Greedy Goblin

Friday, August 24, 2012

A little gift to total strangers

I wrote several times how I handle the annoying 0.01 cartel: by decreasing the margin between the buy and sell orders until the point they give up, or simply the margins are so close that they can't keep up with the natural swings.

Of course it doesn't mean that I own these items. I checked the volumes of my items (the list is similar to the last month). They are sold in the magnitude of 10-20/day, and I buy and sell about 1-2. So my market share is around 10%.

If I have 50B/month and 10% share, the traders of my field take about 500B/month from the mission runners who farm the implants and the implant users. We do it in the form of margin between buy and sell orders. Average guys (those who don't trade just sell their loot or buy items to consume) can't really compete by setting up their own buy or sell orders. You must either camp the market to keep it at the top or deeply undercut once a day and wait for many days maybe. Neither one is smart if you have just a few items to sell or buy. You are better off losing 5-10% and do what you are proficient in.

When I entered this field and every time I include a new item to my list to replace a bad one, I find ridiculous margins. I mean 30-50M between buy and sell for some items. Both buy and sell orders guarded by busy 0.01-ers. I managed to push it down to 5-15M. So assuming the same volume and 2-3x bigger margin, without me (or other deep undercutting trader), the implant farmers and users would pay 500-1000B/month more to the 0.01 cartel.

So just by trading these items I save 500-1000B/month to total strangers and cause 550-1050B/month (the +50B is my share) damage to the 0.01-ers. Just as comparison, the largest battle loss of this year was K6 with the bill of 300B. So my "killboard" is not bad at all. Maybe I need a new logo instead of the goblin face. What about this one?

Obviously I don't own Jita. You can come any time to do the same on any market. There are so many 0.01-ers to destroy and so much ISK to earn and so little time!

Friday morning report: 153.0B (3.5 spent on main accounts, 2.4 spent on Logi/Carrier, 2.2 on Ragnarok, 1.6 on Rorqual, 1.4 on Nyx, 1.8 on Avatar, 2.6 received as gift)


Anonymous said...

I've been in the "deep undercutting" game since before it was cool - And I've not seen a massive reduction in 0.01 pilots. Perhaps I'm trading in the wrong markets - but these bots will rest to +/- 0.01isk as long as an item is even a little bit profitable (i.e. if the bot can make 0.01 isk profit after everything, it will drive the price until it does so, or until its master tells it to stop).

The only benefit I see to deep undercutting is more rapidly filling buy orders. My graphs do not show an exponential increase in overall profits in the markets I am undercutting in. I either 'participate' in the cartel and make 'large' amounts slowly or 'undercut' the cartel and have a higher rate of turn over but ultimately the same profit for a given period of time.

No matter the strategy I take I produce about 4% profit a month. So for every billion I have in the market I'm making 40 million a month on it - which means that I am actively trading around 20 billion isk on the market to keep my plex up.

Does 'breaking the cartel' *really* work (beyond the obvious reduction in opportunity costs involved in camping the market)

Anonymous said...

with all you statistics on your blog. how moch hours do you play per week in average?

Gevlon said...


Anonymous said...

I've dabbled in deep undercutting the Jita skillbook market. I've noticed two kinds of 0.01 iskers. About two thirds will not 0.01 undercut me when I get to within 33% of the CCP-seeded price; the other will keep going until 5%. My guess is that there are two standard bot programs, one smarter than the other.

Smarter? Why yes. As a beginning player, I'm only posting 10 or 20 books, as opposed to their 100 or 200. I expect there are a lot of annoyed botters when they found out what they actually sold their books at...

Anonymous said...

Probably a very noobish question but how do you know they are bots ? It's very rare to see undercutting happen in seconds.

@Anonymous : it surprises me that you only make 40millions for each billlion you have in a month. Try to look at other items/places...

Johnicholas Hines said...

If you have an idea of the dynamics of the market (maybe lognormal random walk),
and have an idea of your time value of money, then you can frame choosing a price to put your goods at as choosing among several possible bets.

I think the Kelly criterion offers a way to decide which of several bets to invest in, and how much to invest in it. Proebsting's paradox is an excellent read:

My guess is that neither blindly 0.01 cutting nor blindly deeply-undercutting is optimal, but I'm not sure how far suboptimal, how much additional returns could be made with a more principled pricing scheme.