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What is the Margin Trading Scam and how does it work?

Jordon Wallace
#1 - 2015-06-18 06:58:33 UTC
I have been hearing a fair bit lately about the "Margin Trading Scam" I am just wondering how it works so I can educate myself and not get caught out by it at some point.
Cruor Angelicus
#2 - 2015-06-18 07:50:51 UTC
They put up a buy order for an item that is way higher priced than all the other buy orders,t he trick si that it has a minimum buy amount. Such as he only buys it from you if you sell him 5 or something. He;s also usually selling one for a higher price at the same time.

However, this higher prices doesn't seem much higher because the's a low market volume and he;s only one of maybe 5 orders or something
If you try to buy from his sell order and then try to sell it back to his buy order ti will fail on the basis of not enough units of the item.

However. if you DO get enough units of the item the margin trading skill comes into effect. It allowed him to make a buy order when he didn't have enough ISK in escrow to fulfill it. As a result the order fails and you;r sat there stuck with overpriced commodity.

The Drake is a Lie

Milla Jjovovich
Never Comeback Airline
#3 - 2015-06-18 08:28:34 UTC  |  Edited by: Milla Jjovovich
train margin trading and when you place a buy order the system only takes a small amount of isk, set your item you wish to sell for a higher amount of isk than its actually worth (you must pretty much dominate the market for that item) then set a buy order for a crazy amount of isk with a minimum buy of more than the item.

When someone buys your item to then sell to your buy order it fails because either you dont have the isk or they have not met the minimum amount.

golden rule: if it sounds too good to be true then it is
Cherri Minoa
#4 - 2015-06-18 09:21:42 UTC
You will also often see an item linked in local with a catch line like "Epic Market Order Fail" that links an item being sold at a much lower value than the highest buy order. Another variant is a link to a contract with just a few items; when you check market value on the item that looks most interesting, there is a buy order at a higher price than the whole contract.

These are both scams to get you to buy the item in the hope of a quick profit. Margin trading allows the seller to place the order, then remove funds from that character so that when you try to sell it, the transaction fails. You are then left having bought the item way above the true market value.

It is one of the nastiest scams, because at least with most scams you can see where the trick is by looking hard. With this one, unless you know how the mechanics of buying and selling work in EVE, it's hard for a new player to spot the sting in this one. Apart from the general good advice posted above.... if it sounds too good to be true, it is.

"If I had been censured every time I have run my ship, or fleets under my command, into great danger, I should have long ago been out of the Service" - Horatio Nelson

Gregor Parud
Imperial Academy
#5 - 2015-06-18 09:25:31 UTC  |  Edited by: Gregor Parud
It's a two part thing:

1) the margin trading skill allows you to have less isk in escrow than you have up on buy orders, meaning that if you make a buy order you have to front less isk than that as it'll assume that due your volume of trading by the time the order is filled you will have the money.

Lets say that you put up a buy order for 100 mil, you front 100 mil for doing so (escrow) and that means that anyone trying to sell to you will make a transaction happen. You asked for 100 mil in items, you fronted 100 mil. Margin trading allows you to put less isk in escrow than the actual value of your buy order, lets say 80 mil, and expects you to cough up the remaining 20 mil as someone tries to fill your order.

that means that if you don't HAVE that extra 20 mil in wallet then an order simply won't complete. This is the first part of the scam as it allows you to set up a buy order for a super high buy price (well above actual price) because you KNOW it'll never actually happen. So this is the lure.

2) This will be done with items that aren't normally for sale and can't really be gotten anywhere easy, so the next bit involves creating a sell order for that same item well above actual value (but below the buy order from #1). So people will look at #1, realise it's a silly high price and would make really good profit if they could fill that, check the market and only find your own sell order, and while it's expensive it's cheaper than your bogus buy order so they buy it hoping to immediately sell it again which obviously won't work.

So now they bought some silly item for a massively inflated price, that is where the profit happens.
Jordon Wallace
#6 - 2015-06-18 10:48:46 UTC
I see this happening a lot with Officer Modules, makes me wonder where they are getting those modules from since most are never on the market and when they are they sell for much more than the scams they have setup which is strange.
9B30FF Labs
#7 - 2015-06-18 11:41:26 UTC
Most of the time it is a rare & useless Officer module that is employed in the scam - something like Officer's Modified Thermal Plating.

The only thing that the scammer risks is the broker's fee on the buy order(s). Smile
Memphis Baas
#8 - 2015-06-18 12:58:45 UTC
They get the modules as random loot drops.

Price of things is determined by rarity to a degree, but mostly by usefulness. So you have officer modules that improve a ship's power grid, speed, or some other significant stat, and you have officer modules that don't do squat for you. But the first kind is called CA-1 blah blah, and the useless kind is called CA-2 blah blah. Making it easy for the scammer to trick people into believing that the useless officer module is expensive because "officer".

Archibald Thistlewaite III
The Royal Society for the Prevention of Miners
#9 - 2015-06-18 13:32:40 UTC
The most important bit to remember about the Margin Trade scam.

Is that the scam is not that you can't sell the item to the buy order but .

You bought the overpriced item in the first place.

Don't buy expensive stuff unless you know why its expensive.

User of 'Bumblefck's Luscious & Luminous Mustachio Wax'

Juan Diolosa
Avocado Cartel
#10 - 2015-06-18 14:32:12 UTC
Jordon Wallace wrote:
I have been hearing a fair bit lately about the "Margin Trading Scam" I am just wondering how it works so I can educate myself and not get caught out by it at some point.

Let me google that for you.