Tuesday 5 November 2013

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.


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).


  1. You wouldn't happen to be a professional share/currency/derivatives trader would you...? You're suggesting the traders mantra almost spot on... cut your losses short and let your profits run!

    Nice post.

    A question for you - have you ever found what you think is a market bot in a region that doesn't have a main market hub in it? I can't say I have at any significant level, at least not enough to drive me away.

    1. Oursulaert was very heavily botted when I had a trader there months back. Ichoriya has some too though they don't cut so frequently as to be easily noticed... But just try selling oh say, Tengu Subsystems and you'll soon realize they're there.

      Many of the other secondary hubs are like Ichoriya. They have bots but the bots are trying hard not to be too obvious.

      From what I've seen a lot of bots seem to be configured to cut every 5 minutes until they cut 3 times in a row. When that happens they'll stop cutting for 1-3 hours before starting the whole process over again.

      The botters seem to have decided that cutting every 5 minutes more than 3 times in a row flags them for CCP attention so they won't cut more often than that.

    2. I think you'd be surprised how many of those bots are not actually bots. I often mine and watch TV, and while doing that have the time to 0.01 my orders constantly. At the end of the day, the more exposure at the top of the market pile I have, the faster my transactions cycle.

      You are right though that cutting losses is a good idea. That's along the same lines as bad long term investing. Like the Gnosis. A lot of people have been stocking them at 60m, with the expectation they will go up to 90m in a few years (which they won't but that's another story). What they don;t consider is how much they could make if they invested in faster cycling lower margin trades.
      I'd rather make 5% 10 times than 50% once, and in a few years? You could easily make 5% more than 10 times.

    3. Not really, when I say "bots" it's often just short for "no-lifers and bots". I'll say "no-lifers and bots" once or twice in a post and just "bots" the rest of the time.

      Then again, I think most players would be surprised by how many of those "no-lifers and bots" actually are bots.

      As for the rest, I couldn't agree more. You definitely get it!

  2. "The higher the profit margin on a particular item the harder they camp it."

    Interesting that you say that, because I've found the opposite. In fact, I would say that the higher the trade volume, the harder a specific item is camped. I trade only in the big hubs, so maybe it's different out in the regional markets, I don't know. But for many high-margin/low-volume items like faction mods, I've found there are surprisingly few "bots" and many more once-a-day traders.

    1. Yeah the campers are all over high volume items too.

      Another way of putting it is the higher the volume or margins an item has, the more campers it attracts, and the more obsessively they camp it. The worst camped items tend to be the ones with both high volume and high margins.

      Yes the high margin, low volume items tend to have fewer bots but all it really takes is one.

  3. Have you ever encoutered people who do not "station trade" but "region trade" in your markets? I have seen some in mine. Buyout a compleet region, relist the whole region with a 200% (or more) increased price and hope for a good margin that covers the end sales.

    I think you need a very decent wallet to keep this up. Undercutting such a person can be fun though, in The Citadel I got a buyback offer by such a person. Its double profits :D.

    1. Yes, in fact I mostly use regional buy orders. I don't buy something out and relist it for more very often though. That's mostly a camper game (in high volume items especially) and I don't camp.

      Buyback in The Citadel? When and on what? It might have been me. When I first started working The Citadel there was some fairly intense market PvP over a number of items. Some of them adjusted sharply downward as a result and I know I sold a few items for less than I paid. ;)

    2. Also, when I first started I was big into best named meta items and I used to see others try that with metas quite frequently. I'd drive the price right back down and wall it off so if they bought me out too it was going to cost them. =)

    3. It was in the Tech I ammo market, but it was about 400 mil isk, for some traders thats small patatoes, but since that was about 20% of my NW at the time, it was really fun.

    4. I made a mistake once buying a stack of what I thought were way underpriced Dread Guristas Torpedo Launchers but turned out to be way overpriced Dread Guristas Torpedoes instead.

      That was a 400 mil mistake and back then it wasn't small potatoes for me either.

  4. I can't agree more - recycling your ISK will often recover your losses faster than holding out for a profit. And these sell orders that are holding out for more can just gather up taking valuable sell order slots and generating a zero return.