I’m not very good at economics or investing, and have only heard of the term flipping in this game (lol). From what I understand, flipping involves buying large quantities of products (at the lower price margin) and selling them at a higher price so fast and in large quantities that you get a profit from selling them. To me, it feels like flipping merely is artifically increasing the price of a good for profit. Please correct me if I’m wrong.
If this is the case, isn’t this a contributing factor to inflation? I mean, if one person does it, it probably wouldn’t have that big of an impact. But if hundreds of people do it across a wide variety of items, mostly commonly traded items, wouldn’t people think that the price its being sold for is the correct market value for it? I read up on investopedia about flipping stocks, but commodities don’t have a close/open trading session, and things don’t tend to fluctuate very much within a few minutes. I do have read about how some people with large quantities of gold used to buy up the precursors in the market to drive the price upwards.
Lastly, I heard in the chocolate thread about people trying to drive the prices of chocolate up to 1s or more. But then I read about another poster who can crash the market at whim. How is this possible?
Don’t disturb me, I have a cat in me at the moment.
Flipping doesn’t cause issues in itself largely because of the TP tax.
What’s causing this craaaazy inflation is a mix for 3 factors.
1) Ascended armor requiring insane amounts of t6 mats were introduced
2) loads of bots were banned and their goods taken off of the tp
3) traders are doing their thing in a economy that’s unstable due to being in transition (making it easier for them to create artificial inflation).
In case you couldn’t follow that these 3 things mean that supply has dropped, demand has risen and the people who could afford to invest heavily saw it coming a mile away and are hoarding until the market reaches a breaking point.
Flipping BTW is a colloquial term that seems to have arisen in GW2 hence you wouldn’t have heard of it. The technical name is arbitrage
And it doesn’t cause inflation.
Correct.
In fact it could cause deflation, whenever you make a transaction the trading post takes a small amount of gold out the system in taxes. If the entire player base were to rely on arbitrage for their income, the taxes would very quickly deplete the amount of gold in circulation, forcing up the effective value of gold
What you are actually describing is Active Trading or Day Trading. Both of which are legal in the US and provide liquidity in the markets. Day Traders get a different set of tax rules when compared to traditional and institutional investors because the IRS views Day Trading as a job while everyone else is an investor. Another thing to note is that the real markets do not have a 15% gross tax on the sale of every position, as we do in GW2. Don’t get misunderstand me, we need the TP tax otherwise we’d be dealing with serious inflation. But, this naturally causes larger spreads to form on the TP then exist in the real market.
What you are actually describing is Active Trading or Day Trading. Both of which are legal in the US and provide liquidity in the markets. Day Traders get a different set of tax rules when compared to traditional and institutional investors because the IRS views Day Trading as a job while everyone else is an investor. Another thing to note is that the real markets do not have a 15% gross tax on the sale of every position, as we do in GW2. Don’t get misunderstand me, we need the TP tax otherwise we’d be dealing with serious inflation. But, this naturally causes larger spreads to form on the TP then exist in the real market.
Even though we’re of differing opinions the more I read of your opinions the more I respect them.
If there’s any single person a reader should listen to on economic matter it’s this guy here. He has a good understanding of how the economic system works and we could all learn a thing or two from him.
I’m not very good at economics or investing, and have only heard of the term flipping in this game (lol). From what I understand, flipping involves buying large quantities of products (at the lower price margin) and selling them at a higher price so fast and in large quantities that you get a profit from selling them. To me, it feels like flipping merely is artifically increasing the price of a good for profit. Please correct me if I’m wrong.
If this is the case, isn’t this a contributing factor to inflation? I mean, if one person does it, it probably wouldn’t have that big of an impact. But if hundreds of people do it across a wide variety of items, mostly commonly traded items, wouldn’t people think that the price its being sold for is the correct market value for it? I read up on investopedia about flipping stocks, but commodities don’t have a close/open trading session, and things don’t tend to fluctuate very much within a few minutes. I do have read about how some people with large quantities of gold used to buy up the precursors in the market to drive the price upwards.
Lastly, I heard in the chocolate thread about people trying to drive the prices of chocolate up to 1s or more. But then I read about another poster who can crash the market at whim. How is this possible?
To answer both of your questions quickly without a huge economic lesson. I place a buy order that costs me time (the order may never fill or may fill quickly or may take hours to obtain the items) and is dependent on players willing to sell their item for my offer. When I buy instantly I am saving myself the time of waiting but paying a premium price for the item (this premium comes at instant delivery and comes at the cost of the seller for eating the trade post cost). Flipping is simply taking my patience and selling an item to an impatient consumer who could easily do the same thing but doesn’t want to spend the time waiting.
As for the ability to change the price in a market it’s simply a supply situation. Some players only look for a small profit while others are looking to make it big in the shifting markets. It is possible to buy out an item up to a certain price and then list your goods at your desired price (taking losses on some and profit on the others hopefully). However, this is easily countered by people who have large quantities stored up the good. These people can easily destroy a market buyout when there are larger quantities to put into the supply side of the equation. As a caveat this isn’t going to work in a limited supply market (think items like precursors or items where you cannot make them anymore or farm them in any way) so it is possible with enough gold to artificially drive the price up. This also tends to work in the opposite way more than not by driving price down. People will buy an item at slightly a higher price than others to get their order filled faster, then sell at slightly lower to move their item quicker, effectively closing the price gap a little and lowering the price. People also tend to sell at the lowest price offered or shave a little so their item will sell first thus again lowering the price. It’s all a giant exercise of human impatience. So if you have the gold and have the patience you can work an advantage. So my less than economical less wasn’t less but addressed other things I think you wanted answered.
Flipping is the fastest way to make gold in this game. Ofc you need some gold to start and choose your commodities, but once you get it rolling you will be swimming in gold like that Duck dude xD
Flipping BTW is a colloquial term that seems to have arisen in GW2 hence you wouldn’t have heard of it. The technical name is arbitrage
Flipping is hardly unique to GW2. I’ve seen/used the term in any number of games. City of Heroes, Rift, etc.
In real life, you most commonly hear the term in reference to real estate “Flipping a house” – there are even shows about it. Where you buy a house, typically a foreclosure or tax seizure house (which are generally sold below market value, especially Tax seizure houses as the government merely cares to get enough for their money owed them and it clears all other liens on the property, usually) then sell it for actual market value. Sometimes you don’t even have to spruce it up
