Friday, April 24, 2015

Trading update: Liquidating assets and restructuring business

If you have been checking my blog occasionally, chances are you remember my plan to grind standings for extra trader characters and I did so by going fastest route - doing awful cosmos missions. I already had 3 active traders with "ok" standings. Though after finishing all skills, I kept creating new characters in same accounts and kept training trading further. As I was midway skilling my last characters, I decided, that if I ever seriously was going to use those traders, I would need better standings.

After grind was done I did not really do anything. My plan was put on hold and I have not been doing much of trading at all. I was reading forums and looking to join a new pirate corp instead. Now, that my craving of being an asshole in lowsec has been somewhat satisfied by smartbombing pods and interceptors, I decided to check my trading stuff.

Dealing with stagnation

It was the usual story. A lot of assets sitting, a lot of orders gone and a lot of orders so far outdated that you have to scroll to find them. It was the same list of items that I am used to, it was the same way of method updating them. I looked at it with despair and asked myself: "is this kind of trading life I want?". And it was then when I decided it was a time for a change.

I said fuck this shit and decided to review my portfolio. Unfortunately, I am not aware of good program to help me give good profit statistics based on items in a nice way, consolidates between multiple characters and stations. Closest I have been using is EVE-Mogul, but even elite subscription doesn't feel fully satisfactory. I had initial ideas to have one set of characters to trade implants and another - deadspace mods. It looked nice in theory, but then I started thinking from practical side. I was not updating my traders frequently. Usually once a month or once every two weeks at best. Doubling characters, and therefore, number of orders I handle, would not make me update more frequently. I decided to take a different approach. Why not combine best of both? There are nice items to trade in implant section and there are also nice items in deadspace and faction categories.

New trading strategy

Since I have 3 accounts and each account has 3 characters, long term is to have 9 traders. 3 are fully functional with good standings, another 3 are fully trained with good standings, but not yet used, and finally, last 3 are finished with skill training, but without standings. So my new strategy will include Tier 3 system. The current traders will be my bread and butter, a Tier 1 trading circle. They will trade my handpicked items, that have best volume movement and high price ratio. Of course those items usually have more competition, but I am not much bothered by it. I do not mind market pvp. I found that high volume and high competition items still beat unpopular ones. These traders will be updated most "frequently".

Tier 2 traders will take the handpicked list of items, that are quite attractive, but not the best. A lot of items I trade now are Tier 2 items, because I kept away from most popular ones when I started trading. I am very curious to see how Tier 1 and Tier 2 will compete in profit. I will try to do an experiment and update them at the same intervals and get the feeling what items are my actual bread and butter. I expect it to be a mix. In any case, market is alive and situation changes, so there is no win recipe. Diversification is my best bet. Instead of swapping and rearranging my item list based on trends, I will be a small part of everything and see global picture. I'm not saying this is best approach, but it's my way. I may change up or quit EVE overall. Hahaha...(desperate laugh, knowing no one ever really quits EVE).

Tier 3 traders will take handpicked items that are not so attractive. Low volume, high price goods. Usually with little competition. These will be updated rarely, only after I see a lot of orders are filled in and are in need of attention. I am also not 100% decided on the list. Instead of taking underdog items, I might go for something different, such as manufacturing goods, or cheap, very high volume stuff, or ships. Who knows. If I won't grind my taxes down, probably high competition items will not be an option.

Handpicking the items

Market is huge. Your ambition can be very easily killed once you start browsing items. There are so many. You can't take everything. Not at least without serious time dedicated. I try not to get distracted and go through all implants and deadspace/faction mods. Yep, every single one of them. Instead of trying to figure out how to extract eve market API data and write a script to process data for me, I do it old fashioned way - by clicking on each item and taking a look at trading history. Then I make judgement call if this item is Tier 1, Tier 2 or Tier 3. Last category were "useless" items, that are either so cheap that profit per item will never be big enough (also with low-medium volume). Or items that have 0-3 sales in Jita and generally considered not worth the time investment to update their orders. 

So I started going through list and did categorization. My goal was ~120 items. That means I can have 240 unique active sell/buy orders, plus multiple sell/buy orders for some items. I found that 120 items is good balance between my health, time investment to update orders and profit. Besides, organizing items by Tier 1-3, I also kept my current used standard and organized them by price. It's quite handy to also see which items to focus on in case I do not feel going through full list. Usually I give priority for most expensive ones that cost 100+ mil.

This activity took some time. I did it whenever I felt like it, without trying to keep any self imposed goals. It's a god damn game and I might as well not stress myself. Even trading is hideous activity, I have love-hate relationship. I hate activity, but low the idea of playing the market and making isk. Also, setting which Tier item should be was not that obvious. I ended up with 300+ items in Tier 1 group. It was very difficult to keep a cold, fact based mindset, by moving some of my favorite items, that I have been trading forever to Tier 3 or "useless" folder, knowing full well I might not be trading them anymore. Process was slow. Each time I thought "now I have a perfect list and with no more room to cut", I turned out to be wrong. I went through multiple times through same items, trying to decide which ones to keep in Tier 1. Same was with Tier 2 list. Most items from Tier 1 traveled to Tier 2 and then I had to do same thing again, combing Tier 2 for items to move to Tier 3. It was fun.

Liquidating the assets

Picking items was only half the work. Before I started with portfolio selection, I have put all my assets for sale. First step was to get rid of a lot of accumulated stock. Way too much, but that is what you get for not updating orders frequently. Setting multiple level buy orders, thinking "price for sure will not go so low", only to find yourself selling at a huge loss due to market swing that happened. I have put up all my assets for sale. I also recalled my Rens and Hek traders. They were updated very infrequently. Even volume movement is low, they still brought in some profits. I had a lot of items in stock that needed liquidating, so I transported everything to mother of trade hubs - Jita.

While I do not dump everything to buy orders (that would be stupid), I put everything for sale, multiple level sales orders. And I cut deep. Some items are enough to satisfy week of consumption in Jita. Of course that is not the smartest move, but I chose a middle ground between liquidating assets fast and a loss. As expected,  market prices for some items went down. Especially for items that do not have big demand. Instead of waiting months to clear my stocks, I wanted to start fresh and restart my activities. That meant, not having a lot of active orders and make room for the new list. All my purchase orders were cancelled and I've put sell orders roughly for 200 billion. 50% went out first few days and remaining will take some time to liquidate. Another 20% went out after I did a big cut in prices. I will try liquidate up to 200bil to restart my trading.

The goal is not only to have space to place orders for new items, but also a capital. To trade in most expensive items you need a lot of capital. And I am not talking of posting 1pc orders. I have no time for that. Sometimes I go 5 pieces for 500+ mil items.  So as you can imagine, I will need ISK and try to keep a healthy balance between liquid isk within 6 accounts and stock. And speaking of stock, I have a bad habit of keeping stock of some items and not letting price to go down too much, creating artificial demand. It was sort of passive trading, where I kept stock and as soon demand seemed to go up, I would liquidate assets and drive prices back to balance. Unfortunately, I feel with CCP drop rate changes a lot of item prices never recovered. In any case, starting from scratch, a nice ISK buffer  is necessary. 

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