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Station Trading 101

Author
Yashmyn
Abyssal Holdings Corporation
#1 - 2014-03-18 12:58:04 UTC
Greetings fellow traders of EVE,

For anyone interested in the basics of station trading I've salvaged my station trading guide from the now defunct podlogs and recreated on http://mistressjita.blogspot.co.uk/

Hope you find it useful!

Y.
Slade Trillgon
Brutor Force Federated
#2 - 2014-03-18 13:29:53 UTC
Looks nice. I would also look into the possibility of posting this in the New Citizens forum now and then or even maybe get it stickied in one of the noob guide threads.
Herzav
Perkone
Caldari State
#3 - 2014-03-18 21:14:10 UTC
Good guide, as a newbie trader I am always open for new information that helps in every bit when trading :)

One thing I noticed in your guide were the trade hubs suggestion and the damn 0.01 ISK undercutting.
You should add that any newbie looking to start station trading, one should not start in Jita IV-IV unless you can babysit your orders all day long because of the 0.01 ISK wars, If one doesn't have a insane amount of time to deal with constantly changing orders, setting shop in a smaller trade hubs is a better idea, there's less volume and less competition, pros and cons, it's up to one to choose.

I suggest having Broker relations and accounting to V, along with a decent standing to get the last squeeze out of your ISK,because most traders have everything maxed and they can operate on razor thin margins,potentially kicking you out of the market if they so desire.

Also, 0.01 ISK wars, you will get tired of this ****. One could aggresively underprice the next 0.01 but I find that sometimes people stop and get the message, sometimes you get tired of that **** and move on or let him get the orders because its a bot or a no lifer, or you or the bot spend their remaining time of the day in a constant circlejerk stronger than the gravity in the entrance of a black hole.

Other than that, good guide for newbies!

Far Wanderer
ACGM Acquisitions
#4 - 2014-03-18 21:59:04 UTC
Thank you for posting this. A refresher is always good. Big smile

I really am wasting my breath though, when you can avoid questions from Hexxx and RAW23 like that you must have some seriously devoted investors. --Elizabeth Norn

Samroski
Middle-Earth
#5 - 2014-03-20 07:21:30 UTC
Thank you! A good read- almost makes me want to station trade!

Any colour you like.

Tor Norman
The Scope
Gallente Federation
#6 - 2014-03-22 19:38:54 UTC  |  Edited by: Tor Norman
You've got the basics down just fine, but a lot of the other stuff is either lacking or simply wrong.

There's no mention of the target audience in the guide. It's very basic, suggesting it might be of greatest use to newer players. However, station trading generally produces the lowest profit margins, which means large investments are required if the player wants a decent profit/hour. New players tend not to have much money floating around.

Reading market history is actually very important. Too many times have I found myself forced to eat a loss because I didn't bother to check a small, but vital detail. Learning the significance of the 5day & 20day moving averages and their position within the donchian channel is a handy tool for helping you decide how much to list your orders for. Sadly, you didn't really seem to touch on this.

In the guide, you've written "Improving the current price by 0.01 ISK is all you need to do, anything else and you are just wasting potential profit" but this is wrong. There is a reason why traders improve prices by more than a penny at a time. In fact, there's two. First: You're turning an unattractive price into an attractive price, which helps you move your wares faster. Second: It discourages competition.

You also mention that the only two ways to handle competition is by 1ISKing them or simply waiting your turn, again failing to point out that you can price them out of the market.

My last issue with the guide is the following sentence: "If you stand to make a loss just hold onto the items until the price goes back up again." This is also a very poor idea and again, for two reasons. First: You do not know when, if ever, the market price will recover to profitable levels - you may find yourself holding onto the item for a very long time. Second: unless you're sure the price will recover (e.g, the price is simply at the low point in its regular cycle), it's often better to sell at a loss and recoup the loss using other trades.

To demonstrate: Imagine I have purchased 10 million ISK worth of goods, but the price dips and I end up selling the item for 9.5 million - a 5% loss. I then take that money and make trades that earn me a 5% profit from the freed investment per day for a week. 9.5 * 1.05^7 = ~13.36 million. That's a 3.36 million ISK profit in a week. If I'd simply hung onto those goods until it became profitable a week later, selling at a 5% profit, I'd have only made 500 thousand in the same time. I'm significantly worse off by simply sitting on an item that I could've sold, freeing the resources and re-invested elsewhere.

=====

All in all, your guide has some good basic tips, but comes up very short when it comes to ISK making.

I talk about EVE trading and general space violence in my blog.

For the ISK and the yarr!

Lucas Kell
Solitude Trading
S.N.O.T.
#7 - 2014-03-22 22:06:34 UTC
Tor Norman wrote:
In the guide, you've written "Improving the current price by 0.01 ISK is all you need to do, anything else and you are just wasting potential profit" but this is wrong. There is a reason why traders improve prices by more than a penny at a time. In fact, there's two. First: You're turning an unattractive price into an attractive price, which helps you move your wares faster. Second: It discourages competition.

You also mention that the only two ways to handle competition is by 1ISKing them or simply waiting your turn, again failing to point out that you can price them out of the market.
I hear this stated a lot but haven't seen any evidence this is really the case. Target customers don't generally care much about the price unless the margin is extreme, so "turning an unattractive price into an attractive price" only really works if you are targeting traders. A regular customer will buy what he needs when he needs it as long as the price is reasonably fair. The job of a trader is to ensure they are always the next order in the queue, which means 0.01 isk is as good as any other amount.

The other issue is that other traders think in the same way as you. If you are willing to nuke the margins into a loss to clear your stock, chances are other traders are too. So you undercut by a huge price an another trader 0.01 isks that price. Now you are still not the next order, so the margin has dropped and you still aren't selling.

Really there is no "one best way", both methods have their merits, its about choosing which tactic to deploy and when. But for the general trader, keeping your price as the best price by any amount does the job fine, and 0.01 isk increases the longevity of the margin.

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

Axel FoIey
Audacious Entrepreneurial Businesspersons Academy
#8 - 2014-03-22 22:55:26 UTC
Lucas Kell wrote:
...which means 0.01 isk is as good as any other amount....


I couldn't disagree more. Let's say 100 people are trading Drakes. If you 0.01 ISK your order, 100 people will 0.01 ISK theirs, making that trade a lottery. Now if you increase/decrease your order by 250,000 ISK, let's say 80 people will find that profit unacceptable, and wait for your order(s) to fill, while 20 of those people will keep on with the action.

But take that last statement and consider that there are usually only 2-8 people actively trading any specific item at any given time. In my experience you can easily cut out over 50% of your competition by deep overcutting/undercutting.

Lucas Kell wrote:
...and 0.01 isk increases the longevity of the margin...


Exactly. And most of the time I do not want to increase the longevity of the margin. I'm perfectly content on making 500,000-1,000,000 ISK profit off of the items I trade. It's a grind. Trading is grinding. But the fly by night "I wanna make billions trading also!" crowd can't handle that low amount of profit. So they move on to where the grass is greener.

Matter of fact, if I see an item trading with a 5-10m profit margin, I nip that in the bud and slice it down to 1-2m profit. I'll turn that item over 10 or 20 times a day for my small 1-2m gains, and no one else can swoop in to claim that 5-10m windfall.
Lucas Kell
Solitude Trading
S.N.O.T.
#9 - 2014-03-22 23:11:46 UTC
Axel FoIey wrote:
Lucas Kell wrote:
...which means 0.01 isk is as good as any other amount....


I couldn't disagree more. Let's say 100 people are trading Drakes. If you 0.01 ISK your order, 100 people will 0.01 ISK theirs, making that trade a lottery. Now if you increase/decrease your order by 250,000 ISK, let's say 80 people will find that profit unacceptable, and wait for your order(s) to fill, while 20 of those people will keep on with the action.

But take that last statement and consider that there are usually only 2-8 people actively trading any specific item at any given time. In my experience you can easily cut out over 50% of your competition by deep overcutting/undercutting.
That's assuming that a good protion of traders are unwilling to sell at a lower price. It's also assuming people don;t see the drop as an indication of the tred and put even more effort into clearing stock. If you are willing to drop the price, chances are other marketeer will, and the players who need to read a guide are unlikely to have to capital to forcefully flush another trader from the market.

Axel FoIey wrote:
Lucas Kell wrote:
...and 0.01 isk increases the longevity of the margin...
Exactly. And most of the time I do not want to increase the longevity of the margin. I'm perfectly content on making 500,000-1,000,000 ISK profit off of the items I trade. It's a grind. Trading is grinding. But the fly by night "I wanna make billions trading also!" crowd can't handle that low amount of profit. So they move on to where the grass is greener.

Matter of fact, if I see an item trading with a 5-10m profit margin, I nip that in the bud and slice it down to 1-2m profit. I'll turn that item over 10 or 20 times a day for my small 1-2m gains, and no one else can swoop in to claim that 5-10m windfall.
Of course, the huge margins often come with sales volume issues and a lot of competition, so pushing down the margin can be a plus, but in general, I've not seen any increase in sales between 0.01 isking and deep cutting. Either way the same people (and bots) continue to undercut you at the same rate and sales come along at the same rate.

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

Axel FoIey
Audacious Entrepreneurial Businesspersons Academy
#10 - 2014-03-22 23:17:06 UTC  |  Edited by: Axel FoIey
It has been in my experience the exact opposite. When I deep overcut/undercut, my product moves much quicker which results in a bigger profit for me had I enrolled in the 0.01 ISK war.

Edit: Wording.
Lucas Kell
Solitude Trading
S.N.O.T.
#11 - 2014-03-22 23:32:48 UTC
Axel FoIey wrote:
It has been in my experience the exact opposite. When I deep overcut/undercut, my product moves much quicker which results in a bigger profit for me had I enrolled in the 0.01 ISK war.

Edit: Wording.
Hmm, well I can;t say I've ever really seen that except with products with inflated margins to begin with. And that doesn't reflect in market history trends either. Most buyers aren't traders, so they don't buy more because the price is slightly lower. Being the next in the queue is the only thing that secures you a sale when a buyer comes along.

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

Axel FoIey
Audacious Entrepreneurial Businesspersons Academy
#12 - 2014-03-23 00:39:49 UTC
Lucas Kell wrote:
Axel FoIey wrote:
It has been in my experience the exact opposite. When I deep overcut/undercut, my product moves much quicker which results in a bigger profit for me had I enrolled in the 0.01 ISK war.

Edit: Wording.
Hmm, well I can;t say I've ever really seen that except with products with inflated margins to begin with. And that doesn't reflect in market history trends either. Most buyers aren't traders, so they don't buy more because the price is slightly lower. Being the next in the queue is the only thing that secures you a sale when a buyer comes along.



Have you seen many buyers (consumers) place a buy order for their next Hulk or Covops? I doubt there are many who do, and those that try their hand at it find out that purchasing from a buy order to save a few million isn't what it's all cracked up to be.
Lucas Kell
Solitude Trading
S.N.O.T.
#13 - 2014-03-23 00:51:54 UTC
Axel FoIey wrote:
Lucas Kell wrote:
Axel FoIey wrote:
It has been in my experience the exact opposite. When I deep overcut/undercut, my product moves much quicker which results in a bigger profit for me had I enrolled in the 0.01 ISK war.

Edit: Wording.
Hmm, well I can;t say I've ever really seen that except with products with inflated margins to begin with. And that doesn't reflect in market history trends either. Most buyers aren't traders, so they don't buy more because the price is slightly lower. Being the next in the queue is the only thing that secures you a sale when a buyer comes along.
Have you seen many buyers (consumers) place a buy order for their next Hulk or Covops? I doubt there are many who do, and those that try their hand at it find out that purchasing from a buy order to save a few million isn't what it's all cracked up to be.
Yeah... and that's what I mean. When a consumer wants a product, they head over to a station and they buy it. So deep undercutting doesn't encourage the consumers to buy more. They will buy when they need the product, and if you are the best price at the time, your item will be the one that sells. How much you undercut by has no bearing on that.

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

Axel FoIey
Audacious Entrepreneurial Businesspersons Academy
#14 - 2014-03-23 01:13:43 UTC
Lucas Kell wrote:
Yeah... and that's what I mean. When a consumer wants a product, they head over to a station and they buy it. So deep undercutting doesn't encourage the consumers to buy more. They will buy when they need the product, and if you are the best price at the time, your item will be the one that sells. How much you undercut by has no bearing on that.


Oh sorry I misunderstood. Well you are 100% correct on that. If you are the best price at the time, your item will be the one that sells.

Now how do we become the best price a majority of the time? If we 0.01 ISK, we are the best price 5 minutes at a time, which is pretty good, but how can we be better?

I undercut my Drakes by 200,000 ISK and now the other trader who is paying attention has to make a choice. Does he want to loose 200,000 ISK profit a piece for his Drakes? Or does he want to let my 3 Drakes sell out, which they will pretty quickly as Jita moves 150-300 a day, and then reap his 'full' profit?

It has been my experience that a lot of traders will let me move my item first, and then try to claim the 'extra' profit.


Lucas Kell
Solitude Trading
S.N.O.T.
#15 - 2014-03-23 01:26:12 UTC
Axel FoIey wrote:
Lucas Kell wrote:
Yeah... and that's what I mean. When a consumer wants a product, they head over to a station and they buy it. So deep undercutting doesn't encourage the consumers to buy more. They will buy when they need the product, and if you are the best price at the time, your item will be the one that sells. How much you undercut by has no bearing on that.


Oh sorry I misunderstood. Well you are 100% correct on that. If you are the best price at the time, your item will be the one that sells.

Now how do we become the best price a majority of the time? If we 0.01 ISK, we are the best price 5 minutes at a time, which is pretty good, but how can we be better?

I undercut my Drakes by 200,000 ISK and now the other trader who is paying attention has to make a choice. Does he want to loose 200,000 ISK profit a piece for his Drakes? Or does he want to let my 3 Drakes sell out, which they will pretty quickly as Jita moves 150-300 a day, and then reap his 'full' profit?

It has been my experience that a lot of traders will let me move my item first, and then try to claim the 'extra' profit.
And if you are selling 3 drakes, he might let it slide. But you have to remember your main competition is people exactly like you. If you are willing to drop 200k/unit they probably are too. All they do is then undercut your new price by 0.01, now you still had only 5 minutes of exposure but the price is lower. So now you can 0.01 or deep undercut again and the same happens again and again until you are running at a loss. And if you are station trading, you won't be able to go as low as a manufacturer, so some people can even undercut you while you are already at a loss.

When I'm in a busy hub and need to push stock, rather than deep undercutting, I'll just split stacks so I'm 0.01 isking 2 or 3 stacks of the same item. Now I'll have the exposure of 2 or 3 traders without having to give up profit margins prematurely.

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

Minerva Bian
Starchild Industries
#16 - 2014-03-23 01:31:42 UTC  |  Edited by: Minerva Bian
Whether to 0.01 ISK or not depends on so many factors, there's no hard and fast rule.

Relevant factors include:

Amount of time the trader is willing and able to commit to updating orders vs the frequency with which the competition on a given item update their orders.

The particular system you're trading in.

The spread of the particular item, both current and historical.

The volume available vs the volume traded per day.

The source of the item (manufactured, gathered, lp, npc drop - difficulty/rarity of farming/gathering).

The target for the item.

Trend of the market for that item.

Opportunity cost of leaving ISK invested in that product vs moving it to another potential investment.

etc. etc.
Axel FoIey
Audacious Entrepreneurial Businesspersons Academy
#17 - 2014-03-23 03:36:03 UTC
Lucas Kell wrote:
And if you are selling 3 drakes, he might let it slide. But you have to remember your main competition is people exactly like you. If you are willing to drop 200k/unit they probably are too. All they do is then undercut your new price by 0.01, now you still had only 5 minutes of exposure but the price is lower. So now you can 0.01 or deep undercut again and the same happens again and again until you are running at a loss. And if you are station trading, you won't be able to go as low as a manufacturer, so some people can even undercut you while you are already at a loss.

When I'm in a busy hub and need to push stock, rather than deep undercutting, I'll just split stacks so I'm 0.01 isking 2 or 3 stacks of the same item. Now I'll have the exposure of 2 or 3 traders without having to give up profit margins prematurely.


As for who is in the mix with me in any given market. Let's say there are 10 people in the mix with me. So it goes like this:

People like me: 2 - I get undercut right back.
People who care about the margins: 8 - they wait for me to sell out.

So I have eliminated 80% of my competition. That is good, right?

I know my numbers are arbitrary. But let's go to the other end of the spectrum. Say that my methods only paralyze one competitor. Aren't I better off for getting rid of that one competitor?
Far Wanderer
ACGM Acquisitions
#18 - 2014-03-23 05:09:28 UTC
Axel FoIey wrote:
It has been in my experience the exact opposite. When I deep overcut/undercut, my product moves much quicker which results in a bigger profit for me had I enrolled in the 0.01 ISK war.
This has been my experience as well, and comports with a system of trading I learned about 5 years ago.

Personally, I like to drive down sell prices and drive up buy prices, then move on to other items when those I was focusing on have achieved parity, because I make a lot of ISK this way and it serves buyers and sellers well.

That and the competition learns to get out of my way, because if every .01 is met with a 100,000, 1,000,000 or 10,000,000 reply, people learn to back off.

I have not seen mindless .01 activity, however, so perhaps there are Hubs or Regions where this strategy will not work.

I really am wasting my breath though, when you can avoid questions from Hexxx and RAW23 like that you must have some seriously devoted investors. --Elizabeth Norn

Tor Norman
The Scope
Gallente Federation
#19 - 2014-03-23 06:53:12 UTC  |  Edited by: Tor Norman
Lucas Kell wrote:
I hear this stated a lot but haven't seen any evidence this is really the case.

This is likely because most people don't keep a running record of their trading activity, which means player testimony is the closest thing to evidence often seen. That said, I strongly recommend you read croda's trading blog (http://marketsforisk.blogspot.co.uk/), particularly the earliest posts as he details his trades. During a mere ~60 minutes per day, he makes 2 billion ISK exclusively from trading in his first month (http://marketsforisk.blogspot.co.uk/2013/06/one-month-old.html). How many month old characters do you know that have made that kind of money? Particularly from <30 hours of game play.

Quote:
Target customers don't generally care much about the price unless the margin is extreme, so "turning an unattractive price into an attractive price" only really works if you are targeting traders.

Sometimes you may find that a large undercut is exactly what the doctor ordered. Consumers may not be all too bothered by 1-5% price changes, but you'll draw attention to yourself with 20% changes. Hell, there have been trades where I've listed for half the price of the competition that are merrily 0.01ing each other way above a reasonable price.

Edit: I'm actually making a trade right now, selling my product for 2.3-3.0 million ISK/item but my competition are lisitng for 9,999,999.99 and 10 million. I'm not even trying to list close to their price because only one item shifts every couple of weeks at that price. I'd much rather shift one or two items per day at my price (even the one I'm asking is a massive markup).

Also, selling to other traders is a good thing. They do care about 1-5% price changes. These small shifts can easily make an item profitable and you may find them snapping the item up so they can move it to another region for sale over there.

As the price becomes more favourable, you're expanding the pool of people that will buy your wares, both traders and consumers alike.

Quote:
A regular customer will buy what he needs when he needs it as long as the price is reasonably fair. The job of a trader is to ensure they are always the next order in the queue, which means 0.01 isk is as good as any other amount.

And if the price isn't reasonably fair? Agressive undercutting works because it ensures the other party is always getting the best possible deal.

Quote:
The other issue is that other traders think in the same way as you. If you are willing to nuke the margins into a loss to clear your stock, chances are other traders are too. So you undercut by a huge price an another trader 0.01 isks that price. Now you are still not the next order, so the margin has dropped and you still aren't selling.

What if everyone 0.01s? It's hilarious when a price hasn't reacted to a market change and a bunch of idiots are 0.01ing each other at a price way above what most people consider to be acceptable. They're literally making something like 1 million ISK/hour on such trades yet there they sit, still mindlessly 0.01ing.

I'd much rather risk some of my trades dropping to unprofitable levels, but make a killing overall than waste my time with such trades.

Quote:
Really there is no "one best way", both methods have their merits, its about choosing which tactic to deploy and when. But for the general trader, keeping your price as the best price by any amount does the job fine, and 0.01 isk increases the longevity of the margin.

I don't want to increase the longevity of the margin! Remember, by simply 0.01ing on a large profit margin, I'm leaving the door open, not only for the existing traders to keep 0.01ing me in response, but for new traders to join the fray. I don't want to sit on a trade, forced to update every 5 minutes because of the ridiculous amounts of competition that aren't leaving because the profit margin is too attractive. I want to list my item for sale, thenleave for a day or so, letting the money roll in on its own.

I talk about EVE trading and general space violence in my blog.

For the ISK and the yarr!

Lucas Kell
Solitude Trading
S.N.O.T.
#20 - 2014-03-23 11:46:30 UTC
Axel FoIey wrote:
Lucas Kell wrote:
And if you are selling 3 drakes, he might let it slide. But you have to remember your main competition is people exactly like you. If you are willing to drop 200k/unit they probably are too. All they do is then undercut your new price by 0.01, now you still had only 5 minutes of exposure but the price is lower. So now you can 0.01 or deep undercut again and the same happens again and again until you are running at a loss. And if you are station trading, you won't be able to go as low as a manufacturer, so some people can even undercut you while you are already at a loss.

When I'm in a busy hub and need to push stock, rather than deep undercutting, I'll just split stacks so I'm 0.01 isking 2 or 3 stacks of the same item. Now I'll have the exposure of 2 or 3 traders without having to give up profit margins prematurely.


As for who is in the mix with me in any given market. Let's say there are 10 people in the mix with me. So it goes like this:

People like me: 2 - I get undercut right back.
People who care about the margins: 8 - they wait for me to sell out.

So I have eliminated 80% of my competition. That is good, right?

I know my numbers are arbitrary. But let's go to the other end of the spectrum. Say that my methods only paralyze one competitor. Aren't I better off for getting rid of that one competitor?
I only takes 1 trader to keep you from selling. And you assume here that other traders aren't willing to go as low as you can, and aren't bots who automatically undercut a price when profitable.

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

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