Thursday, October 9, 2014

Market Manipulation

A couple of months ago I indulged in a little market manipulation. It stemmed from a need my corp had: we were producing a wave of cheap hull-tanked Catalysts to help in our conquest of the entire Gallente/Caldari warzone.  The key ingredient was the Small Transverse Bulkhead I rig, which, despite only costing 100K ISK to make,  cost about 500K at all the major trade hubs, thus making the ship more expensive than we'd like.

I offered to make them at cost for the corp, a nice way to help Aideron out after all the enjoyment and free jump freighter services I've been given. I bought 10 BPOs, bought the materials started churning out about 400-800 a day.

Why so many? I wanted to also see if I could reduce the price at Jita, and perhaps at the other trade hubs, although I wouldn't go to those directly. It's a really useful rig and hull-tanking is the flavor of the month, so I'd like to see if I can push the price down and get the existing sell orders, and new sell orders to come down to my level.

If I make my sell orders too cheap, and too small in number then people will just buy them and re-sell them at the prevailing higher price. My sell orders need to be too big to ignore and too big to casually buy out.

On the first day at Jita, with my 400 rigs in hand I'm looking at the market. There are two sell orders of 500-600 rigs each at 394K and several buy orders offering about 200K each for 100 or so rigs.  I decide to put up a few sell orders at 225-250K to see what happens. They're snapped up immediately...nice for my wallet, but I need the orders to stay around.

The next day I start higher, listing my rigs at 350K. One of the other big sell orders comes down from 394K to beat my one! The market is moving!  I add more sell orders at 299 and 259, and also fill the the buy orders that were offering 200K. I add a buy order of my own at 100K. I'm trying to create the perception that the rig wants to cost between 100 and 200K, not 200-400K as it was.

Dawn comes and I list 160 rigs at under 179K. By this time, other sellers have been joining me at these levels. zKillboard lists the average market price at 299K. That evening I post another batch of 200 rigs at 138K...there are two good sell orders at 169K. I fill the remaining buy orders and, just to see what happens, put up a buy order for 200 rigs at 75K -- well below the cost of making them.

A wild large order appears, right where I want it.

Then the whale arrives.  Somebody lists over 4500 rigs at 138,599 ISK.  That's a huge order and if it doesn't move, that will lock the market down for a long time. Perhaps the drop in price worries them and they just want to get their stock's still a 30% profit, after all. zKillboard reports the average price of the rig, not surprisingly, as 138K.

Trying to keep the market low

Interestingly, this is only happening at Jita. The Rens/Hek/Dodixie markets are staying at 300-400K. I'm surprised that no enterprising space trucker hasn't bought our Jita stock and flown it to the other hubs yet.

I think that's what victory in market PvP looks like, though it is much easier to drive the price of an item down than up.

September 3rd
We don't need the price of this item to stay low any more, so I'm going to stop pushing it down. I'm curious to see if it will go back up again. If I stop undercutting that huge order (now around 2800 units) he may feel its safe to raise his price, which should drag the market back up again.

September 9th
After a few days of not forcing the price down, it has returned to the 500-550K mark. My hopes of getting rich quickly have faded, however, since the rig is selling quite slowly. C'mon people, hull-tanks! HULL TANKS!

September 19th 
Competition on this item has been fierce and the price got pushed down rather quickly. We're at 229K, but since Sept 9th I've sold 795 of them at Jita for a total of 318.9M, yielding a profit of 239M. I'm continuing to sell these to corp-mates in Fliet on contracts for 110K each, in sets of 30.

September 29th
In the last week the price has kept swinging between 225 and 550K. It started with a surprise overnight buyout that cleared out all the available stock under 500K, leaving me with a smile and a steady stream of high profit sales. But the price has been gradually pushed down to a mere 220K. That's still a 100% profit, though, which I'm happy to take any day, especially when I can so easily obtain the ingredients to build the item at Jita. The extra cost for building there is only about 10K per item.

October 9th
The price has stayed low and seems like to stay there. You can continue to track the price here, if you're interested.