Econ 101: Market Manipulation in EVE Online

In EVE Online, players can avail themselves of all kinds of ways to make money.
In EVE Online, players can avail themselves of all kinds of ways to make money. While looting, mining, mission-running, contracting, and salvaging are all excellent ways to put some ISK in your wallet, this article is all about trading. You may have heard of "market arbitrage" in EVE, and trading is a little different than this practice. Market arbitrage is technically defined as playing two sub-markets against each other (i.e. buying low in system A, transporting the goods, and selling high in market B). In EVE Online, this practice can result in enormous profits, but if your trade routes take you through low or null security space (or if you come across the wrong crowd even in high security space) you risk losing your cargo in the process.

So trading, at least for the purposes of this article, is simply buying and selling directly from station and regional markets to earn a profit. Sitting in a station, dictating your own prices, and making a bundle of ISK sounds pretty good, right? It definitely can be just that easy, and though we're not relaying any get rich quick schemes, a solid understanding of how the EVE Online marketplace works and a tried-and-true trading method will at the very least prevent you from making some common mistakes.

The Language of the Market

"Buy low, sell high" is the mantra of the marketplace, and in the hypercapitalist universe of EVE Online, those are words for traders live by. If you've spent much time at all in EVE Online, you've likely done some direct selling and buying. You pay and get your item of choice immediately, or you lay down your items and get paid immediately. But there's another way to buy and sell, and with a little patience you can make a fair profit without ever leaving the station.

Buy orders and sell orders are a traders primary tool's, allowing them to set the price you wish to pay, or have paid, for items. While in other games you might set up a 24 or 36 hour auction, specifying a price that you hope someone pays, in EVE you can stretch these out for up to three months. This allows players to take advantage of longer term fluctuations in the market, especially during the ramp-up to an expansion.

A couple caveats, though. You'll have to pay extra for the convenience of setting up these orders, up to 3% of your total order (including order setup fees and transaction taxes). That's nothing to sneeze at, especially in margin or high volume trading, but fortunately you can shave that down to about 1% through skills (see below). And since nothing comes for free in EVE, traders lay down money and items to cover the value of these orders. For buy orders, you'll have to maintain an escrow account valued at 25% - 100% of the goods you're buying (escrow is lowered through the Margin Trading skill). For sell orders, though it sounds obvious, you have to actually have the item you're selling (i.e. you can't create a sell order that instantly sells what you're steadily procuring through an active buy order). After you're well established as a trader and have plenty of orders churning money into your wallet, that won't matter much, but you may not want to have all your money tied up in longer-term investments in the early going.

You can see the market in action on this item's market graph. It's price seems due for a serious rebound.

You'll spend lots of time buried in the View Market Details and Price History screens, so let's review some of the more confusing terms here. On the price history graph, the 3- and 20-day moving averages are fairly self-descriptive - they simply show the average cost of an item over a period of time plotted on a trendline. Using the 20 day helps show longer-term, more turstworthy trends, but if you're after a smaller, quicker score, the 3-Day can be handy as well. The Donichian Channel, despite it's fancy ring, simply shows the space between the highest price and lowest price an item sold for on a particular day. This helps to describe the price volatility of the item - a fat Donchian channel means there might be an opportunity to make a profit by getting in and out of the market quickly, while thin channels mean that the item is likely a longer-term prospect.

What You'll Need

Having a pure trader alt isn't a bad idea for the serious market manipulator, and the ISK you can make will eventually support the extra subscription through PLEX if you're good. However, players of all skill levels can and should learn the basics of trading, and you don't need to invest much or really any skill training time in trade to make yourself some money. If you're planning to make a pure trader, you'll want to max out your Willpower and Charisma attributes. Since you'll be buying and selling with other players, these stats don't make much difference when it comes to the actual buying and selling. But trade skills will lower taxes and broker fees and increase the number of orders you can have active at any one time.

Here's an overview of EVE Online's trade skills.

If you're serious about trading, you'll probably want to train Trade to rank 3 then get a few points in Broker Relations (with an eye toward Trade IV and Accounting) to whittle away at your overhead. If the 3% of your orders that goes toward setup fees and tranaction taxes doesn't sound like much, it's time to change your thinking. Anything that whittles away at your thin profit margins Procurement, Marketing, and Daytrading are all pricey and deal with creating and changing buy orders remotely. That ability isn't all that useful to station traders, at least early in their career.

[protip]If you're parked in a trading hub and need to buy skill training books from a nearby system, consider buying a small quanity to sell in the hub system. Many players will pay a decent markup for the convenience of not undocking.[/protip]

Next, you'll need some seed money. It's pretty simple, the more money you have, the more you can make on even slight profit margins. You can either get some startup ISK the old-fashioned way (beggar it from more-established friends) or earn it through mining and mission grinding (quick tip: running missions where you play to trade can raise your standing and lower transaction taxes later on). But if you've got a little (real) cash, buying a PLEX in the EVE store and selling it for ISK online is the quickest, simplest and safest way. Click here for a description of the process. How much is really up to you, but I wouldn't venture into the marketplace unless you have at least 10-25 million ISK to spare.

If you dislike the calculator in-game and don't have much screen real estate to use the operating system's calculator, you'll need a handheld calculator handy to figure out percentages. You'll also need something that money can't buy: patience and persistence. Despite the numerous get rich quick guides on the Internet, most written with the idea of getting the guide author rich quick by raising demand for certain items, it takes real time and effort to be a successful trader. Now and then you'll score big, but since on many items you'll be competing with traders able to undercut all but the most energetic traders (and with huge capitalization to boot), most of your money will be earned through slim margins till you garner enough cash to trade with the big boys.

Locating Trade Hubs

Docked players do most of the buying and selling in EVE Online, since having your head buried in the market details screen can be hazardous to your health. Though a thoroughly saturated market might have fewer of the kind of market inefficiencies that make players instantly, hugely rich, it's never a bad idea to go to where your potential vict... er, customers are. Open your map window, and on the World Map Control Panel under Statistics, select "Number of Pilots Currently Docked and Active." The surefire hubs are Jita, Rens, and Amarr. Some traders have mains and alts permanently parked in these systems. As a result, you'll be up against huge volume traders in these trading hubs, but the vast array of goods available and absolute safety make these ideal places to (literally) learn the trade. Later on you might consider moving to some of the outer hubs

Your First Buy and Sell Orders

While a working knowledge of what's trendy among ships, blueprints, rigs, implants, and loadouts can be very handy, you don't absolutely have to know what each item does to be a successful day trader. If you had a choice, you'd rather be stuck with quality merchandise rather than junk no one would equip - good inventory always finds a market sooner or later. That said, all you really have to know to make money are the hard numbers, so we'll go over a method for buying and selling that assumes no knowledge of the actual merchandise.

[protip]Between order set-up sessions, find time to run some missions from the station you're primarily trading from. Good standings will lessen transaction taxes slightly, and since the majority of trading occurs in Jita, Caldari faction is especially prized.[/protip]

There's many methods to find an item to buy and sell, and no doubt you'll devise your own profit-making schemes. But just to get you into the mindset, here's a fairly conservative method that may not make you filthy rich, but will deliver you some early wins without tying up a ton of money in inventory. First, find an item with a fairly stable price (flat moving average lines, narrow Donchian channel). Check the price history to make sure there's some quantity moving through the station, at least 50 or so but more is better. Next, check the buy and sell orders. Is the highest buy order more than 15% more than the lowest sell order? In other words, multiply the highest sell order amount per item by 1.15 . If the total is less than the lowest sell order, you have yourself an item to trade. If not, keep looking.

This item's price is just about the definition of stable, so it might be a good target for some early investments.

Once you find yourself an item, set up a buy order for a modest quantity, say, 5-10 or whatever you can afford, for a price slightly but noticeably greater than the next biggest order. Go with the length of one day so that you keep the record keeping fairly simple and don't fall prey to longer term trends. Remember that buy orders require money in an escrow account, so keep it small and controlled lest you end up with an item bay full of crap you can't afford to move. Set up the buy order, then lather, rinse, and repeat until you've reached your investment target and/or max number of orders. Then comes the hard part: waiting as the sellers come to you, because you're got the best prices around at the moment. It's usually not worth it to create sell orders with goods from partially fulfilled buy orders since you'll get tagged for a modest amount with every order mod you do, and that eats into your bottom line.

[protip]Without fail, two things will increase demand for items across the board - large-scale alliance wars and expansions. It's always wise to get into the market a few months before expansion launch dates, and as soon as you can during an escalation of alliance vs. alliance tensions.[/protip]

You may not fulfill all of your orders, but chances are you'll get enough hits to make your investment of time worthwhile. Load up your transactions in Wallet and calculate your sell prices (lower than others' sell prices, but higher than 13-15 % more than you paid), then set up your sell orders. Feel free to make these for more than a day, but check back often to make sure your prices are competitive. Raise prices as needed, but unless you're in a serious pinch you should never ever sell for lower than 10% more than you paid - that's just not good business. If the prices were stable, they'll rebound before long and you'll be able to move the rest of your merchandise without a problem.

Should prices not rebound locally in a week or more, you still have some options. While hauling is less than ideal, sometimes you can fetch an excellent price on the road without going through overly hostile space. Consider getting some training in Industrials, which are fairly easy to buy, train for, and equip. That way you'll be ready if you catch wind of a bid war on one of your money draining items. It helps to have alts parked in hub systems just to compare prices, and with support from friends, you might want to backhaul some goods too to dabble in arbitrage.

A Word on Price Fixing

This is the classic price fixing attempt gone bad. Notice how the green quantity bars tanked when someone tried to flood the market with extremely overpriced junk.

You'll hear about players buying out all the goods available in a particular station or region then raising the price astronomically in an attempt to monopolize the market. The problem with this approach is that you're not really monopolizing the market unless you're monopolizing the supply, and more often than not some other vendor comes along and undercuts their prices signficantly and make a hefty profit in the process. The fixer is left with a load of inventory they typically have to sell at a loss to move this side of an expansion. Word to the wise, it usually doesn't make sense to buy out the market, but it's an ideal time to ferry in or manufacture goods to make loads of money

So that's our look at trading in the EVE Online marketplace. We'll have a comprehensive guides detailing various aspects of the EVE economy over the coming months, so stay tuned!

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