Market PvP - Taking a loss

Sometimes traders worry too much about making a profit on every single transaction. They'll go to extreme lengths, trying to track the buy price on every single item they ever purchased and sell it at a profit no matter what. They'll cancel orders, buy out cheaper orders and transport items all over the map trying to prevent taking a loss.

It often backfires. The harder they try to avoid taking a loss, the bigger the losses get. For many reasons it's often better to just cut your losses by lowering your price, selling quickly at a small loss and moving on.

Market Adjustments

Sometimes the market just adjusts on it's own without any player manipulation involved. When there haven't been many big fleet battles for a while demand goes down for many items, trader's stockpiles grow and prices drop. When this happens a trader basically has 2 choices:

1. Drop his price and sell it quick (even at a loss) before things get even worse, or

2. Hold onto it waiting for prices to rise again (they usually do eventually).

Option 1 often means not making much profit or taking a loss. The advantage to it is you get your ISK back to reinvest quickly, whether in the same item at a lower price level or in another item with better margins. Normally the sooner you decide to drop something at a loss the smaller the loss is, while the longer you wait the more you tend to lose.

Holding onto items waiting for the price to rise again is fine if you're confident the price will go back up again real soon. Of if you're so rich you couldn't invest all your ISK even if you tried then you really don't care how long the ISK sits idle as long as you make a profit in the end.

Also, it often happens that the longer you wait to dump overstock the bigger the loss is. So not only is your ISK tied up (and not working for you) longer but you lose more in the end. The flip side is the faster you dump it the sooner you can reinvest the ISK and make back any (usually small) losses.

There are exceptions (mostly relatively cheap, high volume items) but in most cases I'd rather take a small loss than hold onto something for too long.

Beating the bots

And then there's player price manipulation, mostly from the no-lifers and bots. Eve has a lot of no-lifers and bots camping the market. They're always there, constantly camping, undercutting everyone else by 0.01 ISK, trying to corner markets and manipulate prices so they get all the sales. The higher the profit margin on a particular item the harder they camp it. Their goal is to gain "control" over the items they camp, drive sell prices sky high, buy prices into the dirt and get all the sales at ridiculous prices with huge profit margins

When moving into new markets I often find there's a bot "controlling" the items I want. I have to buy a few at unreasonably high prices before the bot reacts, prices and margins drop to reasonable levels. The nice part is I can usually sell a few well under his sell price but still at a big profit for me before he decides I'm competition and drops the price. Typically, the bot has it priced at 200-300% profit. I'll post at 100% cutting his profit by half or more. He thinks I'm just a 1 time seller and let's it slide without undercutting me at first. Eventually he realizes he has competition, drops his prices way down and I take small losses on a few before prices settle at more reasonable levels and I start making a profit again..

The thing to remember when that happens is over time he's 0.01 ISKed everyone else out of the market. He's pushed prices up so high and persistently undercut everyone else out of sales for so long that everyone else just gave up. That means he has a large stock that he paid quite a high price for (if buy prices were low other bots would be all over it too).

All you really need to do to break into "his" market is buy a few (sometimes even just one) at high prices, drop the sell price and keep it down. Buy prices will usually drop soon after, the bot won't be able to move his existing stock at a profit and stops trying to buy it all since he can't count on 200%+ profits anymore.

Conclusion

Many times when prices drop it's best to just take a loss, get most of your ISK back and reinvest it. Often in the same item at a lower buy price. So technically you lose on one transaction (or a few) but you make it right back on the next one(s).