Market Discussions

I'd like to start a discussion about some topics that could be useful for the future.
Even while writing this, I notice how the text is not closely following what I want to say so I apologize in advance for being unable to properly convey my ideas in English.

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The era of fixed ISK faucets is declining, I stopped doing L4 missions long ago.

Why? Because EvE's old financial goals started changing into moving goals.

If getting to the first billion then 2 then 10... was a sort of solid, staying milestone, these days is not solid any longer.
For the same reason, just letting ISK sit idle or "parking" ISK in some bank (assuming no scam) equals to lose ISK over time.

This is also why investing - beginning with slow revenue over time IPOs - is getting sparser. No incentive lending money at 5% when a portion of it is eaten by inflation or ISK fluctuations.

Now, some little definitions:

ISK = base currency, used to be fairly "fixed" in intrinsic value over time, but now it's a floating currency.
PLEX = the other currency: game time or money. Also used as safe haven currency. Aurum could have been a third currency but it failed...

Forex mechanism => currency exchanges mechanism => the currencies are not bought or sold "alone" but in pairs.
I.e. an EUR/USD trade involves buying Euros and selling dollars or vice-versa.

PLEX/ISK = what players actually do when trading those two currencies. They buy PLEX while shorting (selling) ISK and vice - versa.

Hedging = risk reducing activity intended to offset potential losses/gains that may be incurred by a companion investment.

Direct correlation = when asset "A" value rises, asset "B" value rises in the same direction, not necessarily in a 1:1 proportion.

Inverse correlation = when asset "A" value rises, asset "B" value rises in the opposite direction, not necessarily in a 1:1 proportion.

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Now, ancient ISK faucets are related to ISK but in a fixed and capped way. I.e. a 30M per hour mission is just that: 30M per hour. The ISK / hour ratio is fixed for a specific pilot.

It's not going to "adapt" and yield 40M per hour just because ISK devalued over time. There's a LP component in missions but that component has been adversely affected by FW competition and other factors (so it actually reinforces the missioning concept obsolescence).

A new proposed approach I am using since about a year is to dump the fixed ratio ISK income and replace it with variable ISK income or at least hedging that income.

This is achieved by crafting or trading and then holding assets whose value is heavily affected by ISK or PLEX intrinsic value fluctuations.
I won't list exact asset names or categories because that could lead to my absolutely AFK income to be adversely affected.


The challenges are:

- Finding suitable candidate items for a direct or inverse correlation. PLEX is one of the most obvious ones but there are others, even craftable ones.

- Finding when it's more convenient to "attach" your income to ISK and when to "attach" it to another commodity. It's normal and expected that direct correlations change over time and may even turn into neutral and even inverse correlations. Whoever traded RL futures knows how the S&P, mini-Dow, T-bonds and other markets like to spend long periods of direct correlation and some of inverse.

- Keeping a correct and sufficient ratio. It's pointless finding an item that is correlated but you need huge tons of it to offset minimal changes in ISK value.

- Being able to find opposing correlated items for hedging strategies. Those may help capitals builders, since ATM we don't have more effective financial instruments like widespread futures.

- Complex items tend to be hard to manage in a portfolio. I.e. Robotics are an high value asset but its underlying components may have wide and anti-cyclic value swings.


Some tips:
Some materials have quite steady value over time, they seem to be directly affected by ISK in a direct correlation.
They tend to hold the balance of power in baskets, effectively cancelling speculative and transient variations.

Simple materials and some BPCs are the simplest direct correlation tools.
Other materials are "front runners" for other materials (some items as "back runners") and may be used as factual derivatives, but this is a thick topic best left for another boring thread.



This somewhat odd if not boring article is to show how you might be looking at the markets in a certain way (i.e. pure station trader) while just looking at them with other eyes you could see so many other uses and venues.

Hoping to have put a bit of curiosity for the marvellous EvE markets, I bid you all a Merry Christmas and an happy new year!

Lots of words to say so little.

Mildly off topic: Have you looked at the correlation between number of mission runners and income/hr/player? I presume that this is non-linear, as it may increase for up to 2 or 3 players and then start heading down. What about incursions? What is the the correlation between number of players and income/hr/player?

I can do some basic statistics using SPSS and Stata, and it may be interesting to look at relations between market items. Any suggestions on how to import eve data into these programs?

So how does one estimate the inherent value of a floating currency (ISK)? Do you use PLEX as a baseline? Other than aurum, what else may enter the equation?

Invest in gold when you don't like the monetary policies of your governing body. Typically you only want 5-10% of your assets in such investments. Turnover still trumps inflation, even in Eve.

You don't really need to estimate ISK but you indirectly can, by looking at the current USD value vs a GTC value. Due to some suggestions I gave when we discussed OHLC charts, EvEMarketeer.com also had this estimate available, let's hope the website will be re-implemented ASAP.

As for importing EvE data... which data? Only items may be easily exported, with something like my freeware OHLC export software or some other custom script.

Out of the four data exports my program provides there's one that is probably the one you want to use.
If you check the various file names out, the ones without "OHLC" etc. (the ones with the most plain name) contain minimum, maximum, average and volume.
For your regression tests you might want to focus on that average. The OHLC data would need you to re-convert it into digestible single values anyway.

Second reply: see, this is what I hoped to see: emergent, positive and winning players like Samroski who see possible emergent gameplay and try their chances at it.