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49473
Jita Trade and Research Institute
0
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Posted - 2013.07.24 09:36:00 -
[1] - Quote
Has there been any evidence gathered about the relationship between the Buy order/Sell order spread and Liquidity?
Is it true that the tighter the spread then the more liquid a market is?
Does squeezing the spread induce liquidity?
According to Gevlon Goblin:
Quote:The main problem of station trading is the 0.01 curse. If you set up a buy order for 100000000 and a sell for 120000000 you won't have to wait long until someone sets up a buy order for 100000000.01 and a sell for 199999999.99. The worst thing you can do is following the same strategy. It's for bots and people who consider time free. You shall cut the price agressively and should not camp the AH. Check prices twice a day maximum. In the the previous 100M/120M example you should go for 102M/118M then 104M/116M and so on, until the prices are within 2% which is near the profitability limit due to taxes and broker fees. The reason to do so is increasing volume.
However, in my limited research on the subject, I have found that slashing margins does induce liquidity but reduces the daily profit margin of an item disproportionately, thus leading to lower returns overall.
I would appreciate your input on the matter. |
arabella blood
Deep Core Mining Inc. Caldari State
84
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Posted - 2013.07.24 10:09:00 -
[2] - Quote
I know where the problem is. Its that you quoting Goblin - the most idiotic source possible regarding to any market matter.
The guy is the MD fool, sorry to say, but we all love to laugh at him.
Gevlon "im the richest in game if you count all the plex i gave my imaginary GF" Goblin. Just sad. |
49473
Jita Trade and Research Institute
0
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Posted - 2013.07.24 10:16:00 -
[3] - Quote
arabella blood wrote:I know where the problem is. Its that you quoting Goblin - the most idiotic source possible regarding to any market matter.
The guy is the MD fool, sorry to say, but we all love to laugh at him.
Gevlon "im the richest in game if you count all the plex i gave my imaginary GF" Goblin. Just sad.
As I say in my original post, I think Gevlon Goblin is wrong. I use a .01 isk strategy but I am curious if a mixed strategy would yield better results.
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Tauranon
Weeesearch
208
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Posted - 2013.07.24 10:16:00 -
[4] - Quote
Liquidity is a relative term, which depends on the size of stake you have in that market. The spread can be closed up with small orders that are meaningless to someone that just arrived with 200 billion isk in a jumpfreighter convoy of alliance farmed mats, but those small orders can all be bigger than your entire trading stake.
oh and fake edit, anything goblin says.... |
arabella blood
Deep Core Mining Inc. Caldari State
84
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Posted - 2013.07.24 10:28:00 -
[5] - Quote
The logic is: Everything Goblin says is stupid, because he has no clue.
I think that statment is bulletproof and no chance to contradict it
It should be an MD Axiom, and be mentioned in the forum rules. |
Vaerah Vahrokha
Vahrokh Consulting
4237
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Posted - 2013.07.24 12:10:00 -
[6] - Quote
49473 wrote:Has there been any evidence gathered about the relationship between the Buy order/Sell order spread and Liquidity?
Is it true that the tighter the spread then the more liquid a market is?
Good or promising markets attract many investors / traders. This attraction means they will put their liquidity in that market.
Being many participants means they will compete a lot and that causes spreads to tighten. So the relation you see is not direct.
Auditing | Collateral holding and insurance | Consulting | PLEX for Good Charity
Twitter channel |
Adunh Slavy
1210
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Posted - 2013.07.24 13:01:00 -
[7] - Quote
If you are using the term Liquidity to mean, an item can be sold with out loosing value, then yes, when spreads get more tight, liquidity is increased. There are two definitions for liquidity. As it relates to markets and another as it relates to accounting. Since we are talking about markets, I will assume the first definition.
Here's an example.
Suppose Widgets have a buy/sell of 100/50. This is not a liquid market. If I buy at 100, and turn around and sell at 50, I loose 50% of the value. Not very liquid at all. If the buy/sell is 100/99, then we see that if I buy and then sell I don't loose much value. The second example is more liquid, by definition, than the first example.
So frankly, in relation to spreads, not sure what the heck you're asking, it's not a question about liquidity.
Another word abused and slaughtered in MD forums Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.-á-á- William Pitt |
49473
Jita Trade and Research Institute
0
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Posted - 2013.07.24 13:22:00 -
[8] - Quote
Adunh Slavy wrote:If you are using the term Liquidity to mean, an item can be sold with out loosing value, then yes, when spreads get more tight, liquidity is increased. There are two definitions for liquidity. As it relates to markets and another as it relates to accounting. Since we are talking about markets, I will assume the first definition.
Here's an example.
Suppose Widgets have a buy/sell of 100/50. This is not a liquid market. If I buy at 100, and turn around and sell at 50, I loose 50% of the value. Not very liquid at all. If the buy/sell is 100/99, then we see that if I buy and then sell I don't loose much value. The second example is more liquid, by definition, than the first example.
So frankly, not sure what the heck you're asking.
Another word abused and slaughtered in MD forums
It is a question about liquidity, I am asking, in simple terms whether tightening the spread of an item makes it easy to sell that item.
Definition: Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money (in the form of cash) is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid.
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arabella blood
Deep Core Mining Inc. Caldari State
84
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Posted - 2013.07.24 15:59:00 -
[9] - Quote
You are a smart man no? how can this:
"According to Gevlon Goblin: The main problem of station trading is the 0.01 curse. If you set up a buy order for 100000000 and a sell for 120000000 you won't have to wait long until someone sets up a buy order for 100000000.01 and a sell for 199999999.99. The worst thing you can do is following the same strategy. It's for bots and people who consider time free. You shall cut the price agressively and should not camp the AH. Check prices twice a day maximum. In the the previous 100M/120M example you should go for 102M/118M then 104M/116M and so on, until the prices are within 2% which is near the profitability limit due to taxes and broker fees. The reason to do so is increasing volume."
has anything to do with what you say:
"Definition: Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money (in the form of cash) is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid."
Goblin gives an "advice" to new market players, and you asking about a totally different question. Don't make a joke of yourself, like that other thread of yours.
You want to look at "Liquidity " - its right under "show table" - sales per day...look it up.
The tighter the spread, the more people "got it/want it", for any reason. if its convertable to isk quickly? depends many other things..defenetly not on your .01 strategy, or the lack of it. |
Adunh Slavy
1210
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Posted - 2013.07.25 02:55:00 -
[10] - Quote
arabella blood wrote: "Definition: Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money (in the form of cash) is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid."
Note the term asset, an asset is not a market. The market is a reflection of how sellable the asset is, not the cause of those attributes.
arabella blood wrote: Don't make a joke of yourself, like that other thread of yours.
And which thread is that? Or are you just an ass because it suits your nature? in other words, FU. Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.-á-á- William Pitt |
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arabella blood
Deep Core Mining Inc. Caldari State
84
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Posted - 2013.07.25 04:10:00 -
[11] - Quote
Adunh Slavy wrote:arabella blood wrote: "Definition: Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money (in the form of cash) is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid."
Note the term asset, an asset is not a market. The market is a reflection of how sellable the asset is, not the cause of those attributes. arabella blood wrote: Don't make a joke of yourself, like that other thread of yours.
And which thread is that? Or are you just an ass because it suits your nature? in other words, FU.
I see you don't know about the forum search option, here i found it for you: https://forums.eveonline.com/default.aspx?g=posts&t=259104&find=unread |
Samroski
Games Inc. The Night Crew Alliance
282
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Posted - 2013.07.25 04:23:00 -
[12] - Quote
I think it makes sense to undercut aggressively, though it totally depends on your playing/trading style. I do not do station trading regularly, but I have dabbled in the market at Jita for some items, and for me updating orders about twice a day works great. It also helps me keep sane (others disagree, though). I sometimes undercut aggressively, alternatively I just set a price and let the weekly market fluctuations do the work.
I suppose one could correlate liquidity with the buy/sell spread, and come up with an answer to your question, but I suspect someone with a little more knowledge has the answer. If the two correlate in RL, they may correlate in Eve as well. Not sure how one quantifies liquidity. It would be pretty easy to do the stats: quantify liquidity for a few hundred items, and relate to the spread.
Think I've started to ramble, thus I'm going to stop before I go into how conventional (0.01 ISKing) station trading sucks. Any colour you like. |
Kethas Protagonist
Protagonist Ventures
58
|
Posted - 2013.07.25 05:25:00 -
[13] - Quote
Uh... er...
You asked a theoretical question but then posted Goblin's advice ("you should overcut/undercut to increase your trading volume") as if it were relevant. You're really asking two questions.
1) The liquidity one, as you correctly point out, boils down to "Are assets more easily convertible into ISK in markets with low, or high, spreads?" This seems trivially obvious to me. Would you rather be holding a widget and trying to quickly and easily convert that widget into ISK in a market where buy orders are 50% of sell orders, or 95%? Let's all move on with our lives.
2) The second one is, broadly, "Is 0.01 isk'ing a good strategy?" This one's more arguable. I'm way, way over in the "no, it's not worth it, your time and capital are too valuable; outbid people aggressively" camp but I can see where the 0.01 isk'ers are coming from:
* "If your competitors aren't paying attention anyway, you're just sacrificing profit by trimming your margins unilaterally" * "I spend a lot of time station trading and can usually out-0.01 my competitors" * "Multiple people undercutting dumbly is how you crash markets"
I'm pretty sure there are several station traders in Jita that hate my guts, I regularly cut margins in the markets I sell in by 20%+ to get my stuff to move. |
Adunh Slavy
1210
|
Posted - 2013.07.25 06:08:00 -
[14] - Quote
That's not my thread, nor do I even appear any where in that thread. Please take your useless crap and shove it.
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.-á-á- William Pitt |
Guywood Threepbrush
Motsu Mission Monkeys
0
|
Posted - 2013.07.25 06:26:00 -
[15] - Quote
Adunh Slavy wrote:That's not my thread, nor do I even appear any where in that thread. Please take your useless crap and shove it.
49473 posts a definition. Arabella tells 49473 that the definition has nothing to do with his/her initial question and suggests he/she not make a fool of him/herself like he/she did in his/her last thread. Adunh Slavy gets his knickers in a twist and starts mouthing off.
Seems to me that someone either can't read or can't alt switch properly. |
arabella blood
Deep Core Mining Inc. Caldari State
84
|
Posted - 2013.07.25 07:43:00 -
[16] - Quote
Adunh Slavy wrote:That's not my thread, nor do I even appear any where in that thread. Please take your useless crap and shove it.
Omg, i guess you are on the list now as well. Wasn't talking to you at all, are you one of these people who think the are center of the world too?or just another fool? Cant read or something?
Maybe just an innocent reading mistake, but why talk **** without checking? Now appologize. |
Adunh Slavy
1211
|
Posted - 2013.07.25 21:50:00 -
[17] - Quote
arabella blood wrote:
Maybe just an innocent reading mistake, but why talk **** without checking? Now appologize.
You want me to appologize for your crap? LOL. Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.-á-á- William Pitt |
arabella blood
Deep Core Mining Inc. Caldari State
84
|
Posted - 2013.07.25 22:32:00 -
[18] - Quote
Adunh Slavy wrote:arabella blood wrote:
Maybe just an innocent reading mistake, but why talk **** without checking? Now appologize.
You want me to appologize for your crap? LOL.
Internet pride...i love it...you clearly not a man but a girl
next time check better if someone was actually talking to you |
Sabriz Adoudel
Paragon Blitz
563
|
Posted - 2013.07.26 05:31:00 -
[19] - Quote
I 0.01 ISK (or 10.01 ISK) on items where I have no highly active competitor, and use much more unpredictable undercutting against active competitors.
More than once I have 0.01 ISKed, seen my trading rival 0.01 ISK me back, then posted 1-2 of the item at a price I'd buy it at 5 min later, watched the rival undercut my 'new' order, then buy their entire stock out.
I am fond of the attitude of 'post 95% of your stock in one order, keep the other 5% in reserve' for this reason.
An enemy is just a friend that you stab in the front. |
Daniel Plain
Science and Trade Institute Caldari State
1307
|
Posted - 2013.07.26 13:50:00 -
[20] - Quote
arabella blood wrote:Adunh Slavy wrote:arabella blood wrote:
Maybe just an innocent reading mistake, but why talk **** without checking? Now appologize.
You want me to appologize for your crap? LOL. Internet pride...i love it...you clearly not a man but a girl next time check better if someone was actually talking to you you should also make a demeaning remark about his genitals. nothing hurts space honor more than a ***** joke.
"I don't troll, I just give overly blunt responses that annoy people who are wrong but don't want to admit it. It's not my fault that people have sensitive feelings" -MXZF |
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arabella blood
Deep Core Mining Inc. Caldari State
84
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Posted - 2013.07.26 14:59:00 -
[21] - Quote
Ability to apologize is what separates the men from the boys... |
Wolfcheck
Pack o' Wolves
0
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Posted - 2013.07.26 15:51:00 -
[22] - Quote
Sabriz Adoudel wrote:I 0.01 ISK (or 10.01 ISK) on items where I have no highly active competitor, and use much more unpredictable undercutting against active competitors.
More than once I have 0.01 ISKed, seen my trading rival 0.01 ISK me back, then posted 1-2 of the item at a price I'd buy it at 5 min later, watched the rival undercut my 'new' order, then buy their entire stock out.
I am fond of the attitude of 'post 95% of your stock in one order, keep the other 5% in reserve' for this reason.
Smart.
I actually just make sure I'm the last one in 5minutes game - so I post a minor order (1piece) right under his price, and as soon as he undercuts me I .01 him down with the big one. This way, as long as I care to check, I'm always lower for slightly less than 5 minutes. In highly mobile markets (i.e. sales volume very high) that's usually enough to get my stuff off the market fast.
Of course, I do not cut my margins much if I can help it, and certainly I don't go undercutting orders that are far lower volume that what I expect to sell. I'd rather move to another market than starting to compete with people who drop 1-2 times the daily volume on the market and undercut 10% at a time (unless it's got 30%+ margins....). Dumping the market so low it's about mineral price doesn't make me or them rich. I can stick to my stock for a while or sell it elsewhere. |
Adunh Slavy
1211
|
Posted - 2013.07.26 16:53:00 -
[23] - Quote
arabella blood wrote:Ability to apologize is what separates the men from the boys...
Which explains why you responded with a thread when I asked which of my threads Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.-á-á- William Pitt |
Huang Mo
Tianxia Inc
70
|
Posted - 2013.07.26 18:56:00 -
[24] - Quote
I practice Goblins advice with success and can only recommend it if you're facing a persistent 0.01 ISKer. However, my experience is based on regional trading where it works even better than in station trading, YMMV.
In regional trading there is an additional handling cost (you need to haul the stuff around) that hits hard when you're on break-even. When your annoying competitor 0.01 ISK your break-even price he is probably very near (or above) his own break-even, so you should just relax and watch while he jumps himself to death for virtually no profit.
When his orders finally pops, you lower your price back to a reasonable profit and look if he comes back. In my experience, most move on to another market. |
arabella blood
Deep Core Mining Inc. Caldari State
85
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Posted - 2013.07.26 21:07:00 -
[25] - Quote
Adunh Slavy wrote:arabella blood wrote:Ability to apologize is what separates the men from the boys... Which explains why you responded with a thread when I asked which of my threads
NeXt time sheck if you were the one mentioned..in no where in my post i adress you... just grow up. you asked the thred, i gave it to you...where do you see in what you wrote that you are asking "your" thread? You have a writing problem too? add to that your reading problem & understanding problems..and what we get? a little boy, which is exactly what you are :) |
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