A study in market forces: Flipping

Hi folks!

I recently had a couple of good sales go through and am sitting on my first-ever huge (to me) pile of inf. OK, so its only about 150-200M, but that's more than I have ever had before. I get little time to put toward the market, but that's ok. Between a rarely-used farming character I have and regular drops & sales, I have so far been able to afford frankenslotting any characters who make it into their 20s, plus the occasional -kb or +Def IO as I felt necessary.

Anyway, I intend to reinvest much of that into a couple of good recipes to craft and sell, but I feel that my grasp of market forces is a bit...tenuous.

So, I intend to spend some time flipping stuff to see how it all works. The only problem is, beyond "buy low, sell high," I have no idea what to do. And therefore, I come to you all. What tips should I keep in mind when finding stuff to flip? Is there a significant difference between flipping salvage vs recipes vs crafted IOs? Is it better, generally, to focus on low-yield high-turnover investments or high-yield low-turnover ones? What patterns should I watch out for?

I imagine there's a guide for this, or covering this, but "flipping" is such a common term and my search-fu sucks. I have read several guides and have what I think is a pretty good understanding of how this all works, but the supply-and-demand thing is still foggy.

Thanks in advance
~AYB

First.. before you get pounced lol

Flipping: Purchasing an item then reselling said item with no changes made to it - ie, buy a piece of salvage for x sell it for x+

Crafting: A service provided by the benevolent to the lazy and impatient. The benevolent crafter purchases the parts of the final product then constructs the final product and marks up their cost for a reasonable profit.

Now that we have that out of the way!

Assuming you have 1 character at above level 10 and that you don't actually "live" at the market, you will see the following:

Flipping:

Salvage - Low end - little risk - average returns of about 10 mil a week with very little effort
Recipes - Mid range - more risk, but not bad - average returns vary wildly - estimate about 50-100 mil a week depending on how much effort you put forth.
IOs - Higher end - very risky - average returns will depend on patience - approximately similar returns as recipes.

Crafting:

Generic IOs - people can and do make decent money at these. They are very labor intensive though
"Yellows" - IOs that sell for ~5 mil. Not as much volume as generics, but still fairly high volume. Not a ton of risk involved - returns of about 100 mil a week or so depending on effort
"Oranges" - IOs that sell for 10mil+. Slower volume - more risk - generally tighter profit margins - Profits can vary between 100 mil a week and 1 billion. This is entirely dependent on effort and knowledge.
"Purples" - Pure speculation! Don't do these until you have so much money you don't know what to do with it all!

Re: Guides - There are a TON of guides in the guide section at the top of this forum. Read them all. Every last one of them! If you still have specific questions, please feel free to ask here! There are many resources available to you - but go read the guides and get the basics first!

Good luck!

Edit: Nice sig btw =D

In order to flip an item, you must be able to:
1) identify the highest likely outstanding bid
2) identify a price you will likely be able to sell the item in question.
3) do modest math

First, identifying the highest outstanding bid. Flippers often employ a "bid signature" as a quick reference. These bids usually aren't "round numbers". For example, I often end my bids with "150". If you see something bought for 10,111,150, it probably went to me. These bids are usually good indicators where the highest bid is.

Second, find out what the "buy it now" price is. This is a price point above the highest bid you've identified that the item usually goes for (I'll get into what that means in a second). Third, do a little math. Is the "buy it now" price > the "highest bid" price + 10% of the "highest bid" price? If so, you can make money on this item.

example:
highest bid price = 10,111,150
buy it now price = 15,000,000
10m + (.1 * 10m) = a little over 11 mil, which is 4 mil less that the 15mil going rate. You can make money on this item.

Identifying the "buy it now" price can be tricky. I'd recommend as a rough approximation in the beginning, that unless there are at least 3 prices in the last 5 around some high point above the 2 at the low point, move on until you get a better grasp of how things are working.

For example, a last 5 history of:
10,111,150
17,000,234
15,000,000
10,111,150
14,799,999
would lead me to believe that 10,111,150 is the highest bid, and that 15m is about what I'd expect someone to pay who wasn't patient.

However, if the last 5 looked something like this:
10,111,150
17,000,000
10,111,150
10,111,150
10,111,150
I'd be more leery. 10,111,150 might actually be the high point, no low price identifiable, and the 17m is just someone throwing away money.

There are a couple of things to keep in mind when attempting to find things to flip. First, If I can't identify items 1 or 2 above I move on. There are other fish in the sea. Second, don't be greedy when setting your price. If you don't have the least expensive asking price, someone else gets the transaction instead of you. Don't be greedy! People will probably give you the "buy it now" price anyways! Also, don't be afraid to find a new niche. Marketeers might move in on your niche and close the profit gap. Move onto something else you can make money on and come back to that one later if it clears up!

In the above example where someone bought for 10m and is looking for 15m, one might put the item up for sale for 12,001,178, still guarantee at least a million profit, but still likely to get the 4 million one is looking for.

My advice is to get your feet wet with a high turnover commodity like salvage for a crash course on the flow of the market. Choose one that has a high number of bid and ask participants, and at a price you feel comfortable losing money at if you do something wrong while learning. Buy stacks, sell stacks, rinse and repeat.

Thanks for the quick response, Misaligned.

Regarding semantics: Yes, I know the difference between crafting-to-sell (a practice I've seen referred to as "crapping," a rather amusing portmanteau) and flipping. My point was that before I get heavily involved in crafting for profit, I want to better understand the nuances of the market. Naturally, I look to flipping for this because it is essentially a simplified version of crafting-and-selling; no salvage to acquire, I can deal in bulk, I never have to find a crafting table, etc. Just buying and selling. Thanks for looking out, though. I don't mind getting pounced, but I've come to expect a better response from the Ebil Ones.


Heh, I have numerous characters past level ten. I've got almost 90 current characters, of which probably less that 15 are below level ten (mostly they are between 20 and 35). So, no problem there. I have two that I keep parked at the market for marketing purposes, one of which is my farmer.

I guess I will start with salvage since I'm mostly wanting to learn how the market "breathes" rather than turn a huge profit. Will any salvage do, or do i need to work on a high-demand one like Neversell-uhh-melting Ice or Luck Charm?

Thanks again.
AYB

Mandur, those are good points.

Do you find that the "highest bid" fluctuates a lot, or just the "buy it nao" price on weekends?

Regarding the Last 5: I have noticed that sometimes when I buy a stack of something and it insta-buys, there will only be one entry of my purchase (I end my bids in 4321). Is this normal? Is it because I bought a stack at once, or does it represent the large turnover of the cheap stuff?

And yes, I anticipate losing inf at first. But hopefully not too much.

AYB

The most simplistic guide I can think of for flipping salvage is in my signature.

To more specifically answer your question about flipping salvage, no. You can theoretically do it with all of the salvage. In general, more move in a day than you could possibly handle - even using multiple characters. The trick is to identify a buy point and a sell point you can live with. Mostly this comes down to throttling how many times you want to visit the market.

For ease of learning, salvage flipping is not really your best bet though. It isn't very indicative of the market as it moves extremely fast and you can't see what is actually happening. Also, when you make a mistake, you are rarely if ever punished for it

However, if you are set on flipping, I would recommend having 3 characters do your marketeering - 1 for salvage - 1 for recipes - 1 for IOs.

Specialize each one so you can see what is actually going on with each type of sale.

And go read the guides! lol

Thanks, everyone, for the tips.

Quote:

Originally Posted by Misaligned The most simplistic guide I can think of for flipping salvage is in my signature. ... And go read the guides! lol

I have read most of the guides here, including yours. I think yours was the first one I read that actually discussed flipping. I have leveraged arbitrage to get start-up funds on characters for a long time now and I get how to price drop/craft sales so I make a profit, so while most of the guides have been helpful in the past, what I need now is knowledge of how to invest. What makes a good investment and why, that sort of thing. My recent acquisition of a recipe whose crafted IO was selling for 100M+ when I listed it versus the ~40M it sold for three weeks later taught me that I don't yet understand the ebb and flow of the market.

Quote:

Originally Posted by Misaligned For ease of learning, salvage flipping is not really your best bet though. It isn't very indicative of the market as it moves extremely fast and you can't see what is actually happening. Also, when you make a mistake, you are rarely if ever punished for it However, if you are set on flipping, I would recommend having 3 characters do your marketeering - 1 for salvage - 1 for recipes - 1 for IOs. Specialize each one so you can see what is actually going on with each type of sale.

So if I were limited to, say, one character logging in twice a week you would suggest I start where? Recipes? Generics or sets?


@Mandur, That is a very interesting way to look at it. I had not considered that ask-price variation might be affecting how often my stack bids are listed. It seems to match my experiences, too. When buying a stack, if it sells while I'm watching it, I see something like: three or so process at once, one update to the last five, two more process, one update, the rest process, one update.


Thanks, all
AYB

Well, my thoughts on it would be (I think) fairly simple and straightforward.

Given a current bankroll in the mid-100M's, and a desire to flip items rather
than craft them, along with limited market access (ie. a couple times/week),
there a few approaches I'd take.

1. Rare Salvage
2. Decent, pre-crafted set IO pieces (non Purple / PvP)
3. Decent set IO recipes.

Now, since you're primarily flipping, I'd look for the following factors.

1. Decent throughput - at least a few every day. You can tolerate lower
throughput than most, because you're not going to check very often anyway.

2. High volatility (the #1 characteristic you need for flipping). That's to
say, Last 5 prices with large spread between those prices among the
three niche types I listed.

In terms of market slots, I'd allocate 1/3 for bidding, 1/3 for selling, and
the last third open (to dump stuff you pick up while playing, craft
something you need NAO, or throw a bit more gasoline on if you find a
particularily good niche in step #2).

The basic technique I'd use in cases where you identify a volatile niche is
bid just above the lowest price you see, and let it sit for a few days...
In the case of salvage, I'd bid for a 10-stack, for recipes and IO's, I'd bid
for just a few (don't go over 1/2 of your bankroll in total).

On the ones you get, the next time you log in, list them a bit below the
high price you see in the Last 5, and let those sit.

When you check back in, collect your cash, reset your bids (if that niche
is *still* volatile), and check for other niches.

Some things to keep in mind along the way.

1> Flipping, almost by definition, is Bargain Hunting. You're an "American
Picker" hoping for a deal that somebody undervalued that you can turn
around and sell for a profit later. Bargains are (fairly) rare, and more
importantly, spread around...

2> You're dealing in High Volatility ... That IS High Risk. Keep that in mind
and don't over-extend your bankroll (ie. the never exceed 1/2 of it point).

3> Be Patient -- this is a Low Volume guy that you're only checking
occasionally... Bargains take time and patience to find, and selling near
the top of the market price can also take some time. Don't be worried
about letting stuff sit awhile if need be... The flip side is don't be shy
to bid, and/or cancel bids (no fees involved), but I'd say once you list,
leave it till it sells.

As long as you didn't get into a trending market, let the Volatility you saw
work for you. Unless you made a mistake in step #2, it will sell at some point.

4> Bargain Hunting / Flipping means looking at a LOT of niches rather than
sticking to a particular niche longer term (like you might with crafting).
Spend a chunk of your market time looking at different niches, and don't
get too engrossed in any single niche (unless it's consistently and
frequently making you oodles of cash) - ie. move around a lot.

5> The effect of flipping (regardless of what the uninformed may think) is to
squeeze/stabilize prices... ie. raise the price floor, and lower or maintain
the price ceiling... So, always be aware of the price volatility - as long as
there is a good spread between high and low (considering fees also), you
can flip. Once that range starts narrowing, move along to something else.

When I think of Flipping, (or were I writing a guide) that's how I'd go about it.

I reco'd those particular niches for you, because those fit within the 100-
300M type of budget you've mentioned. You can, of course, flip at any
level, but purples are out of range yet, and common stuff probably won't
give you a decent enough return based on where you're at currently (imho).

Hope that helps...


Regards & GL,
4

Hmm. I'm not sure what I'd do if I was only logging in twice a week. Much of my thinking is based on the idea that I can grab a couple of sales before the prices change much.

Thing 1: Prices for rare salvage vary CONSIDERABLY over a day, and over a week. Sometimes they move up and stay up, or move down and stay down, but usually they have a couple of different bands that they stay in. Most people don't realize this- if you only buy and sell stuff from, say, 8PM to midnight Eastern, and your friend only buys and sells stuff from, say, 8 AM to noon Eastern, you may both see very consistent prices for salvage... you may "know" that Deific Weapons always cost about 2 to 2.5 million, while your friend may "know" that Deifics always cost about 1.5 to 1.8 million . That's an imaginary example there, but the point is that someone would be buying for 1.5 to 1.8 and selling for, probably, 2 million and 1 inf. They give up 200K per item to Wents but they keep the bonus ("2 million didn't get it? I'll try 2.5 million.")

Normally I'd recommend yellow recipes that move FAST (level 50 Doctored Wounds, Crushing Impacts and Thunderstrikes are the classics.) If you're logging in a couple of times a week, you can probably go for something that moves slower, or hits lower price levels on occasion. You could still go for the Thunderstrikes, but bid half a million less and sell for half a million more- someone on Friday night or Sunday night will most likely oblige you.

I should mention that most of the times I've tried flipping I have made it out with most of the inf I started with. Usually I am crafting, because it's not as obvious to people that the recipes are selling for 3 million, salvage for 2 million, and the crafted item is selling for 20 million.

One trick for cutting into someone's niche (I don't remember where I got it) was to bid EXACTLY what they're bidding- so you'd get about half of the 3,001,100 sales and they don't figure out that you're in there till they have trouble selling.

I haven't tried this myself- I'm happier jumping in at N+908 and jumping out two sales later while the person tries to figure out where to price - but it sounds really plausible.

Weird, nethergoat, I thought I got that trick from you. Wasn't sure though.