Market Discussions

So in my recent escapades in trading I have started speculating on the mineral market, to be precise, ive been trading the somewhat narrow margins but high turnover of buy/sell orders.

In an attempt to formulate some kind of structure ive tried to develop a formula and spreadsheet via excel.

What ive realised after about 2weeks of trading is that the formula I have been using might be off. I had forgotten to incorporate the brokerage fees for my buy orders.

While I am happy with just having a rough/base formula that does not incorporate my standings, I have come to the conclusion that the average buy/sell margin of most minerals is a negative percentile; ie if I was to place the highest buy order at Jita prices, fill it and then attempt to sell at the lowest sell order, due to broker fees and sales tax, id be loosing money. Is this generally an accurate statement?

Here is the rough formula I use. Is this basically correct or am I missing something

Profit margin on product after incorporating sales taxes and broker fees

Profit X (as a percentage) =((A x (1+ST+BF)) / (B x (1+BF ) x 100) -100

Where A= Sell Price
and B= Buy Price
ST= Sales tax percentage as a decimal
BF=Broker Fees as a decimal


To further explain the incorporation of the taxation with my skills ive got a base broker fee % as 0.6% and sales tax as 0.75% (lvl 4 across the board from memory)

So basically im paying about 1.35% for sale orders and 0.6% for buy orders in taxes.

In the above formula Im trying to x the Sell Price by 0.987 and the buy orders by 1.006

Am I on the right track for trying to incorporate the taxation into my calculations?

Cheers for any insight here, because if these numbers are correct, then I simply dont understand how people make money margin trading Items, particularly in Jita where the profit margins are so tight. Do they simply hold onto stock until the sell price fluctuates?

So my above math is good but my choice in where to invest isnt?

I think your formula appears a bit off but your fundamental thinking is on track. Only cursory checked, maybe a bracket is out but at first glance it looks like your formula results in greater profit in the event of greater sales tax.

My (very) rough calculation for breakeven is always a simple multiply buy price by 1.02 to allow for roughly 2% taxes and fees plus a bit of wiggle room and safety. That's obviously a very rough and ready approach.

For a different approach perhaps the following:

sell price / (buy price + buy broker + sales broker + sales tax)

You could expand that to avoid individually calculating fees prior to insertion into the formula with something like:

sell price / ( buy price + ((buy price*brokerDecimal) - buy price) + ((sell price*brokerDecimal) - sell price) + ((sell price*salesTax) - sell price) )

As an example, lets set sale price at 105, buy price at 100 (something we intuitively feel as 5% profit) and have broker fees at 0.5% and sales tax at 0.5%:
sell price / (buy price + buy broker + sales broker + sales tax)
105 / (100 + 0.5 + 0.525 + 0.525)
= 1.034 or 3.4% profit

That all said, your fundamental thinking is sound, that is mineral markets in particular are razor thin margins and those participating will always have price shifts in mind rather than (or perhaps best described as "as well as") just playing the margin.

Confirming that the math is off as are the broker fee and sales tax percentages. Easy bit first.

Base broker fee with broker relations 4: 0.80%
Base sales tax with accounting 4: 0.60%


For the math it's always best to start from first principles when checking your workings. Let's do that.


Profit = (Sell price - cost to sell) - (Buy price + cost to buy)

Cost to sell = (Sell price * Broker fee) + (Sell price * Sales tax)
Cost to sell = Sell price * (Broker fee + Sales tax)

Cost to buy = Buy price * Broker fee)


So we can replace some of the stuff in the first equation to get:

Profit = (Sell price - (Sell Price * (Broker fee + Sales tax))) - (Buy Price + (Buy Price * Broker fee))

That simplifies into the following:

Profit = (Sell price * (1 - Broker fee - Sales tax)) - (Buy Price * (1 + Broker fee))


To find the percentage profit achieved with respect to the Buy Price (not the total amount spent on acquiring the item so that you can easily eyeball the market) we do the normal.

Percentage Profit = (100 * (Sell price * (1 - Broker fee - Sales tax)) - (Buy Price * (1 + Broker fee))) / Buy Price

Which, if we swap to use your terms provides:

Percentage Profit = (100 * (A * (1 - BF - ST)) - (B * (1 + BF))) / B

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As far as mineral trading goes I'll add that many people are doing this with decent standings and that faction standing is more important than corporate standings. When dealing with thin margins you really need to have every advantage you can get.

AFAIK, the lowest possible broker fee is 0.1875%. Lowest sales tax is 0.5%.

So, if you buy a group of items at a 100,000,000 listed price, the lowest price you pay for them is actually 100,187,500 ISK.
In order to get back exactly your 100,187,500 ISK, at a combined 0.6875% burden, you'd have to sell the items at a listed price of over 100,875,785.625 ISK

In other words, you need to list the item bundle at 0.875785625% higher than the listed price you offered in order to barely break even if you do it in a station where you have perfect standings while also having perfect skills.
In other words, traders could make a profit on very high volume items even at a mere 0.9% margin, even if the profits would be meagre.
Do the margins for mineral orders really look lower than that ?

Yes, I probably should have specified that I was talking about station trading within the major and secondary hubs, not doing region wide mineral buy orders, which im sure could/would net more but im not confident that the isk/hr ratio would hold up when you consider how much collection time would be needed across a region.

I would think that sort of speculation would be longer term and with quite a substantial bankroll