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Sethi3
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Posted - 2008.07.17 16:30:00 -
[1]
I'll be dead honest here, I still consider myself a noob when it comes to trading. I'm still learning the ropes here so please bare with me.
I have a question on quantities of items that you put on sale on the market of a certain item. For example, the quantity of Small Armor Repairer you put on sale.
I personally have found out that putting out a large amount of quantity of an item is not necessarily a good thing as you would need to adjust your prices almost everyday and that you would lose out in broker fees and transaction fees (btw, I don't have any trading skills except trade I and retail I) especially if the items you're putting on sale are worth a lot.
The worse case would be when undercutters come and undercut you by a huge margin, along with their huge inventory. You have no way to compete but to undercut them and that would mean a huge loss of profit as well as a loss from the broker fee.
I can also see the drawback of having a small quantity of an item on the market as you might lose profit to other traders due to you selling out.
As I am still a small time trader, such loses are huge on me as I'm still trading small time with a small capital.
So what's everyone take on this topic? Do you normally put out a large quantity of an item, or just a few?
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LaVista Vista
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Posted - 2008.07.17 16:31:00 -
[2]
Diversify diversify diversify
/me predicts Hexxx should be around shortly talking about diversifying.
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Sethi3
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Posted - 2008.07.17 16:39:00 -
[3]
I know that you and Hexxx (If I get the numbers of x's wrong, please forgive me) constantly tell newbie traders to diversify, and I do try my best.
But what I don't get is that how does diversifying helps in this situation? Please do explain.
Do you mean by having more items on sale, you offset the losses on one item with the other items?
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Ambo
Dirty Deeds Corp.
Axiom Empire
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Posted - 2008.07.17 16:47:00 -
[4]
Edited by: Ambo on 17/07/2008 16:49:38
Diversification is good both for mainting overall profit when somthing like you describe happens and for actually getting higher profits in the first place.
For example, you may sell all the armour repairer I's in Eve on a given day but some other guy who has 10% of the volume per day across 30-40 items is almost certainly going to be making more money than you and it's easier to achieve.
This is an oversimplification of course but it does illustrate the point.
Edit: forgot to point out why it's good for the situation you describe:
If you're well diversified then when this happens you can take the loss without any problem because you other lines will continue to make profit. That way you can get the money back from your investment and back into a new round of orders as quickly as possible rather than waiting for the prices to adjust in order to maintain profits.
In other words you can almost ignore profits per item and just look at the profit of your overall business.
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Mr Horizontal
Gallente
KIA Corp
KIA Alliance
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Posted - 2008.07.17 16:50:00 -
[5]
Diversifying stabilizes your cashflow.
If you trade say 1m Armor Repairers, and the profit is good, then the money rolls in. But if the next week other traders have caught on and you have another 1m Reppers to sell, they're going to undercut you, and your profits go down, and you can't really do much about it other than try and sell that stock as soon as you can.
If you have diversified, and in addition to reppers, you also sell all forms of tanking modules, and the above scenario happens where the prices go down, then you can concentrate on other modules in your stock to sell at higher profits, rather than worrying about the reppers, so say in this case the fashion for reppers disappeared, and people wanted to have higher resists and a big buffer, reppers fall in price drastically, while plates and hardeners go up.
Thus you've maintained a stable cashflow despite the prices in the items being volatile.
Director | www.eve-bank.net |
Sethi3
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Posted - 2008.07.17 16:56:00 -
[6]
So the lesson here is rather to diversify, rather than worrying about the quantity?
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Mr Horizontal
Gallente
KIA Corp
KIA Alliance
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Posted - 2008.07.17 16:58:00 -
[7]
yeah. The quantity is really decided by a) how often you can resupply your stock and b) how quickly it's sold. If you have anything left over when you resupply, you're not maximising return.
Director | www.eve-bank.net |
Ricdics
Corporate Placement Holding
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Posted - 2008.07.17 17:32:00 -
[8]
The broker modification fee is only 100 isk per hit regardless of size or quantity of your item. If your profit margins are anywhere near as low as 100 isk then you are trading in the wrong items anyway.
If I plan to sell all my stock at one location I will always do one order. It will always be a large quantity and I just do the price mod game a few times a day.
Think of it this way, it's the equivalent of 29 order modifications just to convo someone not in your address book. Suck up the broker fee, it won't cut into your bottom line anywhere near as much as the standings/transaction taxes |
Kazzac Elentria
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Posted - 2008.07.17 17:33:00 -
[9]
 Originally by: Ambo
If you're well diversified then when this happens you can take the loss without any problem because you other lines will continue to make profit. That way you can get the money back from your investment and back into a new round of orders as quickly as possible rather than waiting for the prices to adjust in order to maintain profits.
In other words you can almost ignore profits per item and just look at the profit of your overall business.
If you want to get fancy about it to, you can even divide your trading up into the various sections of the market from most volatile to least volatile. And adjust the percentages of trading accordingly.
Sure, I took in the jaw on ferrogel this last week, but I more than made up for it in my capital activity. |
Sethi3
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Posted - 2008.07.17 17:47:00 -
[10]
Originally by: Ricdics
The broker modification fee is only 100 isk per hit regardless of size or quantity of your item. If your profit margins are anywhere near as low as 100 isk then you are trading in the wrong items anyway.
If I plan to sell all my stock at one location I will always do one order. It will always be a large quantity and I just do the price mod game a few times a day.
Think of it this way, it's the equivalent of 29 order modifications just to convo someone not in your address book. Suck up the broker fee, it won't cut into your bottom line anywhere near as much as the standings/transaction taxes
What I meant earlier about the broker fees was the inital broke fee you had to pay to set up the sale order. I once put up a massive sale order of megacyte, then only to find competition undercutting me by a huge huge margin, resulting in a loss, total up.
That is why this has then got me thinking about quantity of an item that's going to be put on sale.
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Kazzac Elentria
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Posted - 2008.07.17 17:50:00 -
[11]
Edited by: Kazzac Elentria on 17/07/2008 17:50:17
Originally by: Sethi3
Originally by: Ricdics
The broker modification fee is only 100 isk per hit regardless of size or quantity of your item. If your profit margins are anywhere near as low as 100 isk then you are trading in the wrong items anyway.
If I plan to sell all my stock at one location I will always do one order. It will always be a large quantity and I just do the price mod game a few times a day.
Think of it this way, it's the equivalent of 29 order modifications just to convo someone not in your address book. Suck up the broker fee, it won't cut into your bottom line anywhere near as much as the standings/transaction taxes
That is why this has then got me thinking about quantity of an item that's going to be put on sale.
Remember that you can create more than one buy order for a single item. Use that to your advantage when dealing with lemmings.
What I meant earlier about the broker fees was the inital broke fee you had to pay to set up the sale order. I once put up a massive sale order of megacyte, then only to find competition undercutting me by a huge huge margin, resulting in a loss, total up.
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Ricdics
Corporate Placement Holding
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Posted - 2008.07.17 18:20:00 -
[12]
Or, if you are really tricky, fast, and not restricted by buy orders, you can have your order placed well below cost and then modify it 5 minutes later to reduce your market taxes.
It's not for the faint of heart and can really screw you over so I wouldn't necessarily give it as advice but I have successfully (and unsucessfully) done it before  |
Rho'varo
Diversified Operational Services
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Posted - 2008.07.17 21:02:00 -
[13]
Originally by: Ricdics
Or, if you are really tricky, fast, and not restricted by buy orders, you can have your order placed well below cost and then modify it 5 minutes later to reduce your market taxes.
It's not for the faint of heart and can really screw you over so I wouldn't necessarily give it as advice but I have successfully (and unsucessfully) done it before
Can you (or anyone else!) please explain further on how this would reduce any fees or taxes?
In my experience, when I increase the price on a Buy Order or a Sell Order, my Broker appears to take an incremental fee in proportion to that increase.
(Sales Taxes are not by the Buyer on placement or execution of a Buy Order at all, and are paid at the time of sale on the actual selling price on Sell Orders, so I'm assuming you are colloquially referring to Broker Fees as taxes.)
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Sethi3
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Posted - 2008.07.18 05:16:00 -
[14]
I would like to thank everyone for their advice(s) 
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Mahke
Carrion Crows
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Posted - 2008.07.18 05:32:00 -
[15]
Also, remember the psychology of the other traders.
If someone undercuts you with a massive order, you basically have to undercut them yourself or leave the market. Furthermore, it encourages you to undercut by more, since they may be inclined to let yours move not to wreck their profits (which is when the smart trader then just constantly adds small orders that seem too small to be worth moving for each time s/he's manipulating trades  ).
Very large orders encourage exactly the behavior from your competitors that you do NOT want to see. I'd suggest using them only if you want to set and forget -- set an order for something, leave for a month and not worry about it, and what happens happens.
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Kyusoath Orillian
Viziam
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Posted - 2008.07.18 20:17:00 -
[16]
Diversity diversity diversity
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Amanda Thorn
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Posted - 2008.07.18 21:36:00 -
[17]
Originally by: Mahke
Also, remember the psychology of the other traders.
If someone undercuts you with a massive order, you basically have to undercut them yourself or leave the market.
No, those are not all the options. For example, one other option is to cap their sell order by placing YOUR giant order right above theirs, and a small one right below. As they lemming down you keep ratcheting their profit to 0.
So long as you're still profitable this is a very, very fun game to play.
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SoleDeo Gloria
Minmatar
Mission Runners Incorporated
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Posted - 2008.07.18 21:58:00 -
[18]
Originally by: Ricdics
Edited by: Ricdics on 17/07/2008 18:17:54
The broker modification fee is only 100 isk per hit regardless of size or quantity of your item.
only if you are adjusting your price down. if you adjust up, then you pay the percentage broker fee.
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Sethi3
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Posted - 2008.07.19 04:50:00 -
[19]
I have another situation regarding quantity.
Say for example if I'm selling Gatling Pulse I, and people tend to like to buy them in bulks of 5's. What happens if someone comes along and only buys up 3 of it? To confuse matters, say I'm the only one trading that particular gun at a mission hub. The nearest available sell order is ages away. What would you do? Take the order down, then restock and put up the 5 guns again? Or just wait until its sold out?
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Frenden Dax
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Posted - 2008.07.19 06:20:00 -
[20]
If you know that people buy in batches of five, why would you only have a single order of five up? Put an order of like, oh, 50 on the market. I guess an alternative would be to leave the order of 2/5 up and put another order of 3 at the same price up.
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Sethi3
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Posted - 2008.07.19 08:49:00 -
[21]
Originally by: Frenden Dax
If you know that people buy in batches of five, why would you only have a single order of five up? Put an order of like, oh, 50 on the market. I guess an alternative would be to leave the order of 2/5 up and put another order of 3 at the same price up.
I have thought of putting up a few batches at one go. But what I'm afraid of is that other traders would then have a look at that, and think "Oh, that's quite a few people selling stuffs there, that must mean its good" so they'll jump on the wagon and start competing with me. Same scenario with putting up a lot of quantity of the same item (ie. 1 sell order but instead of 5 guns, 50 guns).
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KtoJest
Minmatar
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Posted - 2008.07.19 09:01:00 -
[22]
Quote:
So the lesson here is rather to diversify, rather than worrying about the quantity?
putting up too much can sometimes work against you.
- if i see a large amount of an item for sale, i may wait to purchase; waiting for someone to come in under, or just waiting because there are so many items for sale. so i defer my buy.
- the longer you are exposed with a lge. qty. the more vulnerable you are to competition ie undercutting. get in - get out.
- you've already eaten the fees on the large order so undercutting with the order in place is relatively expensive.
case in point:
i put out a sell order on 50k of CL-S at 16.- because no one is selling it at the moment.
i know someone is going to come in below that, historically at around 4.95.
so i get some sales at 16.-, maybe enough to cover cost and fees before the 4.95 order comes out.
the question to myself is: will i break even (worst case) if i sell below 4.95.if yes, cut the price, sell out, move on.
for me an open order slot is what is of value. :)
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