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Lillith Starfire
Posted - 2010.10.16 05:39:00 - [1]
 

For an experiment I sold some items at Jita at ridiculous discounts. In some cases undercutting by millions the lowest sell order. Now this is where the lemming behaviour shows itself because somebody else decides to undercut by 0.01 + the massive amount I undercut by. Then a whole group of lemmings do the same.

So now we have a large number of sell orders all reduced in price by millions in a very short space of time. It's not like I was selling large amounts either; a very small quantity of items but people still did it! What's with this wanting instant gratification at all cost? I could understand if it was a large quantity in a sell order but most of them were single figure units for items that were at most 150 million ISK.



AtheistOfFail
AoF Lottery Services
Posted - 2010.10.16 05:46:00 - [2]
 

If a sudden price drop is seen (100m item being sold for 80m), we usually react not to lose our hard-earned iskies. Although this may be a joke to you, it could be our entire savings Razz

PinkFish
Posted - 2010.10.16 06:00:00 - [3]
 

Edited by: PinkFish on 16/10/2010 06:01:23
If all of the big Jita traders allowed smaller traders to undercut by a large margin and trade in peace all of the 10,000+ people who have tried big undercuts in jita would have driven off those big traders over time. It's better to get the volume then the margin, and its better to **** off the people that expect a quick sale.

Rykker Bow
Posted - 2010.10.16 06:05:00 - [4]
 

Originally by: PinkFish
Edited by: PinkFish on 16/10/2010 06:01:23
If all of the big Jita traders allowed smaller traders to undercut by a large margin and trade in peace all of the 10,000+ people who have tried big undercuts in jita would have driven off those big traders over time. It's better to get the volume then the margin, and its better to **** off the people that expect a quick sale.


yes.

Lillith Starfire
Posted - 2010.10.16 06:32:00 - [5]
 

But if somebody is selling a number of them and they reduce their price by millions also don't they lose out?

Take the 100m example. Original price 100m. Let's say I am selling 10 so 1000m total sales. Buy orders are 75m so potential profit 250m (100-75 x 10). Now somebody comes with 1 or two and sells for 80m. If I reduce my price then my profit is reduced by an order of magnitude. Even if I sell everything?

Explain why volume would be better than margin in this case?

Companion Trollin
You are going too fast
Posted - 2010.10.16 06:40:00 - [6]
 

Originally by: AtheistOfFail
If a sudden price drop is seen (100m item being sold for 80m), we usually react not to lose our hard-earned iskies. Although this may be a joke to you, it could be our entire savings Razz

Translation: Yo dawg, this dawg up ahead of me is jumping off the cliff - this looks like a good idea.

Jason W0rthing
Posted - 2010.10.16 06:41:00 - [7]
 

Originally by: Lillith Starfire
For an experiment I sold some items at Jita at ridiculous discounts. In some cases undercutting by millions the lowest sell order. Now this is where the lemming behaviour shows itself because somebody else decides to undercut by 0.01 + the massive amount I undercut by. Then a whole group of lemmings do the same.

So now we have a large number of sell orders all reduced in price by millions in a very short space of time. It's not like I was selling large amounts either; a very small quantity of items but people still did it! What's with this wanting instant gratification at all cost? I could understand if it was a large quantity in a sell order but most of them were single figure units for items that were at most 150 million ISK.





If someone lists 2 items for 20% less than what I'm selling for I just buy the two item and re-list them for my price. It's a win-win. I win because I don't lose money because the lemmings don't drop the margin to 3%. The other guy wins because he sells his two meta 4 mega pulse lasers quickly.

I also trade in enough items that a single item's margin briefly vanishing doesn't f**k up my income.

Krathos Morpheus
Legion Infernal
Posted - 2010.10.16 07:43:00 - [8]
 

Originally by: Lillith Starfire
But if somebody is selling a number of them and they reduce their price by millions also don't they lose out?

Take the 100m example. Original price 100m. Let's say I am selling 10 so 1000m total sales. Buy orders are 75m so potential profit 250m (100-75 x 10). Now somebody comes with 1 or two and sells for 80m. If I reduce my price then my profit is reduced by an order of magnitude. Even if I sell everything?

Explain why volume would be better than margin in this case?
Easy, if you let the 80m order there and don't undercut, other people will and you won't sell a single 100m item. What do you prefer, selling 10 items at 80m or none at 100m? Of course you can buy and relist, but if it's not a random order, you could find more items priced at 80m by the same person, enlarging your loss, your overpriced inventory, or both. Now you have to make a decision on buying or undercutting, both have risks, but if your acquisition cost is (and should be) below 80m, you take less risk by undercutting, it really depends on how fast you sell your inventory and how much would increase it the low orders.

Roguehalo
Caldari
Roguehalo Ship Brokers
Posted - 2010.10.16 11:26:00 - [9]
 

Edited by: Roguehalo on 16/10/2010 11:29:24

I used to do a fairly large trade in ravens and plexes before I retired.

My margins used to vary between practically nothing to 6m on ravens and practically nothing to 10m on plexes.

My technique was to aggressively raise my buy prices and aggressively lower my selling prices.

This usually resulted in margins shrinking to near zero but because I have maxed out trading skills and high faction standing I usually turned some kind of profit.

Strangely at this point the buyers and sellers competing with me seemed to wander off into the sunset and I could start lowering buy prices and raising sell prices. Then after a bit when margins had got quite good new competitors turned up and the merry go round started all over again.

It all averaged out to me making a tidy little profit just off those 2 items.

So even though it don't seem so there is usually some method behind traders' apparent madness.

Some players filled my buy orders in multple of 2, 4 and even 6 so it quickly became apparent to me that, whereas I play for free and have done most of the time I've played Eve, some players are spending a lot of money playing this game. This is, as I've made clear in other threads, fundamentally unfair.

There should be a proper ingame insurance system whereby players can insure EVERYTHING they own at proper market values such that a player no longer has to risk large parts of his wealth every time he undocks.

And as for CCP moralising from high about rmt when it is their crappy game mechanics that are it's cause. Well my views on that have also been very clearly stated in other threads.


Gabriel Virtus
hirr
Posted - 2010.10.16 11:46:00 - [10]
 

Edited by: Gabriel Virtus on 16/10/2010 11:48:55
Most people, myself included, will predatorily chase ppl downwards to the point I don't make money. You will find that if you do this, you will discourage competition and besides - you still make money. If it was below cost, I still might chase to defend my market; It is worth it to me to chase in order to protect my market.

Many times, there are many reasons - some of the great - to do things that most of Eve thinks is dumb. I will continue making isk, and you [all] will continue posting in amazement on forums.

If I aggressively decrease margins, I discourage others from thinking my market is profitable. With decent skills and standings, I can make my margin incredibly small and make you not want to continue without losing much - if any - isk.

-GV

feedayeen
Posted - 2010.10.16 16:26:00 - [11]
 

Originally by: Companion Trollin
Originally by: AtheistOfFail
If a sudden price drop is seen (100m item being sold for 80m), we usually react not to lose our hard-earned iskies. Although this may be a joke to you, it could be our entire savings Razz

Translation: Yo dawg, this dawg up ahead of me is jumping off the cliff - this looks like a good idea.


A more likely explanation: Holy s**t, why is that dawg jumping off a cliff? Did he see something that I missed?

There are other explanations, like insanity. But these other explanations tend to be costly so the probability diminishes that you can create large orders in the first place.

Mr LaForge
Posted - 2010.10.16 17:21:00 - [12]
 

Maybe someone can explain to me why any trader would care about an item 8 jumps from jita that has a lower price than the ones being sold in station. I see it all the time and more often than not its just 1-2 items but everyone immediately thinks their price needs to be lower.

Dirk Mortice
Posted - 2010.10.16 17:58:00 - [13]
 

Originally by: Lillith Starfire
For an experiment I sold some items at Jita at ridiculous discounts. In some cases undercutting by millions the lowest sell order. Now this is where the lemming behaviour shows itself because somebody else decides to undercut by 0.01 + the massive amount I undercut by. Then a whole group of lemmings do the same.




To complete your analogy.


A trader lemming is standing looking out over a cliff, and suddenly jumps off. 50 other lemmings standing behind see him jump and decide that he knows something and take a running leap over the cliff as well. The last thing they see on their way down is the trader lemming, standing on a hidden ledge just below the clifftop. He then climbs down, collects all their stuff and climbs back to the top.

Netheranthem
Eve Engineering Finance
Eve Engineering
Posted - 2010.10.16 19:07:00 - [14]
 

That happens a lot in Jita, but I don't see it too much in other trade hubs, the massive concurrence in Jita and the number of traders here makes it worth it to be a lemming, as discussed above. In other systems I tend to buy / sell to these orders if I can make profit on it (Sometimes the undercuts are really ridiculous) or if I can't and it's a small amount, just let it go. If it's not an implant, most likely people will let it go without undercutting.

Elldranga
Posted - 2010.10.17 00:34:00 - [15]
 

welcome to the world made up largely of 2 characters...

1. macro traders
2. noobs who just sell go below the current low to sell quick.

PinkFish
Posted - 2010.10.17 00:49:00 - [16]
 

Originally by: Elldranga
welcome to the world made up largely of 2 characters...

1. macro traders
2. noobs who just sell go below the current low to sell quick.

This is the case and point of the above discussion. When you screw the market hard enough long enough other people think its broken and quit. It's nice to see someone who likes the market enough to read MD but doesn't think it's worthwhile to play. This is a win.

Elldranga
Posted - 2010.10.17 04:48:00 - [17]
 

Originally by: PinkFish
Originally by: Elldranga
welcome to the world made up largely of 2 characters...

1. macro traders
2. noobs who just sell go below the current low to sell quick.

This is the case and point of the above discussion. When you screw the market hard enough long enough other people think its broken and quit. It's nice to see someone who likes the market enough to read MD but doesn't think it's worthwhile to play. This is a win.



The really funny thing is that you have no idea of the level of irony in your post. Sometimes... the best comedy is shared only by one.

Lederstrumpf
Posted - 2010.10.17 13:41:00 - [18]
 

Edited by: Lederstrumpf on 17/10/2010 13:43:43
Originally by: Lillith Starfire
For an experiment I sold some items at Jita at ridiculous discounts. In some cases undercutting by millions the lowest sell order. Now this is where the lemming behaviour shows itself because somebody else decides to undercut by 0.01 + the massive amount I undercut by. Then a whole group of lemmings do the same.



Some traders would tend to say you are the first and real Lemming if you were undercutting by a huge amount first.

For sure sane traders will undercut each other if supply is greater than demand. Because otherwise they'd sell nothing anymore. Lowering one's own margin of revenue is perfectly sane if the alternative is no revenue.

And it's sane to sell at a loss if the alternative would be selling at a bigger loss. If there's not enough hot air left for prices to go up or stay where they are, there'll be some downwind spiral.... down to a point where demand exceeds supply again.

If underbidding is done and calculated right, you can try using it as powerful instrument to drive people away...
... or to even buy up their stock at quite a low price to push all sell orders up afterwards again.

To quote "The Art of War": If you only know yourself, but not your opponent, you may win or may lose.

Da Trader
Posted - 2010.10.17 19:34:00 - [19]
 

small profit is preferred to no profit.

Lanais Suleia
Posted - 2010.10.17 23:01:00 - [20]
 

Originally by: Roguehalo
There should be a proper ingame insurance system whereby players can insure EVERYTHING they own at proper market values such that a player no longer has to risk large parts of his wealth every time he undocks.


FYI it took me this long to figure out you're trolling. Well done.

Pookoko
Posted - 2010.10.18 01:38:00 - [21]
 

3 things.

1. There are people doing stupid things.

2. There are people doing smart things you cannot comprehend.

3. You never know which one you are up against.

Regis Nex
Posted - 2010.10.18 18:54:00 - [22]
 

I do it for fun.
I do it to shoo competitors.
I do it to test if they are stupid.
Theres a reprocessing value for each item.
People think its the only item I make money with.
I do it for this kind of thread.

Mint.

Thrasymachus TheSophist
Posted - 2010.10.19 15:50:00 - [23]
 

Its more about getting out of the no-longer-profitable item quickly and into a profitable item then anything else.

Of course, there are limits and if you think the undercut is a manipulation or you're feeling lazy and can't be arsed, or wahtever, then you might just ride it out ...

But its not lemming behavior.

Jack Dant
Minmatar
Posted - 2010.10.19 16:36:00 - [24]
 

Originally by: PinkFish
Edited by: PinkFish on 16/10/2010 06:01:23
It's better to get the volume then the margin, and its better to **** off the people that expect a quick sale.

And yet, you are the one who buys out my sell orders in Rens, every time I take my loot can to market.

Dhaul
Agent-Orange
Nabaal Syndicate
Posted - 2010.10.19 16:46:00 - [25]
 

I'd say so yes. There have been many times where I'm watching my orders and see one person undercut by a large amount and like 10 other people follow him. I usually wait for them to sell out and catch sales on the rebound. The only time I ever follow a radical price change is if somebody moves a massive order ahead of mine that's going to take forever to fill (like 85 HACs or something).

Netheranthem
Eve Engineering Finance
Eve Engineering
Posted - 2010.10.19 19:23:00 - [26]
 

Originally by: Dhaul
I'd say so yes. There have been many times where I'm watching my orders and see one person undercut by a large amount and like 10 other people follow him. I usually wait for them to sell out and catch sales on the rebound. The only time I ever follow a radical price change is if somebody moves a massive order ahead of mine that's going to take forever to fill (like 85 HACs or something).

At that point you're just speculating. You could also buy some of these orders and resell if you really think prices will rise. Trading is the art of investing money in the market, you don't want to have millions stuck in something that will have to wait before being sold, and if you buy carefully enough, you shouldn't loose ISK on any item (or very rarely), on the other hand if you buy over mean price, you're getting undercut everytime :P

garus banta
Posted - 2010.10.19 21:43:00 - [27]
 

Originally by: Gabriel Virtus
Edited by: Gabriel Virtus on 16/10/2010 11:48:55
Most people, myself included, will predatorily chase ppl downwards to the point I don't make money. You will find that if you do this, you will discourage competition and besides - you still make money. If it was below cost, I still might chase to defend my market; It is worth it to me to chase in order to protect my market.

Many times, there are many reasons - some of the great - to do things that most of Eve thinks is dumb. I will continue making isk, and you [all] will continue posting in amazement on forums.

If I aggressively decrease margins, I discourage others from thinking my market is profitable. With decent skills and standings, I can make my margin incredibly small and make you not want to continue without losing much - if any - isk.

-GV


Do you work for Sony?

LOL, you stole their strategy!

Richard Royce
Caldari
Abh Empire
Posted - 2010.10.20 03:59:00 - [28]
 

Originally by: Pookoko
3 things.

1. There are people doing stupid things.

2. There are people doing smart things you cannot comprehend.

3. You never know which one you are up against.



The one genuine trader in this thread has now put in an appearance.


 

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