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Emporia Tzard
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Posted - 2008.08.28 10:41:00 -
[1]
I've been trading long enough now to be making a decent amount of isk, but there is something that I don't yet have enough time to evaluate therefore I'd like some opinions.
When you have a stock of something and the price drops so low you're selling at a loss (something I have encountered occasionally in Jita)what do people do? Keep going and sell it as quickly as possible to minimise the loss, or take the items off the market and wait for the price to recover?
I haven't yet seen enough of the market cycles to see how likely/quickly the price is going to go back up again.
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Neidhardt Foster
Sternenschauer AG
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Posted - 2008.08.28 10:59:00 -
[2]
I don't have a huge experience in trading, so you might take my opinion with a grain of salt.
I usually don't sell at a loss. If a item drops in price I check for better selling opportunities in other regions and if I don't find any, I wait or manipulate the price. For me the latter requires a not to high-volume good and a good where I know the price/sell history. In that case I simply buy everything until the "old" sell price has been restored. This obviously doesn't work in markets where there is a lot of activity.
I think you should estimate if you need the money right away (ie. have a good opportunity to invest it) and in that case I would consider making the ISK available (through selling at a loss) and to use that money to make a profit that is higher than your loss. Normally prices do adjust to their old levels within a few days, maybe two weeks. I have only encountered one exception to that: t2 Nanofibers, they are dropping in prices across regions for nearly a month now.
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Bad Bobby
Ugly Toys
Zzz
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Posted - 2008.08.28 11:56:00 -
[3]
In many cases you will find that you can make more isk by dumping the stock and re-using the isk elsewhere than by waiting for the stock to increase in value.
Consider how much you can do with that isk over the time period you could potentially be waiting for. Consider also the possibility that you could re-use that isk many times over in that time period.
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Absimi Liard
Gallente
Confederate Miners Union of Eve
space weaponry and trade
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Posted - 2008.08.28 12:03:00 -
[4]
I don't like selling at a loss.
But I will if I am desperate for liquid ISK, and I usually am.
Of course I'm a manufacturer, so until I'm richer than God I'll always want more liquid capital. Damn traders with their margin trading, I'm hugely jealous.
-abs
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Confuzer
Polaris Project
Curatores Veritatis Alliance
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Posted - 2008.08.28 13:19:00 -
[5]
I never sell at a loss... so sometimes my orders are on market for more then 9 months. I even have one over a year now. But I don't really need the liquids so rapidly, as I have enough.
-----------------
Destiny is not a matter of chance. It is a matter of choice. It's not a thing to be waited for - it is a thing to be achieved. |
thetwilitehour
Cutting Edge Incorporated
RAZOR Alliance
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Posted - 2008.08.28 13:50:00 -
[6]
This is not really something anyone can answer for you, because the answer is both simple and complex. Simple because the answer is - you should do whatever costs you the least. Complex because you have to weigh the various factors involved. You have to determine how much ISK you are likely to lose in the selling of the item, than you have to determine how much ISK you would make by having the liquidity of selling the item at a loss, before the price goes back up on the item.
To wit
You bought widgets at whatever price. Doesn't matter. Widgets are now worth 10 million isk a piece, you have 100 of them. If you sold all widgets you'd have 1b isk. You would then make 400 million isk on the newly liquid isk before the price of Widgets rose to 14 million. So sell. If on the other hand you would only make 200 million isk before the price on widgets rose to 14 million isk, you should hold the widgets.
Yet again this boils down to opportunity cost.
Also, if you really care about acting rationally, you dont care what the price of an item was when you bought it, you only care what you can exchange that item for (isk now + profit on that isk, or more isk later) in terms of your current inventory everything else is water under the bridge.
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mynnna
Caldari
GoonFleet
GoonSwarm
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Posted - 2008.08.28 15:34:00 -
[7]
 Originally by: Bad Bobby
In many cases you will find that you can make more isk by dumping the stock and re-using the isk elsewhere than by waiting for the stock to increase in value.
Consider how much you can do with that isk over the time period you could potentially be waiting for. Consider also the possibility that you could re-use that isk many times over in that time period.
This is what I always figure. Dump it, eat the loss, move on. Remember, you're typically making 5-10% on any given item anyway, so if you dump something at a loss you're only losing 5-10% of your initial investment. Plus there's always the risk that the item in question will settle at the lower price for weeks or months.
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Shadarle
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Posted - 2008.08.28 15:58:00 -
[8]
It doesn't matter what you payed for an item. Why? Because once you have an item it is no longer worth what you payed, it is worth what it will sell for today. Yesterday means nothing, an hour ago means nothing, all that matters is now and tomorrow.
Unless you can predict the future you should sell everything as fast as you can, it's never a good idea to hold items just for the sake of hoping they might go up, because if they have gone down recently they are more likely to keep going down rather than to rebound.
You really shouldn't be trading massive quantities of any item if you don't completely understand the market and understand why the price is changing. You can too easily be caught with large stockpiles of an item that shifts like it seems you were. But if you decide to trade in such large quantities anyhow then you definitely have no business acting like it's such a bad thing to sell at a loss, that's the price you pay occasionally for trading the way you do.
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Clair Bear
Coalition of Nations
Free Trade Zone.
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Posted - 2008.08.28 16:00:00 -
[9]
Do *NOT* sell at a loss (unless you're hurting for the capital for a 'sure thing' trade). The #1 rule for making money is not losing money.
One strategy you may like: use a small portion of your stock to lemming down the price. Yes, down. Keep the price pressure on until your competition sells at a huge loss, gives up, or the price gets low enough that you feel comfortable buying them out and relisting.
They're feeling the same thing you're feeling. It's a game of market chicken. Or they're using the above strategy.
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Lexander Morinex
Caldari
LDD Investments
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Posted - 2008.08.28 16:04:00 -
[10]
I will mostly go with Shadarle on this one, though I admit I tend to not sell at a loss for the stupid reason I hate to record a loss. He is still right though, and I accept the truth of it even if I try to avoid it.
More often than not, when I end up with stock worth less than I paid it is because I was dabbling in something I didn't understand. I tend to trade in away from Jita, and for awhile I wasn't aware of the prices in Jita which were much lower on certain items. Oddly enough, I got stuck a few times when the local price dropped due to vendors bringing in supply from other places.
I fought those battles with old-fashioned price manipulation and was able to retrieve most of the losses and turn a profit. OTOH, I can't really argue it was worth the time value I put into controlling the market to assure that gain again. More often than not, I would have done better to 'short' my position by selling at a loss and then putting in buy orders for what I just sold.
- Lexander Morinex
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Clair Bear
Coalition of Nations
Free Trade Zone.
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Posted - 2008.08.28 16:18:00 -
[11]
Upon further thought, depends on what you're stuck with. How much demand is there for the item? Does the price graph look cyclical? Are the blips on the graph from people selling to buys or buying from sells? How many days worth of daily volume do you have?
If it's a 3 month cycle low demand item start bailing. If the current pricing dip is an anomaly and there haven't been any announced game changes it's not that risky to hold or even accumulate a bit more through buys.
You're not catching a falling knife here (I hope). If an item was in demand then barring game changes the odds of it being in demand again very soon are good. If you have a giant position of an item with a recently changed supply or demand -- take the loss, go on with your life.
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Shadarle
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Posted - 2008.08.28 16:30:00 -
[12]
If someone is asking on this forum what to do they clearly have no clue about the market they are in, thus it is not reasonable to tell them it depends on their market. They don't know their market or they wouldn't have to ask for help. Thus the default position that should be taken is to use a current value approach.
Advanced trading requires knowledge of the specific markets you're in, in which case it may in some cases be worth holding or even killing prices in order to rebound them in larger swings, but for the person who has to ask for help here that is likely beyond their ability/knowledge level. I used to do that myself all the time, I now realize it's much simpler to take a few losses and to write it off.
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mynnna
Caldari
GoonFleet
GoonSwarm
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Posted - 2008.08.28 16:32:00 -
[13]
Edited by: mynnna on 28/08/2008 16:33:02
Originally by: Clair Bear
Upon further thought, depends on what you're stuck with. How much demand is there for the item? Does the price graph look cyclical? Are the blips on the graph from people selling to buys or buying from sells? How many days worth of daily volume do you have?
If it's a 3 month cycle low demand item start bailing. If the current pricing dip is an anomaly and there haven't been any announced game changes it's not that risky to hold or even accumulate a bit more through buys.
You're not catching a falling knife here (I hope). If an item was in demand then barring game changes the odds of it being in demand again very soon are good. If you have a giant position of an item with a recently changed supply or demand -- take the loss, go on with your life.
Taking this position requires assuming that everyone else driving the market cares about the exact price just as much as you do, which is blatantly false. Someone producing an item that you bought at 200 and tried to sell at 210 before having it drop to 190 might not care much and could continue selling at 190, keeping the price there. After all, their production price is only (say) 170, they're still turning a healthy profit...why would they sit on their goods in the hope that they go back up, when they can sell what they have and use those profits to make more?
Course, then there's potential opportunity, but I think you get the point I'm trying to make?
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Lexander Morinex
Caldari
LDD Investments
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Posted - 2008.08.28 16:45:00 -
[14]
Originally by: Shadarle
If someone is asking on this forum what to do they clearly have no clue about the market they are in, thus it is not reasonable to tell them it depends on their market.
Shadarle,
This is where you and I end up differing. Just the other day you asked for assistance on a problem, and I think that people can come to this forum and ask questions. Newbie questions don't bother me.
The basic problem in mathematics today in America is that too many Americans can't do basic addition/subtraction/multiplication and division. Those that have mastered that are often unaware that the single most important thing they will ever be taught in algebra is taught in the first week. You can't master the big stuff until you have mastered the little stuff.
The willingness to focus on and reteach the absolute fundamental basics, the 'obvious' and easy stuff, is an important part of learning and doing. I have done my share of tutoring and I really believe that the willingness to spend countless hours redoing the basics is a key part of mastering the hard parts.
Your point about the value of something being what people will pay is a critical idea, and one that deserve a lot more attention than it often gets. Just because you or I get why it is true doesn't mean that others will. I support more teaching and answering of basic questions, not less. Just my feeling on that matter.
- Lexander Morinex
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SencneS
Amarr
Rebellion Against big Irreversible Dinks
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Posted - 2008.08.28 16:57:00 -
[15]
Edited by: SencneS on 28/08/2008 16:57:17
Originally by: SencneS
I post the following as an Individual and not a representative of EBANK, BSA, either of the organization's members or their affiliates.
Originally by: Emporia Tzard
When you have a stock of something and the price drops so low you're selling at a loss (something I have encountered occasionally in Jita)what do people do?
Well it depends on how much capital you have tied up for me. One thing I do consider is continuing to purchase and resell the item. Because you're buying a cheaper price, and selling at a slight profit on the items you just purchased you can reduce your losses.
As you gain profit on the newly traded stock, your loss on the old stock goes down. Eventually you'll end up breaking even, or even turning a profit. I've done this many times on complex reactions as they seem to go up and down without warning usually. Just keep trading the items and give yourself a little buffer.
Amarr for Life |
Clair Bear
Coalition of Nations
Free Trade Zone.
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Posted - 2008.08.28 16:58:00 -
[16]
Edited by: Clair Bear on 28/08/2008 17:06:03
Originally by: mynnna
Course, then there's potential opportunity, but I think you get the point I'm trying to make?
Another excellent point I missed. I almost never trade t1 items, I produce them.
Always look at the supply side. Is the item you're trading a limited supply commodity (named or faction gear, some t2) or can someone wade in and flood the market on a single day notice? Different strategies apply in each case.
Oh, and shockingly enough, I agree with everything Shadarle said re: knowing your market being fundamental to formulating a strategy and deciding on tactics. I disagree a bit on all the 'sell sell sell and panic' advice -- you're in a position, make it a good learning experience. Walk away having learned something about that market segment.
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Danari
Syncore
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Posted - 2008.08.28 19:01:00 -
[17]
Push it out the door as if you hadn't taken a loss on it. A small loss freeing up the capital is your best out.
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Shadarle
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Posted - 2008.08.28 20:51:00 -
[18]
Originally by: Lexander Morinex
Originally by: Shadarle
If someone is asking on this forum what to do they clearly have no clue about the market they are in, thus it is not reasonable to tell them it depends on their market.
Shadarle,
This is where you and I end up differing. Just the other day you asked for assistance on a problem, and I think that people can come to this forum and ask questions. Newbie questions don't bother me.
The basic problem in mathematics today in America is that too many Americans can't do basic addition/subtraction/multiplication and division. Those that have mastered that are often unaware that the single most important thing they will ever be taught in algebra is taught in the first week. You can't master the big stuff until you have mastered the little stuff.
The willingness to focus on and reteach the absolute fundamental basics, the 'obvious' and easy stuff, is an important part of learning and doing. I have done my share of tutoring and I really believe that the willingness to spend countless hours redoing the basics is a key part of mastering the hard parts.
Your point about the value of something being what people will pay is a critical idea, and one that deserve a lot more attention than it often gets. Just because you or I get why it is true doesn't mean that others will. I support more teaching and answering of basic questions, not less. Just my feeling on that matter.
- Lexander Morinex
My point was that if someone comes here asking what they should do with an item (but they won't give the specific item name) then it's kind of assumed they don't know the market for that item very well. If they did they wouldn't be here asking about it. Thus to tell them to act depending on their specific market is rather a futile exercise because they don't know their market. So you can most definitely attempt to go through a very detailed explanation of what to look for or contact them privately and ask for the item so you can advise them more. But to tell them to do something they clearly don't know how to do is not helpful at all.
I wasn't saying it's wrong to give advice, just useless to give advice way above a person's head. It's like if you told me to use a stochastic differential equation to solve my problem. It wouldn't help me one bit. I might have heard of it before but I wouldn't even know where to begin and I'd need an entire lesson on them first.
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Lord Fitz
Project Amargosa
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Posted - 2008.08.30 14:02:00 -
[19]
It really depends on what is causing the price of the item to go down now doesn't it. Is it a cycle because there is oversupply which will be turned off soon? Or has the cost to make that item dropped since you calculated your costs and so people will be able to make it cheaper than you potentially forever ?
When the new T2 ships were introduced the material costs spiked, and then began to fall very very rapidly, so much so that it's been almost a year and the sale and build costs are still far less than the peak they reached and if you held onto the items in question you would be making an even bigger loss than if you offloaded for a small loss at the time. Remember when holding onto things, there's always the possibility that the price could go down further and your small loss may turn into a big loss. It really does depend on what is causing the price of that particular item to drop ;)
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Shadarle
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Posted - 2008.08.30 22:11:00 -
[20]
Originally by: Lord Fitz
It really depends on what is causing the price of the item to go down now doesn't it. Is it a cycle because there is oversupply which will be turned off soon? Or has the cost to make that item dropped since you calculated your costs and so people will be able to make it cheaper than you potentially forever ?
When the new T2 ships were introduced the material costs spiked, and then began to fall very very rapidly, so much so that it's been almost a year and the sale and build costs are still far less than the peak they reached and if you held onto the items in question you would be making an even bigger loss than if you offloaded for a small loss at the time. Remember when holding onto things, there's always the possibility that the price could go down further and your small loss may turn into a big loss. It really does depend on what is causing the price of that particular item to drop ;)
All of what you said is right in theory. The reason for the price drop is crucial. But my point is that if someone is coming here asking what to do then they clearly don't know why the item is dropping in price or they'd already know what to do.
So unless the person wants to tell everyone what item they're trading then it's rather pointless to tell them "it depends on why it's dropping". It won't help them make a decision.
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Lexander Talonix
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Posted - 2008.08.31 00:31:00 -
[21]
Originally by: Shadarle
My point was that if someone comes here asking what they should do with an item (but they won't give the specific item name) then it's kind of assumed they don't know the market for that item very well. If they did they wouldn't be here asking about it. Thus to tell them to act depending on their specific market is rather a futile exercise because they don't know their market. So you can most definitely attempt to go through a very detailed explanation of what to look for or contact them privately and ask for the item so you can advise them more. But to tell them to do something they clearly don't know how to do is not helpful at all.
I wasn't saying it's wrong to give advice, just useless to give advice way above a person's head. It's like if you told me to use a stochastic differential equation to solve my problem. It wouldn't help me one bit. I might have heard of it before but I wouldn't even know where to begin and I'd need an entire lesson on them first.
Point taken. You are probably right, but it doesn't take away my innate desire to explain.
- Lexander Morinex
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Shadarle
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Posted - 2008.08.31 00:38:00 -
[22]
Originally by: Lexander Talonix
Originally by: Shadarle
My point was that if someone comes here asking what they should do with an item (but they won't give the specific item name) then it's kind of assumed they don't know the market for that item very well. If they did they wouldn't be here asking about it. Thus to tell them to act depending on their specific market is rather a futile exercise because they don't know their market. So you can most definitely attempt to go through a very detailed explanation of what to look for or contact them privately and ask for the item so you can advise them more. But to tell them to do something they clearly don't know how to do is not helpful at all.
I wasn't saying it's wrong to give advice, just useless to give advice way above a person's head. It's like if you told me to use a stochastic differential equation to solve my problem. It wouldn't help me one bit. I might have heard of it before but I wouldn't even know where to begin and I'd need an entire lesson on them first.
Point taken. You are probably right, but it doesn't take away my innate desire to explain.
- Lexander Morinex
I used to agree, until the 20th time the same question was asked and the person refused to go read the past threads or to look into the stickies.
Just like on the skills forum, people would ask about tactical shield manipulation every few days.
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Kazzac Elentria
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Posted - 2008.08.31 05:19:00 -
[23]
Originally by: Shadarle
Just like on the skills forum, people would ask about tactical shield manipulation every few days.
Speaking of repeaters, whens the new mineral price thread coming up now.. any day right? Its been a week. |
Pax Empyrean
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Posted - 2008.08.31 07:37:00 -
[24]
Sunk costs should play no role in your economic calculations.
If you think a good is going to go up in price faster than anything else you could do with the money you've got tied up in it, hold the goods regardless of what you paid for them. If you think it's going to go down, or not go up as fast as another opportunity, sell it. That's really all there is to it. Considering the price you initially paid for an item is pure foolishness.
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Svanna Gulmi
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Posted - 2008.09.01 15:40:00 -
[25]
I've been there many times, really you need to truly understand WHY the price is dropping! Once you know why, then you can decide what to do with your stock. Has it become less popular or has someones sales tactic pushed the market right down? Many people will simply work on a low margin even when there are 3/4 times the isk to be made! There is always a risk in trading to get caught out, but equally if you have the isk just just the stones to do it, you can turn this to your advantage!
Svanna |
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