Greedy Goblin

Thursday, March 15, 2012

The three limits of trading

No tree grows to the sky, no way of trading is without limits. To maximize your income, you shall be aware of the limits of your activities, so you can switch to another type which still have room.

The first limit is time. The most typical time limited activities are mining and mission running. You can make X million by mining an hour, so you can make 2X in two hours. If you mine 25 hours a day, you get 25X million every day. Oh wait!

The second limit is demand. I make about 1.1 million over every Logistics book I sell, so to be a billionaire overnight, all I have to do is run up and down in the galaxy buying books and listing 1000 pieces in Jita. Except they won't sell in a month. While items can travel trough many hands, traders, haulers and manufacturers can do their thing on it, at the end it must reach the consumer. And people can't consume in infinite amounts. Selling more than they buy is simply making your capital sitting there. You can figure out the demand from the price history graph:

The third limit is capital. You have to buy the item (or its materials) spending cash. Actually you have to spend 24-100% of the cash (depending on margin trading skill) when you set up the buy order. You will not see this cash back until you actually sell the item. So you can't just buy up everything that looks to be profitable to sell, you simply can't afford that.

What to do?
  1. Do the demand limited trades. They usually don't take too long, you have your usual restocking ways, you just grab some materials and sell it. Usually these operations are the most profitable, so don't miss them by spending your time on something else.
  2. Secondly, calculate the material costs of the time-limited activities. For example you'll run missions and you buy implants for LP+little cash to sell them for big cash. Calculate how much "little cash" you'll need.
  3. Spend the rest of your cash on the capital-intensive ventures, haul them to the trade hub and list them.
  4. Only after these start doing the time-limited activity.
Obviously if any of your activities has lower ISK/hour than your time-limited one, you shall terminate it instantly, it's stupid to keep your capital in something that pays less than your fallback activity.

PS: quick business report, 1.36B (0.5B gifts)

I understand that people don't want to do jumps to buy a book 70K cheaper. It's just economical to pay a little premium to me for bringing it to Jita. But the moron of the day did not buy one book. He needed 43 (maybe more from other sellers, I had no more to sell). So he bought mine. Not the ones sold by the NPCs 43*70K = 3M cheaper two jumps away:


Gevlon said...

Simplifying: comments regarding the moron of the day are deleted. Please go somewhere else with the "I make 999999999999999T a minute so it's totally justified" nonsense.

Kirith Kodachi said...

I'll try and avoid a nonsense response regarding the buyer of your items when he could have saved a considerable chunk of change in two jumps. :)

Eve players, as they get space rich, get lazy. If someone is tasked with purchasing a few hundred million (or billion) ISK worth of supplies for their corporation, they probably have a frieghter and those things are painfully slow to fly. 0.3 AU/sec slow (compared to 6 AU/sec for a frig).

Add in align time and even a two jump detour can seem like agony, especially if its to save a mere tiny percentage on the entire order he has come to the market hub to fulfill.

Utimately its all a matter of scale: 3 million or 30 million seems like nothing when you're dealing with one or two orders of magnitude more ISK.

Fortunately, this allows enterprising pilots to provide a service and make a profit, such as yourself.

Caramael said...

It appears a lot of folks in EVE are using the Bullworth Burger method to identify potentially decent trade items:

Casares said...

"Actually you have to spend 80-100% of the cash (depending on margin trading skill) when you set up the buy order."

The margin trading skill works multiplicative: at level 1 you only have to deposit 75% of the buy order value, at level 2 56% (0.75 x 0.75) down to 24% (0.75^5) at level 5.

If you are going for accounting 4 anyway, then I recommend to train margin trading, too. Level 3 already means a reduction down to 42% of the buy order value and doesn't take long to train.

Gevlon said...

Margin trading fixed

Anonymous said...

The fourth limit, although not as apparent in EVE, is space. The translation would be that you can list something in Jita, but people in another star system can't buy it there. In real life, this is why Africans find it hard to buy things at the same cost as in America or Europe.

Sega said...

Thats valid. Many pilots do not have full access to everything in Empire. I had to work to make sure that of all four races there aren't two that shoot me on sight whenever I go highsec.