The trader experiment

From time to time, I read the Markets for ISK blog (http://marketsforisk.blogspot.ca/), and I must say I'm quite impressed by that player. If you have some interest in understanding the market perspective in Eve Online, you should spend some time reading his blog.
I'm pretty sure that his (or her) day job is related to the economy industry (banking, trading, or something like that).

As I was daydreaming in the subway last week, I decided to make a small experiment for a couple of months, just to see if I could make it works.

I will use an alt as a trader in a low volume tradehub (Dodixie), with a limited budget (25 millions of ISK), no access to my corporation assets, and 2 ships: a Heron from a career agent (400m3 cargo haul) and a Wreath (fast align T1 hauler, 4000m3 hauler).
My ultimate goals are the following:
+ to generate, at least, a 20% gain per month in wealth in the first few months (as I doubt to be able to keep such a growth rate at some point)
+ To have as little as possible of ISK in my wallet (1% to 2% of my wealth)
+ less than 1h/day, to adjust Sell Orders and buy new items.
+ PLEX that account.

For that last goal, I'm supposed to do it with my industry activities, but I kept re-investing in new BPOs each months, and thus, failed to do it since, at least, a year.

I don't exclude the possibility to trade items from my corporation to that alt. On that case, since I don't build an item if I can't have a 10% GPM selling it in Jita, I will sell them to my alt with a 10% profit for my corp (TCO cost of that item + 10%).

So, I spent the next few days training that alt a few skills (an other 10m ISK worth of skill books, that I don't count in the initial budget of 25m that I gave to the alt.)
As I was scheduled to be out of town for a few days, I did schedule a one week skill queue, that is about to finish this Thursday, and burnt my 25m ISK of initial budget in Thursday 26th of august.

Since I had some time to spare that day, I decided to run some level 1 distribution missions with my heron, to raise some further cash while waiting for Sell order to sell.
I finished buying a venture+fits and buying some weapons for my heron to finish some quests.. bah, to bad for my profits :-)

Anyway, I generated around 1.5m ISK with those missions.
Using my main character in The Forge, I found a couple of items that I could buy for cheap in Jita, and re-sell them immediately in Dodixie for a profit. In a few hours, my 1.5m ISK were now a 4m ISK, then a 6m ISK, that I did re-invested in various items before leaving for the week end.

As of today, Wednesday 31th of august, here's the picture:

This month          
Bought for:    275 291 436,88      
Sold for:    318 546 238,52      
Taxes paid:          
Gain    43 254 801,64      
Account    2 883 602,36   
I did traded some items on Monday and Tuesday, and realized that I forgot to buy and train the Minmatar industrial skill, when I tried to move a 4000 m3 cargo. Most of those trades were quick one, buying for 20m-30m in Jita and sell "immediate" in Dodixie with a 600 000 ISK - 1m profit per trip.

Those profits were reinvested in new items, that are now in sales.

In the meantime, I did spent some time, while moving stuff around, at programming some scripts and database for my trader, to track her
activities. I've not finished yet, but most of it is done.
I still have to handle taxes, to deduce them from gains, and account my sell orders in my wealth calculation.
IIRC, I have 120m of Sell Orders as this Wednesday morning.

I must say that it's not that bad to go from a 25m budget to close to 40m in just a few days. I don't count my sell orders for now, since I didn't integrated them in my excel file yet.

To help me to decide if I will do a profit on some particular item, I did a quick calculator in excel. It helped me to determine if some items were worth it to move between trade hubs.


Broker Fee    2,70%    Sales taxes    1,20%          
Quick Calc                               taxes:           gain:             GPM      
amount:          2                  
Buy at:           1 249 998,00                  
Sell at:           1 800 000,00    -70 199,00    959 606,00    44,00      
Immediate:    1 705 007,07    -20 459,08    869 099,97    36,40   

I will make a post once a month to report on my progress in this experiment.

On my industry buisness:

For my other activities, well, it seems that I did a "slight" miscalculation :-) I just completely forgot to by some mexallon earlier past week, and ended up with close to 10B of minerals, but barely no mexallon at all.

Minerals    typeid    quantity      
Tritanium    34    214 362 418      
Pyerite        35      75 999 780      
Mexallon    36        3 252 496      
Isogen         37      49 141 255      
Nocxium    38        2 544 550      
Zydrine      39        1 199 964      
Megacyte   40          404 327      
Morphite    11399    26 551      
    worth value:    9 590 419 892,21   

I don't want to buy too much of mexallon at a time, its price is still dropping ever few days. And I think that I have an other 50m, or so, units of pyerite in transit to my production system.


Oh, and for those who may wonder how to keep up your production with your minerals, I've come up with a formula which seems to work for me. Since Tritanium is the mineral the most used across the board for T1 items, I base my calculation on its amount:


Minerals    quantity    Cur. ratio    ideal ratio    needed      
Tritanium    214 362 418    100,00    100,00    0      
Pyerite          75 999 780    35,45        30,00    0      
Mexallon        3 252 496      1,52        10,00    18 183 746      
Isogen          49 141 255    22,92          3,00    0      
Nocxium        2 544 550      1,19          0,60    0      
Zydrine          1 199 964       0,56         0,22    0      
Megacyte          404 327       0,19         0,08    0      
Morphite             26 551       0,01         0,00    0   

So, depending on my amount of Tritanium, I need 30% of that amount in Pyrite, 10% in Mexallon, etc. Those numbers seems to hold for me, and are based on producing ships (which are the most mineral intensive products). I may need to revisit those numbers if I start building Citadel related items.

A "quick" update.

Since it's still summer here, I haven't spent much time playing in the past few months. I've invested massively in capital parts and structures BPOs in July, thus, I'm still working on these to improve them to, at least, ME:8 or ME:9 and a decent TE. I'm unsure about going at more than ME:8 for structures BPO, since going from 8 to 9 take 90 days in a NPC station and will cost around 65m ISK.
Half of these BPOs, at ME:8, sell at a loss, and pushing them to ME:9 is useless at the moment (the values are the GPM for that each module, at ME:8 and ME:9 with all taxes considered -production and sale-). Things may change when additional modules would be available for players to build, such as factories inside Citadels.

Structure Construction Parts    -13,41    -13,27   
Structure Hangar Array        7,06    7,20   
Structure Storage Bay        -13,95    -13,84
Structure Laboratory        -8,43    -8,26   
Structure Factory        -12,73    -12,56   
Structure Repair Facility    36,13    36,35   
Structure Reprocessing Plant    22,77    23,01   
Structure Docking Bay        26,46    26,62   
Structure Market Network    16,36    16,53   
Structure Medical Center    9,76    9,90   
Structure Office Center        20,56    20,72   
Structure Mission Network    -22,65    -22,5

For now, I'm reluctant to invest more in these BPOs due to these prices.
I'm now working on the industry part of Eve Online for more than 1 year, and I'm still amazed by the amount of items that I could find in trade hubs, which are sold by individuals at an incredible loss. Most of the time, I suspect that the player haven't do the math correctly. Let's take a few examples:

Item                                       TCO              Sell @Jita    ROI                Profit/unit    GPM
Crucifier                                341 215,46    226 999,14    219 848,67  -121 366,79    -35,57
Explosive Deflection Field I 118 417,06    79 999,96     77 479,96    -40 937,09    -34,57
Medium Cap Battery I           46 003,95       29 999,99    29 054,99    -16 948,96    -36,84

Who could build a frigate for less than 300 000, and still make a profit? The one who mine his own minerals? nope, safe if he doesn't value the time he spent at mining those asteroids. Some frigates will always get sold at below their building price, since they are giveaways in the newbie missions. Steer away from them.
Some modules are common loot in NPC wrecks, thus, you could expect to find some of them very cheap from time to time, and that's the main issue.
Some industrialist players don't bother doing the whole maths, and thus, they undercut on a already incredibly low price, digging a bigger hole for that item. People need to learn the ropes of the market. If a player undercut a 3500 ISK module by 1000 ISK, and that the historic price for that module is around 2900-3000 in the past 6 months, chances are good that at 2500 ISK, a careless industrialist-wannabe who try to undercut that price will be selling at a loss.

For example, I got a similar case in the past 2 months. Early in June, I built 3500 of a specific module (Item A), at a TCO (Total Cost of Ownership) of 1173.82 ISK/item. I put a Sell Order for 1000 of those at 1513 ISK or so (291 ISK profit after taxes), and slowly undercutting until 1320 ISK (close to 100 ISK of profit per item). At that point, there was no point in undercutting further, and changed back my price back to 1500isk, and waited for the market to recover. It went as low as 1150 ISK at sometimes in July,
I finaly sold most of them past week, and I put the remaining ones from my inventory at 3600 ISK / item. On past Friday, I bring back a couple of thousands more, which I sell now in the 15 000-14 000 ISK backet:

Item              TCO        Sell @Jita    ROI             Profit/unit    GPM
Item A        1 173,82    15 895,92    15 395,20    14 221,38    1 211,54


Now, back to those ridiculously low prices we could see around. The worst items for that kind of behavior are munitions, you could find quite a lot of them at very low prices, and vastly undercutting the building price:

Item                  TCO        Sell @Jita    ROI        Profit/unit    GPM
Gamma M        12 099,75    5 900,00    5 714,15    -6 385,60    -52,77
Gamma S        2 465,08    1 306,06    1 264,92    -1 200,16    -48,69
Infrared M       5 128,60    2 699,95    2 614,90    -2 513,70    -49,01
Plutonium Charge M    48,99    30,00        29,06        -19,94        -40,70
Radio M          13 266,53    8 650,98    8 378,47    -4 888,05    -36,85
Ultraviolet M    6 027,51    3 582,00    3 469,17    -2 558,34    -42,44
Ultraviolet S    1 187,82    798,86        773,70        -414,12        -34,86
Xray M            10 352,08    6 500,00    6 295,25    -4 056,83    -39,19
Xray S            1 969,73    1 188,00    1 150,58    -819,15        -41,59

Those ridiculous prices are mostly due to players, who did a couple of missions, looted a bunch of ammunition from the wrecks, and put a sell order at a ridiculous price in a trade hub to sell them quickly.
Sadly, "market PVPer's" or careless industrialists will undercut those prices. When the undercutting
amount is low, the impact is weak. When you see someone undercutting a 200 rounds Sell Order by a 2 500 000 rounds Sell Order, you know that you should put you sell order at a decent price, and wait for the market to recover.

Now, one of the most common advice we give to a new player, who want to get involve in the industry, is to start with the ammunition, without explaining too much on how to calculate the TCO, in a POS or in a NPC station, or how to deal with those various sales taxes. I spent a lot of time researching formulas, on how to calculate those costs. I managed to find them, test them in a NPC station, then in a POS before writing them down in a huge excel file.
I keep track of the building cost of my 360ish BPOs, hundreds of BPCs (tier I and II), how much minerals did I bought this month, for how much, and how cheaply versus the current average price, etc.

Could we still say to a new player to go and buy ammunition BPOs and start from there ? Yes definitively. Will he/she be able to make a fortune of it ? nope, but statistically, he/she will do some profits.
Here's some guidelines and hints:
_ diversify ! don't do only one kind of ammunition, do missiles, hybrids, lasers, etc. Multiple size (S/M/L) - avoid XL for now.
_ do your researches :
+  some ammunition are more used than others.
+  look at killmails, what kind of modules, munitions, turrets are they using.
+  Look at your trade hub, what do people buy/sell the most ?
+  Is there a war going on somewhere ? Who fight there ? what's their doctrines ? Could I build something that they use ?
+  Should I get involved in ships ? yes, but do you research ! most of ships are selling for a slim profit, if at all.
_ Pay attention to your logistic chain: (time to market is part of the logistic chain)
+  Building close to a trade hub, mean high manufacturing taxes, and a short logistic chain.
+  Building far from a trade hub, mean low manufacturing taxes, but a long and possibly dangerous logistic chain.
+  Finding an opportunity where you could get a 50% GPM is meaningless if you can't bring that item in the next few hours. (time to market)
+  Do you plan to move yourself your minerals ? with what (T1 indust, Freighter) ? How many jumps to/from your trade hub ? How much time do you need to move stuff around ? Is there pirates ?
+  How much minerals/Moon products/PI do you need per day ? or per week ? How much of them do you have now ? (delay of 6hours due to CCP`s API)
_ If you plan to use a freighter service, you have to consider these costs and integrate them in your TCO or in your sale taxes (the later is easier)
_ Learn to use an excel-like software (MS, OpenOffice, etc). you *will* need it.
_ Don't use a BPO which is not fully researched, this is especially true for modules, rigs, ammunition and ships. Then again, do your maths! Sometimes, it isn't worth it.
_ If you have to move BPOs, use a fast ship, lots of stabs, a fast align time, and give a small prayer to Bob before each gate jump.


Oh well, I'm sure I've forgot a bunch of stuff, some of them may or may not apply to you, since you're playing in a different space (Null/Low/High), or you are a genius in mathematics. Anyway, there is no one way to do industry in Eve Online, there is so much complexity in that game, so much variables, that you will have to find a way to make it works for you.
Eve Online was a drug for me when I first started to play it. The more I was digging, the more I was amazed by the amount of stuff I had to understand before being able to play it correctly. The learning curve is huge on this game, and there's always more to get on. I could say that I know now how to do industry, to do PvE missions safely, but I still don't know how to PvP, how to fly in a fleet, how to be a Fleet Commander.. 2 years on, and still so much to learn, so few hours to play :-)


Fly safe o7