Difference between revisions of "The Basics of Trading"

Revision as of 06:26, 14 March 2009

"What is best way to trade? Buy low and sell high, of course!" - Anonymous Trader
"Every [trader] needs to master three essential components of trading; a sound individual psychology, a logical trading system, and good money management" - A. Elder

Introduction: Why Trade?

Trading is one of the highest income activities in EVE. All ISK-making activities naturally have a cap on their hourly income. For activities involving harvesting game's resources, such as NPCing and mining, this cap is typically somewhere in the range of 10-30 million ISK per hour. Trading obviously has its own limit, as you cannot generate unlimited ISK/hour, however it does offer a much higher cap per same time and effort when compared to other ISK-generating activities the game has to offer. It is also one of the less time demanding occupations in EVE and can be made as risky or low risk as you would like it to be. And what's more, trading generates ISK even when you are not playing the game. You can be sleeping or on vacation and ISK will be slowly seeping into your wallet.

Given the above, why doesn't everybody in EVE trade then? The answer is simple: not all players find it fun and not all players become successful at it. Being a successful trader who finds trading to be continuously engaging and interesting requires a certain mindset. Some players might find mining relaxing, while others find it excruciatingly boring and frustrating, and similarly not everyone enjoys trading. As you start experimenting with it, keep in mind that it is only a good way of generating ISK for as long as you're having fun doing it.

"Buy Low, Sell High"

Every beginning trader seeking advice on how to trade the best will eventually encounter a response that goes something like "buy low, sell high". However, this response only springs more questions to mind. Buy what? Sell where? What is low? And what is high?

Amateur traders may seek answers to these questions from their friends, corpmates, or post make threads in market forums. My advice: don't. It is highly unlikely that a successful trader will reveal their trading secrets to you because ultimately you will turn into a competitor. Trading is unlike other forms of generating ISK in that it can be done completely solo. Unlike mining, running missions, maintaining a POS network, exploration, or ratting in 0.0 space, trading offers very little incentives for group play. As such, the mindset of a regular trader is that everyone swims through the murky waters of market on his or her own. In summary, it is highly unlikely that you will receive good advice from other players on trading beyond the generic and/or outdated ones.

If you would like to find some worthwhile opportunities to make ISK trading, you have do the homework yourself. There is no easy way around it. Spend a few hours doing market research and read guides posted on the subject. Take a peek at EVE's market forum, try to pick up some tips and hints from success stories of other traders. In essence, the process of buying, selling, and hauling goods is not very difficult. It is seeing opportunities to buy/sell at a good profit that is an art.

How Can I Start Trading?

Remember Nike's advertising campaign "Just do it"? Yeah, that's about it. The best way to learn something is by experience. This is true for pvp and it is true for trading. Do a bit of homework then just start experimenting. Eventually you will see certain patterns and figure out what makes you the most ISK.

Types of Trading

This section deals with "what to trade" type questions.

Even though trading everything will make you gazillions of ISK, since your play time is limited and it is difficult to remember prices of hundreds of different items, you will have to pick one or a few areas of specialization. Here are a few of them listed:

• Trading NPC goods. This is the most basic method of trading that many newbies start out with. NPC trade goods sell in the "Trade Goods" section of the market. NPCs set up sell orders and buy orders for these at certain price differences that can be exploited to make profit. The down side of this type of trading is that it requires hauling stuff often between two different regions, which is time consuming. The price difference also changes, slowly decreasing as more and more people find out about trade route. Eventually a trade route gets extinguished and traders who have been using it have to find new ones to continue making profits. In empire this activity is very low pay generating at most may be 10 million ISK per hour. However the more risky the route is, the more profitable it can be: Making 2.2 Bil ISK a Day via NPC Route

• Trading modules. For anyone who has ever lived in a region where NPCs do not drop the racial items needed to fit your ship this one becomes apparent right away. While T1 non-named and T2 modules can be produced anywhere, named goods are often lacking in regions where they don't drop in missions and belts and can be resold in these places for a markup. You can also trade T1 and T2 modules between two trade hubs if you see there is a good discrepancy in prices. There are usually good profits to be made if you haul your items to places where little or limited manufacturing takes place, such as 0.0 stations. Modules can be successfully traded via buy/sell orders as well as private bulk contract with producers.

• Trading ships. Ships unlike named modules, do not come in named varieties dropped by NPCs. Their trading patterns are similar to that of T2 and non-named T1 modules that can be produced on site. Unlike modules, however, ships require significant investment in ISK, as one T1 cruiser hull already costs 4-6 million ISK on its own. Also unlike modules ships are best traded by establishing contacts with the producers who often don't want to bother with hauling them to trade hubs and then sitting there watching sell orders.

• Trading POS fuel. EVE universe is hopelessly littered with POSes and each hour every single one of them consumes fuel. Those players who have no time or means to go to a major trade hub to purchase POS fuel will often pay a nice markup to have it readily available in vicinity. POS fuel gets especially consumed at fast rates in places where there are POS wars between several alliances. In addition, each region features ice that can be refined into fuel that can fuel towers of the race that holds sovereignty in that space. So for example if you have a Gallente tower in Amarr space you won't be able to mine local ice belt for fuel. All local ice would refine into helium isotopes such that you would have to buy imported oxygen isotopes.

• Trading implants, rigs, skill books, blueprints, GTCs, etc. Just like modules all of these items can be bought and resold at a higher prices in places where they are lacking and demand is high. There is a decent demand on rigs, implants, and skill books in 0.0 space. Blueprints originals and copies can be resold on contract system just like any other item.

• Trading via Sell Orders Forum. Anything being bought/sold over Sell Orders forum can be traded for a profit; sometimes some exceptionally good deals can be found there. The trick is being able to sift through all the information in the shortest period of time. It is usually the more experienced and advanced traders who know their prices who benefit from using this forum the most. Amateur traders can get quite lost among all the threads posted there.

• Trading through contracts. Contracts sytem is an alternative system to selling and buying items that cannot be sold on regular market, such as rigged ships, Cosmos, faction, and officer loot, and various items such as Apotheosis shuttles and snow ball launchers. Just like on regular market, there are certainly good deal that can be found on contracts. In general, however, contracts trade requires considerable investment because items sold over it are not cheap.

• Trading characters. Unlike other ways of trading this one requires input of real life money. When you sell a character, you have to pay 20 in fees in order to transfer it from one account to another. However, it is not much of an obstacle for those players who already sell game time codes for their ISK. With character trading it is possible for example to resell a char for 1 billion ISK profit thus paying just 20 for 1 billion ISK.

• Keep in mind that anything in EVE that has an ISK value can be traded for profit. If it is not listed here it does not mean that you cannot buy and resell it for more ISKs.

Where to Trade

There are many locations where you can do the "buy low, sell high" trick. The best way of learning pros and cons of each location is by experimenting.

• In-Station Trading. Perhaps one of the most common and laziest ways of trading. Using this approach, you don't have to undock or haul anything - just set up buy orders in same station that you are docked at and once goods drop resell them for a profit.

• Intra-Regional Trading. Trading within a region can be accomplished by setting up region-wide buy orders. Once a month items dropped to such buy order can be picked up and sold for profit at the main trading hub in region. You can do the hauling yourself, or alternatively outsource it via courier contracts to other players.

• Inter-Hub Trading. Trading hubs are systems with large populations of players who consume goods off the market at decent rate. Such systems can be mission running or factional warfare centers, or a populated 0.0 system. Most regions have one or more trading hubs and there is usually a price disparity between them such that goods can be traded between for a profit.

• Inter-Regional Trading. Each region offers some resources that other regions do not offer. The demand for these resources in those other regions fuels inter-regional trade. For example, you can buy hybrid weapons cheaper in Gallente space where rats drop them and resell them for more in Amarr space where rats drop only lasers. Common items to trade in this way include named modules, faction ammo, and pirate implants.

• Inter-Sec Trading. This is trade done between two systems of different security status, such as trading between highsec empire trading hub and a lowsec or nullsec system. In general, inhabitants of 0.0 and lowsec do not want to come out to highsec to ahop as this is accompanied with a certain measure of risk and it also takes them out of pvp gangs. Thus they will pay more to buy goods locally. This is especially true of 0.0 alliances that have several wardecs and that do not have good industrial backbone.

Tracking Income

Analyzing Market Graphs