Guild Wars 2

Let’s say you want to power trade (or whatever the term people use nowadays). You see item X with a highest buy price of 25c and lowest sell of 76c. Clearly, this is opportunity for huge profit. So you buy up a lot (or a reasonable amount) of item X and try to make a profit. You realize over the past few days the spread is getting thinner and thinner: people have caught up to this product and are doing the same thing you’re doing.

Eventually, the spread becomes so thin, and since the item is regarded as worthless (price only of <1s a piece, or has no real big value as a commodity), you stopped using it.

My question is this. Assuming traders stop trading this commodity for its unprofitability, in what instance or how can the spread “normalize” once again for opportunities for profit? Will it ever go back to 25c-76c range (not actual price, but price difference)? If so, what factors will contribute to it? If not, why?

I pretty much cycle between the exact same ~10 items constantly and it never loses effectiveness. I branch out when I feel like it, but in general, I can “autopilot” a small set of given items ad infinitum.

In general, the higher the profit margin on a flippable item, the more investors become interested. The more investors, the more buy orders. The more buy orders, the more “overcutting”. Finally, the more overcutting, the quicker the gap narrows.

Now let’s say the item gets all the way down to 10% margin (from 100% for example). Practically no investors feel it is worth flipping and the pattern repeats backward:

Less investors are interested and the number of sellers exceeds buyers. The “supply” of buy orders slowly diminishes and the profit margin grows. This continues until the margin reaches a point where enough investors are interested and so we start all over again.

Think of it like a repeating wave function. In fact, I’ve approximated curve functions for certain bulk flippable items (such as cheap runes) and most of them remain VERY accurate over the course of time (with minor shifts in the curve up or down of course)

SO the conclusion that can be drawn is that you can effectively have two sets of “staple” items that you’ve found that reliably give a profit. Just alternate between the two sets depending on whether each set is on a “high” or “low”.

ahhh i see i see thanks for the insight! Just wondered how prices eventually come down.