Station Trading lessons


(Piotr Leusten) #1

I have a trading alt that has been active for several months now. The alt I’m posting as (Piotr) is primarily for combat/exploration, but also does passive station trading for supplementary income.

I feel like I’ve learned a lot about the ins/outs of station trading, and wanted to both share some of what I’ve learned, answer questions, and have a discussion about being a station trader.

First, the answers to some common questions:

Q. How much money can you make station trading?
As with so much in Eve, it depends – on the skills you have trained, the region of space you’re in, how much time you’re willing to devote to it, the strategy you’ve chosen, etc. Your mileage WILL vary, but here’s my experience just to give you an idea of what’s possible.

My primary trading alt is in Jita. When I first started out, I had to babysit my orders all day to make 100M. The competition in Jita is intense, and you’re lucky if your top price lasts 20 minutes. Often, it doesn’t even last one. It almost wasn’t worth it – I could make more money exploring or ratting, and those are more interesting than babysitting buy/sell orders.

Now he’s fully trained in the skills he needs, and I’ve picked a trading strategy that fits my play style. I’m also a programmer, and I’ve written a bunch of software tools that use the API to help me find profitable opportunities unique to my specific trading strategy. I can make 100-200M a day just by grabbing the opportunties my software finds and updating prices a few times a day. When I’m playing more actively, I average 400-500M a day.

The best single trade I ever made netted 7B, but that was a once-in-a-lifetime kind of event – my program found a lightly-traded item being sold in bulk for WAY below what I could make off of it, and I was lucky enough to find it mere minutes after it had been posted. Trades worth 10M+ are SLIGHTLY more common, but still rare. The vast bulk of my trades are much smaller, and rely on volume to add up to real money.

It takes money to make money. In order to sustain that rate of profit, I have about 3B in escrow and about 5B in assets waiting to be sold – either because the price isn’t right, or I’m trying to accumulate enough to make creating an order worthwhile, or I have to haul them somewhere.

My Piotr alt is based out of a secondary hub, where the opportunities are fewer and smaller but the competition is WAY less intense. He’s not optimized for station trading in any meaningful way, other than some social skills. He just has nothing better to do with his available buy/sell orders. He takes the opportunities my program shows him, but most days he updates his prices just two or three times. He averages 20M a day on trading.

Q. Will I enjoy station trading?
This is actually THE most important question. Station trading can be extremely tedious: The competition can be intense, and the actually gameplay involves a lot of clicking on orders to check them, and then right-clicking to modify prices if necessary. If that sounds boring, then don’t station trade. Find something you enjoy doing, and figure out how to earn the money you need doing that. You can make money doing just about anything in EVE; you will be much happier if you can earn it while having fun, rather than grinding at something you hate.

Truth be told, the most interesting thing about station-trading, for me, was developing the software tools I rely on. Now that I’m done with that, it’s a lot less interesting. Which is why I’m shifting my focus to this character (Piotr), and from now on will spend a lot more time doing lowsec exploration/ratting. I’m willing to earn less-but-still-sufficient money in order to do things I find more interesting than trading.

Q. What is the best trading strategy?
There isn’t one. It’s whatever works best for you, in terms of playing style, time investment, risk acceptance, what you’re willing to do and how well you understand the market you’re competing in. Here’s my take on each of the main strategies.

SCRAPMETAL REPROCESSING

Pros
– Least risky strategy
– Fewer people doing it

Cons
– Least profitable strategy
– Requires huge investment in skill training to max out
– Repro price is usually lower than the sell price, so buy/sell traders can price you out of the market if they want
– Repro value of an item isn’t obvious. It depends on your reprocessing skills, your standing at the station you’re in, the reprocessing efficiency of that station, etc. That makes it hard to identify the right items to trade in.
– Still has plenty of risk: you’re at the mercy of mineral prices, which can change quickly and hugely.

BUY/SELL WITHIN HUB

Pros
– Second least-risky strategy
– Lots of opportunities
– Opportunities are relatively easy to find
– No special skills needed. They help, but you can do profitable trading on Day One with an Alpha.

Cons
– Everyone can easily see the same data within the game; no third-party tools needed
– Thus, the most competition and smallest margins
– Buy/sell data can be misleading. Just because there seems to be a big spread between the buy/sell prices doesn’t mean that items are actually selling at those prices. So you may end up placing orders that never get filled. Or worse, buying stuff thinking you can sell it at one price, then discovering the price has fallen when you’re ready to sell, leaving you stuck with overpriced goods.

BUY/SELL WITHIN REGION

Pros
– Better margins and more opportunities than only buying/selling within a hub
– Less competition for more-distant opportunities

Cons
– Have to be willing to go get the stuff you buy (or haul stuff to sell at distant stations). So now you need a freighter, plus the skills to fly it efficiently, plus the time spent going back and forth. Plus the risk of being ganked.
– Need the funds for a large escrow, because you will be buying things that will sit for awhile until you haul them to their sell point.
– More price risk. The item you buy 10 jumps away can’t be put into a sell order until you go and get it, meaning more risk of the market for that item changing in the meantime.

BUY/SELL BETWEEN REGIONS

Pros
– Generally the largest margins
– Lots of opportunities
– Little competition

Cons
– Opportunities not findable within the game; requires third-party tools
– Involves a LOT of hauling, with all the attendant time commitment and risks
– Requires the funds for a very large escrow, because items may sit in neighboring regions for a long time until it’s worth it to go get them
– Even more price risk, due to the longer delay between buying and selling

Q. How should I pick a trading strategy?
Ask yourself the following questions:

  • Why am I trading? Is this your main interaction with Eve, or a side activity?
  • How much time per day/week am I willing to spend trading?
  • Where is my risk/reward sweet spot? The more risk I take, the more money I can make, but I can also lose money, sometimes lots of it.
  • What is the smallest profit margin I’m willing to accept?
  • How many skill points am I willing to spend on this?
  • Am I willing to haul things?
  • What sort of market information do I have access to?
  • How many orders do I want to manage? When buying/selling, you usually have at least two orders for each item: a buy order, and a corresponding sell order. You have to manage each one. Then there are tactical considerations, such as “two buy orders on the same item lets me immediately respond if someone outbids me.” But now you’re managing three or more orders for the same item.

Now for some deeper dives into various aspects of trading, along with a “Lessons Learned” section:

ORDER COUNT
IMO, one of the most important considerations is “how many orders do I want to manage?” Train the right skills, and you could have hundreds of orders available to you. This comes in handy if you want to be broadly invested: buying/selling 150 items can generate far more profit than buying/selling 15 items. Just remember that every order you have needs to be managed, and that takes time and attention. If you have 150 orders, and it takes 5 seconds to update each one, it will take you more than 12 minutes each time you go through your orders. That’s a lot of clicking.

If you don’t want to spend your entire day managing your orders, there are three main options:

  • Limit yourself to whatever number of orders you feel like actively managing, and accept that you are choosing to earn less money in order to spend less time trading.
  • Invest in hundreds of items, but only update orders once or twice a day, counting on volume to make up for your lack of minute-to-minute competitiveness
  • Invest strategically, picking items that sell cyclically or otherwise tend to burn through large numbers of orders from time to time. Set your price at something you think will sell, and then forget about it. If your price is reasonable (say, near the long-term average sell price for that item), it will eventually sell. This approach requires a LOT of patience and deep pockets, and it’s not necessarily easy to find items it will work for. But it’s the least labor-intensive way to trade.

Me, I decided that I didn’t have time to manage hundreds of orders, nor the expertise/patience to invest strategically. So I developed a trading strategy that lets me focus on a small number of profitable orders. I make less than I could, but my time investment is reasonable.

PLACING ORDERS
When you place an order, you pay a broker fee up front. It starts at 3%, and you can reduce it to 2% through training and standing improvements. 2% may not sound like much, but on large orders it can add up to millions of ISK. You also pay the broker’s fee when you change your order – in such cases, the fee is based on the difference between your old price and the new price. So if you place an order for 1M ISK, you’ll pay the fee on 1M. If you then raise your price to 1.1M, you’ll pay the fee on the additional 100,000.

Keep this in mind when planning your orders. Don’t dive into a new market with a 10,000-quantity order. If the item doesn’t sell as fast as you think, or someone responds to your order by raising the price so high you can’t make a profit, you face a choice of either canceling your order (forfeiting the fees you paid), leaving the dead order in hopes the other order will eventually sell out, or raising your price to compete (and paying a huge amount in broker’s fees again).

Use small orders to test a market, and go big only when you feel you understand it. Even then, you might want to use smaller orders (500 or 1000 quantity, say). That way your up-front cost is smaller, other traders won’t necessarily see you as an existential threat, and you can bail out of the item at minimal cost if it comes to that.

Also, don’t be bloodyminded. Some traders keep an order alive until it completely sells out, because they don’t want to “lose money” on broker fees. But that attitude costs you money in the long run. If you have the top buy order with a remaining quantity of 15, and someone sells 200 of that item, you get 15 and another trader gets the remaining 185. You didn’t waste any of your broker fee, but you missed out on a huge profit opportunity.

My rule of thumb with buy orders is to cancel an order and re-up it when the quantity is down to about 5% of the original amount. So if my original order was for 1,000 quantity, I’ll cancel the order when the quantity falls below 50, and then create a new order at the same price for another 1,000. You should adjust this based on how fast the item in question sells – you can wait longer on slow-selling items. But don’t be afraid to cancel a small-quantity order so that you can be sure of capturing the next large sale that comes along.

LESSONS LEARNED

Don’t be in a hurry. You will lose WAY more money by fat-fingering a price then you will lose in a few seconds of missed sales. Take the time to confirm a price before clicking “OK”. Pro tip: If your cursor is in a price field, hit “Tab” after entering your price. The price will auto-format with commas and decimal points, making it easy to check that you entered it correctly.

Check the price history of an item before deciding to invest. The most important thing to check is volume: does the item actually sell in any reasonable quantity? Also check the number of orders, to make sure the volume isn’t the result of one big order, which could be a unicorn you never see again.

The actual min/max price values are more or less useless, because CCP removes what it considers “outliers”, so it may look like nothing sells for the buy price when in fact it sells quite robustly.

You’ll have to learn by experience how to judge whether a buy/sell price is likely to produce sales. The main factor tends to be “is this an item players buy to use, or an item players acquire and want to sell?” Take ammo, for example. Players need ammunition, and lots of it. So ammunition sell orders generally sell quickly, and at decent prices. Buy orders for ammo tend to do less well, except for the low-end ammo that players acquire from NPCs through missions and ratting.

Train daytrading skill to at least Level 2. That lets you modify orders while away from the station. Without it, you’re either stuck in the station all day, or your orders quickly get pushed down the queue. WIth it, you can multitask – managing your orders while running missions, for example. For additional functionality, train the Marketing skill. It lets you place remote buy orders, so if your order gets filled you can place another one without having to return to the station.

Make sure your competition is actually competition. Often times you’ll see a bunch of orders in a trade hub, and then an order with a much higher/lower price at a distant station. Unless the range on that distant station’s order reaches where you are, you can usually ignore it. 95% of selling/buying activity takes place at hubs; that distant order is not going to steal many sales, and if you try to beat it your profit margin will go way down.

In other words, don’t be this guy, unless you have another reason for setting your buy price so much higher than everyone else:

That’s it. Feedback/discussion appreciated, and I’ll answer questions as completely as I can without compromising my trading strategy.


Im starting station trading
(Dravick Afterthought) #2

Thank you for that, fascinating stuff.


(Tipa Riot) #3

Nice read, but don’t forget to offshore your buy orders to spare the 2.x% broker fee.


(Nunosh) #4

Nice post. I also “love” those traders that increase their bid as you show, or on a sell order they offer so low that after fees they get less than if they dump directly to buy order.


(Piotr Leusten) #5

Definitely something to consider. For myself, while saving 2% on buy orders is nice, I find the convenience of operating out of the hub itself to be worth the price. Plus I don’t have to worry about the citadel getting attacked, or access being revoked, or the owner raising broker fees.


(Tipa Riot) #6

I‘m glad many traders decide this way :stuck_out_tongue:

Issuing buy orders with almost no costs has other advantages …


(Piotr Leusten) #7

LOL

Agreed. It just hasn’t been a big issue for me, and I compete against citadel-based buyers.


(Imustbecomfused) #8

i make that 400-500 mil in an hour running wh sites… lol nice post but not sure trading is for me. :slight_smile:


(Magnus Witchspace) #9

My current side income is to sell mission loot in big lots about 5 jumps away from a trading hub for 5-10% above the market rate. Folks will buy from me to save 5 jumps.


(Piotr Leusten) #10

That’s great, but of course not everyone has the skills to run WH sites, or safe access to WHs.


(Piotr Leusten) #11

That works, but I would think that things would take a lot longer to sell. Or is the system you sell in busy enough that it goes pretty fast?


(Imustbecomfused) #12

and not everyone have 8 hours a day to sit in a station upping my orders by one penny till I make enough to plex the account… its actually just as frustrating as plexing via ratting… which is why I have to take breaks from eve. Its a ■■■■■■■ job. lol. and that is ALSO why I tend to play other games now. pay2play isnt really my thing anymore x8 accounts… lol

Ive tried trading, made some isk, lost a little but too here and there learning some tricks and whatnot. misrepresentation is the key… and as soon as I seen it in the markets I seen it in the subscription theme too. I just feel kidna taken too far and there isnt that much reward I get from Eve that really justifies that cost/time. Given a few exceptions but still, I just get bored with trading and dont make enough to make my ends meet and requires too much time, where it actually takes away from my real life fun. So I didnt really win from the trade lifestyle.

The ratting in wh was a goal I set years ago and have finally achieve where I want to be. Now that I have a sense of perspective with the experience and how Eve is played, I just cant justify it much anymore. investment vs reward thing.

Im well aware you can make great isk from trading, but it does take a bit of capital and time invested. Like most things. :slight_smile:

Eve is more of a lifestyle. Not really a game, imo. And I will likely play for a long time, just not so intensely as I used to. which isnt helping ccp much pay their bills but they have many subs. so it matters not.


(Chainsaw Plankton) #13

I have a few orders that have historically made me good money that I update maybe daily or every few days. I mostly put up big bulk orders Typically ~1bil per order, most of them I just let sit, maybe update once a week or even month. Some even less, I have my orders sorted by time left and if anything gets under 30 days I usually update. They are priced where I pretty much know I’m going to make money, worst case prices shift and I ship it off to a smaller hub and just leave it there.

Then there’s the speculation side, can make way more here. Buy under used stuff that’s about to be in demand, CCP announces abyssal deadspace go buy up a bunch of popular cruiser mods. I’ve been flipping RF cap batteries for months, I had 100s stockpiled when abyssal deadspace launched. Also faction/deadspace medium reps, 10mn/50mn prop mods, and some other things.

I make a bit less running burners, but it just feels like running around for crumbs and I hardly ever run them anymore. My trade/industry side hit critical mass and I can log in update orders, start jobs, and make more in less time than active grinding. Took time to research things, make some spreadsheets, and build up enough isk that I could effectively trade. But now that I’m there it’s mostly just easy money.


(Magnus Witchspace) #14

Yes, it takes time, but it’s a passive income that I set and forget while I’m having fun.


(system) #15

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