many stations you are willing to put up sell orders in - on low ticket items people can be very lazy about getting good deals). If you dominate, don't expect the other traders to take this lying down. They'll fight you the only way they can - price increases on buy orders and price drops on sell orders.

You have two basic strategies for dealing with this.
1) Modify your orders to respond.
2) Get out of the market.

I strongly suggest option 1 - it's more fun!. If someone is buying for more than you or selling for less, this is a signal from the market that your prices are wrong. What you want to do is readjust your prices until the other trader decides that it's not worth it and moves on to some other item. Sometimes you will experience competition from only one direction, this is a signal from the market that you need to move your prices up or down. This is why I suggested leaving a big gap between the your prices and the ones you are beating. It gives you room to adjust up or down as needed. Other times you will get competition from both directions. This probably means that you were trying to earn too big a profit and some other hungry trader spotted a chance to beat you. Narrow your profit margin.

The most annoying competition comes from people who beat your price by 0.01 ISK. They're hardly competing at all! In my experience the best way to deal with them is to respond by changing your price by a big number. Say you are buying Warp Core Stabilisers for 3,800 ISK and someone starts buying for 3,800.01. It's tempting to just go to 3,800.02, but then they will go to 3,800.03 and it'll go back and forth until someone gets bored (probably you). Meanwhile, you are wasting brokerage fees on every change. On the other hand, if you respond to 3,800.01 with 3,900 this sends a signal, which is that you're serious about staying in this market. My experience has been that after responding to .01 ISK increases with large numbers twice, those .01 ISK increases tend to go away.


Expanding Your Empire
Selling small ticket items can be very profitable and educational, but eventually you will reach a saturation point where your orders aren't getting filled fast enough. The optimal size of a buy or sell order is for an amount of items that will get filled 1 second before the next time you sit down at the station to check on your active orders. If you put up 10 Warp Scramblers for sale and the tenth is sold just as you dock, that's perfect. If you put up 10 and they sell out a day before you check on them, that's a day that someone else has been selling Warp Scramblers instead of you. If you put up 10 and come back to find 5, then that's 5 Warp Scrambler's worth of ISK that could have been invested in something else.

You'll never reach this perfect balance of buying and selling, but you will find yourself at times either selling items faster than you can buy them or buying them faster than you can sell. If things are selling to fast, consider raising your buy price to encourage more people to sell to you (the higher your buy price and the tighter your margins, the less people will be tempted to put up their own sell order for the item instead of selling through you). If things are selling too slow consider lowering your sell prices to make your items more attractive. If your buy AND sell orders are moving slowly, then you probably have too much ISK invested in that one item and it's time to look at diversifying into more markets. Go through your hangar of loot for more leads or try looking at the variations tab for items that you are already selling.


Getting Organized
Soon you will find yourself with a variety of different items for sale, with buy and sell orders ending at all different times and stuff spread out across a variety of stations. The first thing you should do when you stop being able to remember all of the items that you're buying and selling it start taking notes using the in game note pad. I suggest noting down the name of the item and your buy and sell price. As you adjust your prices, note the changes in there (leaving a history of price shifts).

For example here are my notes for Warp Core Stabilizers:
"Warp Core Stabilizer 2200 3200 now 2200 4900 now 2500 3900 now 2600 3900 now 2700 3900"

You can also leave yourself other notes: items to look into, prices in different regions if you travel, notes about planned prices. It's very useful to be able to log in, find a hangar full of Rail Guns you don't remember buying and to check your notes and see what you were planning to do with them.

You should also consider using cargo containers. You can buy them on the market and you will sometimes get them as rewards for missions as well. Assembled containers can be named and I like to use them to separate out items I intend to keep from items for sale as well as separating out high, med and low slot items and ammo for when I'm fitting ships. I leave the main hangar for stuff I'm buying and selling (that's where it ends up by default) and use the containers to organize everything else.

I trained up to Industrial I but honestly have had very little use for a big hauler. I find that for the most part when you are dealing in modules and ammo that you don't need that much cargo hold. A decent frigate with a big cargo hold, some cargo expanders and an afterburner will be what you use most of the time to collect things from neighbouring stations and systems.

When you are deciding where to locate your main hangar, I suggest two things. First, find the most populous system in your region (or consider moving to a region with a very populous system) then in that system, pay attention to where the buy and sell orders come from. A lot of them will come from the same station. I highly suggest relocating to that single station. If most of the buy and sell orders are located there, then most of your business will happen there. I find that I will often put up a buy order for 50 items with a 2 jump range and that 45 of those items will get sold to me from within a single station with the other 5 spread out all over the place.


And that's my advice so far:
-Run combat missions and use the loot you find to narrow down your search.
-Look for huge gaps between buy and sell orders and plug them.
-Respond to 0.01 ISK price wars aggressively.
-Diversify your buy and sell orders.
-Take notes.
-Use cargo containers.
-Make your home in the most popular station in the most active system.


I'm sure there's lots more to learn (I haven't talked about trader alts or all kinds of things). But so far, I'm doing pretty well for myself. I can easily afford all kinds of frigates and fittings (I could probably afford a few cruisers if I wasn't reinvesting all my profits). When I first started playing a very nice player gave me 300,000 ISK for no good reason. I remember feeling like it was the most money, ever. Just over a month later, I find myself regularly not bothering to place a buy or sell order because it's "only" 300,000 ISK. Trading is a lot of fun and it's very easy to get in to. Give it a shot and share what you learn with everyone else!

 

Copyright Notice & Source Acknowledgement

By Sun Win

This article was copied from the EVE Online website at http://www.eveonline.com/ingameboard.asp?a=topic&threadID=487360

< Prev		Next >