This is long but I want to share, and if you take the time to read it, I believe you’ll be glad you did. Continued in multiple posts.
A couple of givens and qualifiers for this list
1) Be aware that you lose 15% on any item you list and sell. 5% is a non-refundable listing fee taken for your existing gold. 10% is a tax deducted from an item when it sells. The TP calculates the latter when it shows net profit.
2) You are not already rich. These rules still apply, but rich folks tend to scoff at these more tedious tasks. You just need 1-2g to get started buying stacks
3) You are buying in stacks of 250.
4) You know better than to ever undercut the next lowest seller by more than 1c.
5) You are buying your items via the ORDER TAB, at no more than 1c higher than highest bidder, and selling at no more 1c lower than lowest seller.
6) Emphasizing #4, you realize that you do not have to drastically undercut to get something sold. Goods at lower price (even by 1c) will always sell so long as they are in demand.
7) In my experience, a good profit margin starts at around 15%, but I have accepted any item with a low overall investment cost with a profit of 10%+.
8) Make sure that the item you are wanting to sell is decently higher than the vendor sell cost if you are starting in the real low coppers.
9) Optional but recommended: You are keeping track, ideally via spreadsheet (link at bottom of post #3).
So Here goes:
1) Crafting Components are ideal, but upgrade components are nice too. People are always crafting and these are always on the move and therefore in high demand, whether people just want to level to the next crafting tier, or are trying to turn a profit of their own.
2) Avoid the crafting components that are not drop items. There is just usually a lesser demand for these because someone is trying to get rid of extras, or can just make them themselves using the components, which usually sell at a lower combined cost. Exception are the items that are “transmogrified” like an amethyst lump or a bolt of cotton, as these are also frequently traded.
3) Avoid ordering any item that has a short list of orders. The fact that a lot of other people are Not ordering the same item is not an indication that you have stumbled upon a gold mine. It is an indication that you are looking at an item with a low demand. You don’t want to trade in items that have a low demand.
4) Trade in items that have a lot of activity/movement/demand. These markets tend to be more volatile because, yes, more traders are involved, but your goods will be bought or sold quickly. A volatile market, one that may dip randomly and drastically, is also just as likely to jump right back up. The important part is that there are constantly people buying and selling, which has its own way of stabilizing a market. In most cases, if you post an item that is suddenly undersold, you will find your goods will sell within 24-28 hrs. In other words, don’t freak out and pull your stack unless it stays longer than this and is tying up your capital.
5) Trading in “high ticket items” is not usually as profitable as you think. First of all, you will feel the 15% loss a lot more, and therefore you require a greater disparity between Order and Sell cost to actually make a profit. The problem with this is that the greater the disparity between Order and Sell, the more likely a seller looking to unload is to do so via sell. A savvy seller will list their goods at 1c less than the lowest seller. The people who fulfull items on order when there is a big difference are really impatient, but not entirely common. Sure you can take your chances, but in most cases you will find that these orders are slow to be filled.
6) Don’t tie up your gold waiting for a big profit. This ties into the above. You see an item that sells at 10s but the highest order is 5.5s. Do you really think that the average seller will opt to lose 45% of their money? Sure, some will, but most buyers are inherently more greedy and savvy than that. This is not a smart way to invest your money because your order willl take much longer to fill (refer to #4 again if you need). You will end up waiting too long for that order to be filled, and in that time of waiting, the market can shift drastically.
7) Remember that the idea is not just simply overall profit, but profit margin. In other words, how much money is being returned for your investment. If you buy a stack of something and make 1g, but you had to invest 15g to get that, you are doing it wrong.
8) Look into lower ticket items. In my experience, these are the goods that are 40-99c per but branching to 1-3s as you gain net worth (using a spread sheet becomes particularly important the bigger the numbers are, refer to #5). You will often find a greater profit margin in these items because people find any difference measured in copper as insignificant, but that’s where you come in. You can buy a 250 stack of items at 2s and sell them for 2.5s, and you just made 31.25s in profit…but that’s only 5% profit margin and you had to invest 5.75g! Buy 250 stack of something at 37c and sell it for 56c, and you just made 26.5s for a 19% profit margin and you only invested 1.06g! Are you kidding me? That means you do that times 4 and you more than quadrupled your profit for the same investment. I am telling you…low ticket items are the way to go.
9) Don’t be afraid to pull an order. Before you log off for the day, check your orders, and click on anything that doesn’t seem to be moving. You want check to see how the gap has changed since you first ordered. If the profit margin has changed drastically, then consider just cancelling the order. What is likely taking place is a mass unloading of people who simply got their orders fulfilled before you, and are now racing to outsell each other. If that is the case, the price will probably continue to dive until most buyers have realized the market shift and have stopped investing and selling (and the market will eventually go up as demand goes back up).
10) You goal should be to expect an order to be fulfilled before you log off, and listed before you log off, but in most cases you will start to see orders arriving within minutes, and you’ll want to start listing ASAP. You do not want to give the market time to shift. Sometimes it shifts in your favor, and sometimes not. It’s best to capitalize on the odds you are seeing right at that moment than to gamble on tomorrow’s market.
11) You don’t have to, and may not want to, list a full stack all at once. There is nothing wrong with starting to list whatever you are getting as it comes in, and it has its benefits. First of all, especially if you are undercutting, other sellers will be less likely to undercut you if you have a smaller amount listed that isn’t a threat against their own stack. Many savvy sellers will not undercut and just dump their smaller stacks in with that of an already existing smaller stack to not have to even lose that 1c per. (Thank you Morphemass for this handy reminder, see his original addition below)