Greedy Goblin

Monday, April 2, 2012

Station trading

I wrote a post advising everyone to stay away from station trading. Lot have changed since then, so I choose to remove that post as I consider it now misleading. However the main point of that post is true: new players and non-professional traders must avoid station trading like the bubonic plague. To station trade you need billions of capital, I'd say after 2B cash you can give it a shot, but you'll I have to set up buy orders for 1-3 items, which fill fast and need recreating. You need high market skills which are mostly Charisma based, an attribute that can't be used for combat skills or even combat support skills. Finally you need dedication, you can't station trade casually like you can mine, haul or run missions when you feel like. In station trading, you are on it 100% or you are out.

What is station trading? Sitting in one of the trade hubs (mostly in Jita, Rens, Amarr, Dodixie), set up buy orders for item X, then resell item X instantly on the same station. Station trading makes its profit out of sellers and buyers being inpatient, lazy or just plain dumb. (I know you make 99999999999999999T in a minute so you can afford to pay premium, no need to comment)

What items you can't station trade?
  • Items that are produced by players like ships and modules. The producers are hard-working, patient (material research can take months) and smart (as they could understand the complicated crafting system). As raw materials are available in practically unlimited number, they can produce large amounts and cut the middle man: you.
  • Items that are NPC sold like most skillbooks: any hauler can buy them 2-3 jumps away and dump them on you any time
  • Items that can be farmed like veldspar: The rule of morons is "i farmd it so itz free lol", so they happily undercut any price you set.
There is one exception from the above rules: if the running price is below the material/NPC price. For example the Astronometric Pinpointing book goes for 380-390K, despite NPCs sell it for 405K, as newbies get them for the starting quests and sell it as it give no "pew pew lol" skills. My pet business, the Logistics book is not an exception from the above rules, I am making profit as hauler and not station trader.

So what items can you station trade? Items that are dropped by pirates or random missions. The one who gets it get only one, so not bothering to research can actually be smart, but usually he is just dumb like a rock. He sells for the highest available buy order and don't look back.

Preparation step #1: For every sale you have to pay 1% tax. For 1B that's 10M. You can decrease it to 0.9-0.5% by learning accounting skill. Without rank 4 don't even think about it. Get 5 as soon as you can. When I say "as soon as you can" I mean when you learned the other necessary skills to 3-4. If you prefer to drive a good pew-pew ship first, you shall stop reading now and forget station trading forever. There is no shame not being dedicated to this branch of economy and you can make good money hauling, mining, salvaging. But if you even think about preferring a pew-pew ship, you will either fail in station trading or will hate it and have to force yourself every day to continue.

Preparation step #2: Broker fees. You have to pay 1% to the brokers for setting up an order, either buy or sale. That includes orders that will expire or you cancel. Since you buy and sell, you pay this fee twice. The approximated formula is BrokerFee% = (1 – 0.05*BrokerRelationsLevel)/ exp(0.1 *FactionStanding + 0.04*CorporationStanding), which isn't entirely accurate but a good guideline. As you can see, the skill Broker Relations can only bring you to 0.75%, so while having it rank 5 is nice, it's far from being optimal use of your time. Some may even call me a newbie for telling, but I think maybe rank 5 can wait after your pew-pew ship and rank 4 can wait for the other trading skills. What matters here is the standing. I wrote how you can farm standing very fast via distribution missions and datacenter missions. These are "farmable" so you can do it actively instead of waiting for skill points. Please note that broker fees ignore the connections skill. A simple graph to show the effect:
Please note that while it's almost linear, the standing vs time spent farming is very much not. Raising standing from 7 to 8 is about 4 times longer than from 0 to 1. Find your own spot, I go with 8/8 (this way I get jump clones too). My current broker fee is 0.28% with Broker relations 4, Caldari state 7.7, Caldari Navy 7.2.

Preparation step #3: margin trading. When you set up a buy order, the price is taken from you. The skill decreases this price to 75%, 56%, 42%, 32%, 24%. You pay the rest when the item is sold. This skill allows you to set up buy orders for 3-4x more than you have cash, as they won't find seller all together.

Preparation step #4: trading slots. You only have 5 trading slots and for station trading you need two slots for every item. 3 is more convenient (2 sell, 1 buy). You can get more slots by learning Trading 4, then Retail 5, then Wholesale 3. That give you 104 extra slots, that's a good start. Later you'll need Wholesale 5 and Tychoon 3 for 128 more slots.

How to actually do the trading? You set up a buy order and a sell order and probably get under and overcut by 0.01 ISK in 10 minutes. Then you start closing the prices by big steps and continue to do so until the competition gives up or the two prices get into 1% range of each other (2x 0.25 broker + 0.5 tax). Then you wait until your competition finally gets the picture and goes away. It won't happen overnight. For me it was more than a week till the 0.01 punks packed their bags and left. Until then I spent time and my capital was rotting there. First they will cancel their buy orders, but they still have to sell their old stock. If you notice your buy order being the highest by a large margin, decrease your buy order, and instantly follow it with your sale to make them even more miserable and because lower prices increase demand so their stocks go empty faster.

Worst case scenario:
  1. Before your arrival the sell price is 10M, followed by 10M.01, 10M.02, 10M.03 and lot of other orders around it, while the highest buy price is 8M and 6 other orders right below it.
  2. You enter with a 9.9M sell and 8.1M buy order. In an hour you'll find 10 sell orders between 9899999.89 and 9899999.99 and 5 buy orders between 8100000.01 and 8100000.06.
  3. You modify your prices to 9.5M sell, 8.5M buy. You thank God that in EVE the names are anonymous so they won't spam you with moron letters.
  4. Next day you find 10 sell orders between 9499999.89 and 9499999.99 and 3 sell orders between 8500000.01 and 8500000.03.
  5. You modify your prices to 9.1M sell, 8.9 buy. They buy one of your items just to learn your name and send you moron letters. You send them to me so I can publish them here
  6. Next day you find 9 sell orders between 9099999.93 and 9099999.99 but only one lone buy order above you. You smile and wait.
  7. Next day the buy order disappeared and you are the highest. The second highest is some old order at 8000001.18. You decrease your buy order to 8.4M and your sell order to 8.6M. You imagine them cursing and calling you noob. Oh wait you don't have to imagine, they send you tells educating you about "how can we all make money with larger margin".
  8. Next day there are 8 sell orders between 85899999.93 and 8599999.98 (the 8599999.99 sold out). There is no new buy order, the second highest is still that 8000001.18. You decrease your buy order to 8M (yes, below that old order, it won't disappear otherwise), and your sell to 8.2M.
  9. On the seventh day the Lord rested, so shall you. Imagine them praying for the Goons to finally come to Jita and do something with you as they obviously can't.
  10. Some time on the next week the name of your item shows up on your transaction list. You either bought one or sold one. You check the item and see that the sell orders above you sold out, you have the highest buy order and the second highest is at 7M with 54 day expiration (was a 3 months order that was forgotten 36 days ago). You set your buy order to 7.01M, the sell stays at 8.2 and you start making profit
  11. A week later you see no other sell orders, besides some old and overpriced crap and no buy orders above you. Congratulations, item X is all yours, you can elevate the sell price and print ISK
From time to time a 0.01 ISK punk comes along and tries his luck. Don't ignore your orders for days, don't encourage him. The faster you show him the door, the faster he goes out on it. If you let him have profit for days, he won't give up so fast.

Usually you encounter random sellers who got the item in a mission but not so dumb/lazy/"making 99999999T every hour and still run missions" to sell to a buy order. You can just wait them out, or buy them out (careful with that, do only if their price is closer to your buy order than your sell).

One day someone like you comes along and start doing the same. Who will win? The one with higher capital, as he can afford keeping his money in unsold items and buy order escrow waiting for the other to give up.

Finally the great question: how profitable it is? On Friday morning I included "2.5B (0.4B gifts)" to the post. Today, Monday morning I include my current report: 3.74B (0.4B gifts). I used a stopwatch to exactly calculate the time spent trading (as opposed to getting standing for my Amarr trading alt, or running L2 securities with my girlfirend to hook her up on the game): 5 hours, 48 minutes in the last 3 days. 214M ISK/hour. OK, it was weekend, when the kiddies are unleashed, 3 workdays would give less, but still, 2 PLEXes in a weekend.

Again, before you'd jump into printing money, I'd like to stress the upfront costs: after 7 weeks of playing, my best combat ship is an Osprey, I grinded standing with Caldari Navy and state doing distribution missions and paying others do do security storylines. I got 2B starter money by hauling pyerite and mexcallon on a T1 industrial and skillbooks in a T1 frigate to the most pirate-infested system of the universe and spent a week clearing up the 0.01 punks. So, think carefully if it is for you or not. The other business ways (hauling, mining, manufacturing, planet industry) are producing more than enough ISK for your normal gameplay and save you from ever having to shoot little red NPC crosses.

The moron today is our friend, the 0.01 punk. If you don't get why he is a moron, maybe station trading is not for you. (Solution below in small letters)

It is a buy order, he should have typed 28000026.01

Remember that you can participate in our EVE conversations and soon group activities on the "goblinworks" channel.


Anonymous said...

Since most stuff in EvE is player created and thus falls in your category of items to stay away from, this doesn't leave many items to be traded this way. Tags and the odd storyline drop. Unless you include faction modules that cannot be build?

Gevlon said...

That exception isn't so exceptional. There are many items that are below material costs + production costs, due to being showered by NPC pirates.

Anonymous said...

Also, some of the dropped by NPC named items are pretty common. I remember looking up some item being sold in 100-200+ amounts, and wondering where the blueprint could be found, only to find out it was a drop.

Gesh said...

"running L2 securities with my girlfirend to hook her up on the game"

Missions are pretty boring even in group. If you want to hook up your GF, send her to RvB and consider doing the same with a frigate alt. (although I know you promissed you wont fire a gun and so on).

Gevlon said...

@Gesh: she likes to salvage. And scan. She is weird.

Anti said...

if i had time i'd look back through your old posts to find my comment that was something like "eventually you'll discover station trading is the way to print ISK."

each of my station trading alts started with 30m or so capital, no standing, basic skills (trade 4-5 and retail 4). with very little time investment i was doubling my capital weekly.

good to see you've finally seen the light.

best thing about station trading is that it is one of the few reasonable income sources availiable to trial accounts.

Gevlon said...

@Anti: I'm still completely convinced that a newbie can't make money via station trade. Maybe it was different when you started it, but now the competition only leaves if you tank the profit to 1-2%. That's something a newbie can't due due to higher costs and lower capital.

Kana said...

@gevlon: If your girlfriend like scanning and salvaging, there is these great article how to make most of it:

But personaly, I find it more effective to scan first and salvage/loot then nobody home.

antronics said...

..Gevlon, you sure are quick to call someone a moron. In Eve, and WoW.

The supply of 'moron' is much smaller in Eve tho, which is why I suspect you posted that picture.

Ever updated 50 different orders 2+ times a day? Ever make a mistake born from staring at a monitor with large numbers on them?

I wouldn't call him a moron, just a station trader that mixed up his buy order procedure with his sell order procedure. Please post if you ever make this mistake.

Gevlon said...

@Antronics: I first update my buy orders for all items, then the sells. Also I don't 0.01 but use big round numbers. So I never make this mistake.

Vincent Trevane said...

I made a lot of starting capital station trading at career agent stations. Its not a lot, but it can be done early.

Anonymous said...

You can station trade casually no problem.

The important thing to do is not to ride the daily numbers but the weekly numbers.

While items will generally move upwards or downwards over time, there is a weekly wave. The trick is to just seek very high volume stable items. DC2 is a good example.

I basically adjust my buy and sell orders weekly/bi-weekly and do just fine for the 15 minutes i invest in it per week.

The point for casual station trading is to diversify. I run about 10-20 items, at any given time. A percentage of those will do nothing, a percentage will just trickle in, and a percentage will move quite fast because who knowns what happened.

Either way, in the end it all averages out to a nice stable passive income.

Also player made items are fair game, while their production cost surely is an attraction point, it rarely matters. The price is what a punter will give for it and buy and sell orders should be set based on trend anyway. So it makes little difference if that trend is governed by a production cost or drop rate.

Another thing is that eve is still a game, as such realities change. Keeping an eye on things going on with the game while keeping trading in the back of your head is always a good move. Often it pays off to be one of the first to put 2 and 2 together about some change and be able to invest before the inevitable speculation bubble. Which is obviously the point at which you check out and make silly profits.

Good examples in recent months have been nocxium just this weekend, assault frigates in february, and PI goo last november.

Anonymous said...

See Anonymous' comment above - it's perfectly possible to ride the cycles and make reasonable money station trading. A lot of the biggest traders do this - as they rather save time than update 313 orders on all their alts.

Secondly, it's perfectly possible to make money as a newbie station trading, just don't try to do it in Jita (for the record a number of the large traders don't trade in Jita either)

Sal said...

It has always puzzled me that these games don't add a minimum undercut to prevent the 1 c punks (wow; 0.01 isk in eve?). It does not have to be much, 0.25%-1%. In EvE You could even add a skill that decrease the minimum undercut %.

It'd be set up such that you'd either match competition, or undercut which would be a minimum of x %.

Anonymous said...

There is already a 'tax' on undercutting - the 100 ISK it takes to reset the order.

CCP were shooting for a fairly pure free-market, which is why I doubt they'd introduce a repricing tax.

The absence of automated market-markers means that players make the market - even those alleged '0.01c punks' are providing a useful function.

If you were spot trading why would you leave more profit than necessary on the table?

Anonymous said...

Its not true you need 2b or so to station trade at all...only if you want to compete with the ones who buy 50b of mins at once.

If you can be bothered to spend some time figuring out what to flip on station with decent margins, then it becomes clear why you do not need so much isk. Sure, if you want to make a large isk amount, you need a large isk amount to begin with.

I generally trade nothing that I cannot get 20% on, ideally 40-50%. No, these are not low volume items, it just means I have spent some time looking through the market to see what is not covered.

It will be interesting to see how the market changes when they remove Meta 0 loot from missions.

You forgot to mention standings in your post as well, faction & Corp standings make a huge difference on the isk taken by the broker. Especially if you are dealing in low margin items.

Sal said...


It's not meant as a tax, nothing is taxed, but rather prevent last to market sales and promote first to market.

Just to clarify; by 1c-punk I refer to undercutting by a negligible amount. As in the last digit holds no value. Hence, you are not really undercutting, but rather matching prices and being a "punk" ("punk" was not the first word that came to mind).

Under the current rules the last person to market is the one who gets the sale. What I hope a minimum undercut % would achieve is to promote first person to market sales. Since all items posted at the same price would be resolved in a FIFO manner (first in first out).

A person later to market would have to weight in whether to stand in line, or undercut competition.

This is not the same as a re-listing fee.

Anonymous said...

Hello. I'm newbie here and due to my poor connection, pew pew-ing is out of a question so i mostly do trading and ultimately manufacturing.

Your posts has been very brave. Other station traders wont post their secrets but you blatantly inviting competitors to your favor and yet your fortune has never going down a bit.

Im curious, how to you make 2 bil with only hauling pyerite/mexallon? I cant see much profit by setting buy order and then hauling those from mining system to Jita.

Zong said...

Hey Gevlon, looking at the numbers here you would be working with a 2.24% margin. With lvl 5 skills and 0 standings you already loose 2.25%. With ~5 Faction standing you loose 1.75% and 1.25% with a faction standing of 10.

How low do you recommend the profit margin get? Is it worth the time to be working on an item with a 3% margin, and after taxes you're working with a profit margin of 0.75%