Wednesday, April 18, 2012

Day 7: 30 Day Market Challenge

Late post, but I pulled the numbers at the same time as every other day. I can lose money on the market!  How I did this is simple.  I bought too many (~50) items at a price that gave a total margin of about 36 million.  Someone came in and placed 200+ at a price that halved that margin, so my sell orders fell by 18 mil.  I managed to recoup about 3 mil during my limited time today.

Lesson 1:  Reported sell values are not how much you actually have in the bank!

The underlying problem was that I assumed that buy and sell orders will only move in small increments.  But sometimes someone comes in and crashes the sell price or inflates the buy price.  Smaller inventory and smaller batches can help you avoid this if you cannot do the same, or are looking for short term profits as opposed to longer term investments.

Lesson 2: Don't count on prices being stable.

I also pruned my buy orders (lost broker's fees), consolidated inventory in to sell orders (new broker's fees), and reallocated my buy orders to items that have lower margins but move a little faster.  In the last three hours I recouped another 8 mil, so things should be back on track.

Lesson 3:  Sometimes you have to give up a few high value, high margin orders to increase the velocity of isk.


  1. I've been quite successful with trading as a young character some months ago but I've had problems getting back at it lately (Jita works very differently than my old hub)
    You insist a lot on velocity, I'm wondering how does it reflect in practice, do you put lots of buy orders of 1-3 items to avoid immobilizing cash in buy orders?

  2. First, I'm new at this :).

    But, velocity of isk means how fast the money moves. Imagine you have 10 isk. You have a choice of buying 1 order with a 5 isk margin, or 10 orders with a 0.50 isk margin. Assume it takes a day to trade the 5 isk margin item, and half a day to trade the .50 items. In one day, with the large item, you flip one and will end at 15 isk. With the 0.50 isk item, you will move ten, have 15 isk, then move another 15, ending at 22.50 isk. The exact same margin of 50% is worth an additional 7.50 isk if the velocity increases.

    In practice, I am trying to balance small orders (5 or so) of high margin, big ticket items with orders of 20-50 of high velocity small items with variable margins. I tend to have 20-40 orders overall at any given time. Your mileage may vary.

    Also, buy orders do not impact your liquid isk. You only lose the broker's fee if you cancel it, so if you find a much better deal and have an ordert that just won't fill, you can move that isk. Inventory and sell orders are the only things that lower your liquid isk pool.