Guild Wars 2

I still recommend you stick with tier 1 crafting mats, set your buy points at the low dips on Spidy, even if the current bid price is higher, hold for 8 hours or so then sell. This is more swing trading than flipping.

Things that go bump in the night

P.S. I finally sold off the last of my chocolate bars around April 2nd. I could have sold them much sooner but I took a very long break from the game.

Are any of you that posted in this thread still playing?

The market is down 4.51% from this time last night and 10.77% since I started tracking it on 12/13.

But it would seem that I bought gems at the worst possible possible point

Since this time Friday night, the avg. price of the 125 crafting materials I’m tracking have dropped 6.56%. This is a very short period of time and it could just be the Sunday night blues but I’ll keep you posted.

xxxzavulonxxx.8413:

Lets look at Charged Lodestones. They have had pretty drastic spikes within the last week or so.

I don’t know if it is people converting real life money or TP speculators cashing in their large sums of money for legendaries, or what not. However, there is a lot of money being injected to that particular market somewhere. Which is velocity (the movement of money in the current money supply)…

On smaller scales when there are large amounts of buyers (which is what happens when people exchange gem for golds) the velocity would tend to swing upwards.

It is hard to say what the overall situation is in terms of the money supply currently is without data from Anet to examine though.

XXX,

I’m talking about a future event that we haven’t seen yet. Even if we do see deflation in the market, that doesn’t mean certain items will not increase during this time period, only that the over all average price of goods will be lower. I’ve started tracking the 128 Raw Fine Crafting materials on the AH as of the 13th and I’ll keep taking snap shots of this sector of the market around the same time each night. I should be able to determine the trend over the next couple of days, which I’ll report here.

xxxzavulonxxx.8413:

Your off on your analysis on a few key parts.

I prefer the more simplistic version of Equation of Exchange. If gold is being destroyed at a greater rate than it is being created then it will decrease prices. There are only a few ways that gold enters the economy; farming, $$ to gold, and magic money fountains from Arena Net; like the useless tonics into gold during Halloween, or butter in gold right before it. So if M=P and money supply decreases then prices will decrease.

Quantity Theory of Money

The Quantity Theory of Money was
a bit of Classical theory based around the Fisher
Equation of Exchange. This equation stated that:

MV = PT

where:
M is the amount of money in circulation
V is the velocity of circulation of that money
P is the average price level and
T is the number of transactions taking place

Classical economists suggested that V would be
relatively stable and T would (as we have seen
above) would always tend to full employment.
Friedman developed this and tested it further,
coming to the conclusion that V and T were both
independently determined in the long-run. The
conclusion from this was that:

[^] M [—>] P [^]

~cheung

I just wanted to make sure we’re talking about the same thing. Are you talking about the price of gems inflating or the avg. price of the market? Because I’m talking about the market.

Jiro.6589:

•The quantity of vials of Powerful Blood, Vicious Fangs, and Elaborate Totems that drop from loot containers is now 1-2 instead of just 1.

Just to clarify it’s these 3.
.

Corrected, thanks

That last line could mean anything

Black Lion Chest Overhaul:
Permanent Bank Access, Permanent Trader Express, and Permanent Merchant Express items now drop twice as often from Black Lion chests. Though still extremely rare, they can now be traded until their first use.
The Black Lion Chest drop chance for mystery tonics has been reduced from 100% to 25%. Tonics now have the same drop chance as “Heavy Bag of Coins,” “Unidentified Dye,” or one of three new Guild Influence items worth 50, 100, or 300 influence.
“Heavy Bags of Coins” have been added to Black Lion Chests in the tonic and buff drop sections. Bags hold between 80c and 1g50s.
“Glory Booster” has been added to the list of possible buff drops.
Buff drops now occasionally drop the “booster multipack” triple buff.
Rarity and proportion of all other Black Lion Chest drops have been rebalanced to reduce overabundance of some items.

Since Arena Net is pretty tight lipped about the currency exchange, it’s hard to tell how much gold is entering or leaving the market. Earlier tonight I purchased ~1000g in gems http://www.gw2spidy.com/gem . I should have done this sooner but after reading the patch notes I felt that I had too much of my net worth tied up in gold. When I made my purchase, the price spiked up as I would have expected. However, I did not expect it to almost instantaneously return to the same level I purchased at. It’s entirely possible that someone was refreshing the exchange, waiting for such a spike to convert gems to gold. However, I think it more likely that Arena does not want the price increasing too fast, and potentially discouraging other people from converting gold to gems, which leads to the main reason of my post.

If Arena is more actively involved in the currency exchange than they have led us to believe, then we have no insight to how much gold is leaving the economy. This means we will have little warning of a market downturn and as long as Arena keeps us in the dark, we’ll have to rely on our reasoning, and based on that I think we face a significant chance of deflation in the market.

https://forum-en.gw2archive.eu/forum/info/news/Game-Update-Notes-December-14-2012/first#post999247

Reasons for Deflation

1) More gold will be converted to gems than gems converted to gold.
A. In my opinion gold is still too expense in terms of dollars. At the current rate, it would still cost you 75$ to buy Commander and 80$ to buy a guild bank with 250 slots. I think we’ll see our first hard floor around $50 for Commander and seriously doubt Commander will ever cost less that $20.
B. Arena Net is marketing gems to a new group of people, traders. Previously, the Gem store offered very little that I cared about except bag space and character slots. However, now they have added items that I actually have some interest in, made more of the drops from chests sell-able, and added “gold drops” for the gamblers. I’m pretty risk adverse but If you have pockets that are deep enough, you could theoretical figure out the break-even point on BLC.

2) Arena has heard the cry of their people and decided increase the supply of some T6 items that drop from containers. Since they’ve caved on this, they may increase supply on other items that they deem are over priced.

All this being said, I think it is a dangerous time to be trading over night. I’m not saying don’t do it, it’s just that the risk of a loss significantly increases as you enter a bull market. Instead of looking at the average low spikes on spidy, you’ll be trying to predict the new low spike. If we do enter a deflation period, gold is a good place to hold your wealth. However, if you care about the gem store, I’d recommend you hold some of your wealth in gems as well because I do not anticipate this ratio to improve. You also might want to consider holding low valued tier 1&2 raw crafting materials while staying away from any of the more expense tiers. Of course, I could be wrong about this but I’ve already taken my own advice. I’m holding gold, gems, and low valued crafting materials, and a few long term value based investments. If you can keep yourself liquid, you’ll be ready to take advantage of very low priced items when the market does swing back.

BlueStoat.9157:

Cymatoperior.5942, I’ll take my gold now please.

Ahahahaha.

There are too many English/Theater majors in this thread…

Schei.7301:

Logun.5360:

Schei.7301:

Logun.5360:

This stuff looks familiar…

Aren’t you the guy who claims to make like 20g on a bad day off the tp?

No, I never claimed to make 20g per day

But you did say that you often flip items with hundreds of gold right?

I said per hour

penatbater.4710:

@logun and other traders

slightly off topic, but what do you do when only a part of your sell orders were filled? From his example, say he was only able to sell ~3-4k bone chips at that price, or his sell orders were undercut by another power trader?

Good question. My short answer is risk can be quantified and marginalized by increasing the number of variables that have the same projected outcome. Lets say there is a 95% chance that Bone Chips will go to 29 copper but their is a 5% it will either be higher or lower with a standard deviation of 5 copper. So it could be 24 copper or it could be 34 copper. By adding more variables like tiny venom sacs, tiny totems, garnet pebbles, etc., you will be able to keep the same confidence level, in our case 95%, but you will be reducing the standard deviation of your losses while maximizing your profits. This is the Hedge Principle that I’ve discussed in other threads.

I posted the first video of a Finance Theory class in the Gold per hour thread. Lecture #22 specifically dealt with reducing risk. There’s a lot of math in this so fast forward to the principles if you get bored.

I’ll have to wait until later to discuss the opportunity cost of holding onto bad investments and why you should take a loss instead of waiting for the market to recover.

majorkong.9073:

Logun.5360:

Whatever happened to citing sources? This was posted over 3 days ago in the silver doubloon thread in an attempt to help talk the OP off a ledge.

OP in this thread is the same OP you talked off the ledge in the other thread… he was QQing about how hard silver doubloons were to get, and then you told him how to get them, and now he posts this thread like he’s some super genius who thought of it.

Good thing I was long on pebbles and nuggets…jk

Schei.7301:

Logun.5360:

This stuff looks familiar…

Aren’t you the guy who claims to make like 20g on a bad day off the tp?

No, I never claimed to make 20g per day

TooBz.3065:

And what exactly is “r” in this game? Or even approximately.

It is not necessary that you be able to calculate the Time Value of Money for your transactions on the TP, only that you understand the key principles. Mainly that you understand that a buyer is trading time for a future value, while the seller is offering a discounted present value in exchange for money now. However, since you asked, I’ll be happy to answer your question and apply it to the TP.

Last night, I put in bids for 10,000 Bone Chips which were filled at 21 copper each. Tonight I sold 10,000 Bone Chips at 29. At the time I placed my bids, Bone Chips had a Bid/Ask spread of 21c/26c. When you factor in the TP tax, I could have traded the spread at a net profit margin of 1.3 copper (21/.85) per Bone Chip. Which option is the best return on my investment and time?

Time Value of of Money Basic Formula

PV=FV/(1+r)^n

PV is the present value of the asset (21 copper)
FV is the future value of the asset (29 and 26)
r is the compounded rate of return or “discount rate” (this is what we don’t know)
n is the number of periods (for us, we’ll use hours)

Algebra or Google will get you the above equation solved for r;

r=(FV/PV)^(1/n)-1

Now we can calculate our rate of return for our two options above. For the sake of simplicity, we’ll ignore the TP tax.

Option 1. Waiting 24 hours to sell your asset for 29 copper. As you can see below, it earns a compounded rate of return of 1.35% per hour.

(29/21)^(1/24)-1 = 1.35%

Hour 1 I 21.28
Hour 2 I 21.57
Hour 3 I 21.86
Hour 4 I 22.16
Hour 5 I 22.46
Hour 6 I 22.76
Hour 7 I 23.07
Hour 8 I 23.39
Hour 9 I 23.70
Hour 10 I 24.02
Hour 11 I 24.35
Hour 12 I 24.68
Hour 13 I 25.01
Hour 14 I 25.35
Hour 15 I 25.69
Hour 16 I 26.04
Hour 17 I 26.39
Hour 18 I 26.75
Hour 19 I 27.11
Hour 20 I 27.48
Hour 21 I 27.85
Hour 22 I 28.23
Hour 23 I 28.61
Hour 24 I 29.00

Option 2. Waiting 1 hour to sell your asset for 26 copper. As you can see below it earns a rate of return of 23.81% per hour. Now let’s assume (wrongly of course) that you can reinvest in or “flip” this asset every hour for the next 24 hours and that the market can absorb your increased buying and selling with no diminishing returns.

(26/21)^(1/1)-1 = 23.81%

Hour 1 I 26.00
Hour 2 I 32.19
Hour 3 I 39.85
Hour 4 I 49.34
Hour 5 I 61.09
Hour 6 I 75.64
Hour 7 I 93.65
Hour 8 I 115.94
Hour 9 I 143.55
Hour 10 I 177.73
Hour 11 I 220.05
Hour 12 I 272.44
Hour 13 I 337.30
Hour 14 I 417.61
Hour 15 I 517.05
Hour 16 I 640.15
Hour 17 I 792.57
Hour 18 I 981.28
Hour 19 I 1214.92
Hour 20 I 1504.18
Hour 21 I 1862.32
Hour 22 I 2305.73
Hour 23 I 2854.71
Hour 24 I 3534.41

Ah the wonders of compound interest. Now as I said above, this is unrealistic because of diminishing returns. However, if you don’t have a lot of money to invest (lets say 1s to 1g), you can very rapidly grow your net worth by active trading or flipping (Option 2). Once you’ve made it to 10g, your rate of return per hour will easily exceed that of a casual farmer (1-2g per hour). Once you’re worth 20g, your rate of return will exceed that of an expert farmer (3-4g per hour).

Around 50g, you’ll start feeling the strain and diminishing returns of active trading. This is when you should switch to swing trading (Option 1). This is because it requires much less time and attention than the active trader. Additionally, instead of actively trading a couple of assets, you will be buying 10-50 different ones in a very short amount of time, after which you can play the game, visit with your family, work, sleep, etc etc. So even though your hourly rate of return for Option 1 is 1.35%, you are now earning it on 50 different items at a smaller investment of active time.

TLDR; Traders or “Flippers” (as they are derisively called by the uneducated), sell their time for a discounted asset now in exchange for some future value of the asset, while reducing inflation and providing stability and liquidity to the market.

Whatever happened to citing sources? This was posted over 3 days ago in the silver doubloon thread in an attempt to help talk the OP off a ledge.

Astraea.6075:

I think you missed the whole point. It’s because there are players in the middle that players who wish to sell immediately get better returns and those who wish to buy straight away get cheaper goods.

Astraea, you’ll drive yourself crazy trying to explain simple concepts like the Time Value of Money to these guys.

Aoreias.6384:

Just a nitpick but I think ‘flipping’ is much more akin to market making than the colloquial use of the term (“Flip that house!”) If you could set a maximum price that you would buy an item at, there’d be much less of a need for very active trading.

I suspect ANet might not want to do that because such a system would benefit very well capitalized traders more, and make it harder for people to get a foothold as a trader.

The buy in to making money on the TP is around 50s. ROI’s at pre-100g are much higher than 1000g.

Is this the “Trading Post” forum or the “Vendor Post”? There would be much fewer threads like this if people spent half the time educating themselves on fundamental economic principles and trading styles as they did complaining about perceived “unfairness” in the market. Every concern raised in this thread could be easily explained by one of the following concepts.

The Four Laws of Supply and Demand
Quantity Theory of Money (Think Gems)
Inflation and Deflation
Time Value of Money
Arbitrage
Value Investing
Buy and Hold
Trend Following
Swing Trading
Active Trading (Aka Day Trading or “Flipping” in GW2)

And Gilosean, despite what you may think, I did not make my GW2 fortune manipulating markets. I did it using the principles above as well as others that I’ve shared in various threads in this forum.

This stuff looks familiar…

Create an alt human and run him Divinity Bank, it takes all of 5 min and you’ll have 26 free slots.

I tested it until my patience ran out, it’s somewhere between 1/20 and 1/50. The sample size I ran was only a couple of thousand so, that’s no where near what you’d need to get an accurate estimate, more like 50k for that. I ran it back when doubloons were going for 50s per, so the return would be half as much now. You can make much better gold per hour by buying and sell as we discussed in the first gold per hour thread.

That and there’s a chance to mystic forge nuggets into one

Helequin.2608:

Logun, the top four should cover most of it XD.

I’ve got a pretty decent handle on things like managing savings and tracking what I spend.

When I look into investing and the market however, I really don’t know much about what the options are and how it all works. Sure, I know at a high level what a GIC, Mutual Fund, Stock, Bond, Option, Share and so on is. But I have no detail to back that up or to start to evaluate which option is the most attractive.

I have some basic economics, like MARR, present worth and such, but nothing market specific. I know math and some stats, so I could definitely undertake my own basic evaluations, if I had the information to input to start with. Of course, expanding techniques here is good too.

So I’ll try to list what I’m looking for in short:
-How investment markets work, and the options for investing. The nuts and bolts how would I buy/sell shares, and what other operations are there? What are the structure and the rules that the market operates on?

-How do the markets differ (stock, commodoties etc.)?

-Beyond that, some investment principles and analysis techniques would be good too.

I’d start with Security Analysis and the Intelligent Investor by Benjamin Grahman, the father of value based investing. Warren Buffet was a student of his. Buffet has achieved an avg. rate of return of 24-25% over the past 35 years and weathered down turns like a heavy weight champ.
http://www.amazon.com/Security-Analysis-Principles-Benjamin-Graham/dp/007141228X/ref=wl_it_dp_o_pC_nS_nC?ie=UTF8&colid=UP1V9M6KAPR3&coliid=I3K5T3KTTS4I77
http://www.amazon.com/The-Intelligent-Investor-Definitive-Investing/dp/0060555661/ref=wl_it_dp_o_pC_nS_nC?ie=UTF8&colid=UP1V9M6KAPR3&coliid=I3ASRVLOKKYY55

Next, I’d recommend Elements of Investing and then A Random Walk Down Wall-street by Malkiel. Basically, here you’ll learn the value of buying an index fund over the usual fund. This is what you need to do, if you don’t have the discipline to value invest.
http://www.amazon.com/The-Elements-Investing-Burton-Malkiel/dp/0470528494/ref=wl_it_dp_o_pC_nS_nC?ie=UTF8&colid=UP1V9M6KAPR3&coliid=I1Y9AEXMQ18XJK
http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393081435/ref=wl_it_dp_o_pC_nS_nC?ie=UTF8&colid=2PQUFLQDST5SG&coliid=IA9ZKK7DVLKML

For Technical Analysis, start with this one. It’s got the basics. Technical analysis with candlesticks graphs are powerful if only for the reason that millions of people believe specific symbols mean specific things and then act a certain way and self-fulfill the prophecy. If you’re going to day trade or swing trade, you’ll need to know this because you don’t want to be caught off guard by something like a hanging man.
http://www.amazon.com/review/R1EYMVM6HWC84C/ref=cm_cr_pr_viewpnt#R1EYMVM6HWC84C

A lot of the more modern advice didn’t handle the last two downturns well compared too the styles above. But if you’re interest, I’d stalk Mike Vranos and the Ellington Management Group. There is a great deal of information that John Geanakoplos gives out in his 24 lectures that you’re not going to get anywhere else because no one has written a book about what they are doing yet.

For wealth accumulation, I’d recommend The Millionaire Next Door
http://www.amazon.com/The-Millionaire-Next-Door-Surprising/dp/1589795474

And for perpetuity investing,
http://www.amazon.com/Holy-Bible-Version-Scofield-Duradera/dp/0195278674/ref=sr_1_13?s=books&ie=UTF8&qid=1354773833&sr=1-13&keywords=king+james+bible+leather+scofield

Helequin.2608:

@Logun
I took a look at the Yale lecture as well. I’ll probably follow up on the whole series in the next month or two.

Do you have any other resources you would recommend for learning how financial markets work that could apply to either GW2 or indeed real life?

I’m an engineer, so math comes easily but I’ve never bothered to learn the basic mechanics of the market. GW2’s is easy enough to understand with only buy and sell orders, but I need a good reference for the real life stuff where there are things like options, shortsales, dividends, different markets and so on.

I’m in Canada so a few things may differ, but general theory would be the same.

I’ve got some more stuff I can recommend but it’d help if you can give me a little more detail on what you’re looking for. Some of these can be applied in game, all of them can be applied in life.

General Investing Principles
Specific Investing (Funds, Stocks, Bonds, etc.)
Trading (Short Term or Swing, Active or Day Tradig)
Growing Net Worth (Inside and Outside the Market
Tax Avoidance
Personal Development
General Life Principles

OrianZeta.1537:

I agree with you about bots and gambling, undoubtedly the former has a disastrous effect on the economy, and I’ve read those pre-cursor and Halloween threads of angry and disillusioned players. These are all very serious issues, but as this isn’t so much a topic about macroeconomics but wealth-earning, I suppose it’s outside the scope of discussion. Still, valid points, and boiled down it comes back to Anet. Their game, their issues and us players have to live in their world and abide.

Logun.5360:

1. A free character slot, 80 slots with 4 15 slot bags (2.6g or 3.25s per slot)
2. Guild Bank, 50 slots (5g or 10s per slot)
3. Purchased character slot, 80 slots (16g or 20s per slot)
4. One Bank space, 30 slots (10g or 33s per slot)
5. One Bag space with 15 slot bag (7g35s or 49s per slot)

Believe me I won’t touch gems-for-gold with a longbow (spikes have been over the 2g mark per 100 gems) I’ve been making use of a mule for all I can, but soulbound items are not allowed to leave your inventory or your bank account as far as I know. Still, how do you receive #1 on your list?

1. is for the other four characters besides your main, that you are allowed to make. All of your characters share the same pickup tab and bank. So whatever you put in the bank (don’t know if it works for soul bound items) your other characters can put in their bags.

Astraea.6075:

This is not true. Look at http://www.gw2spidy.com/item/19721 and you will see the price increase started long before the introduction of ascended gear roughly around 1 November. If you look closer you will see the drop in supply (sell listings) around that time that is probably associated with the mass bot banning, and you will also see a slight increase in demand (buy orders) around November 6th – 8th. There has been no spike in demand caused by the introduction of ascended gear.

There was serious deflation in the market after people converted massive amounts of gold into gems for the crappy BL chests (Halloween). Then ArenaNet allowed for the conversion of useless items, from Halloween, to gold via the mystic forge. This is why prices spiked (more gold, less supply from bots) yet the gold to gem ratio remained terrible, gold was added back to the economy in another means that cash to gems to gold.

OrianZeta.1537:

By the way, judgment of what is/isn’t a lot of money is entirely relative. We’re still talking about manipulating prices on orders of magnitude (1,667% by one example). Do you at least find that wrong on principle?

If you are concerned about manipulation of prices, you need look no further than our gracious hosts and the gem market. I’d also remind you of the multiple crap into gold options that have been implemented in the last four months (i.e. butter, chocolate, tonics, logs, etc. etc. and the mystic forge.)

OrianZeta.1537:

On the gems side, I chipped away in PvE until I had a small fortune, enough to snag the 600 I need for another Bank tab; it’s getting awfully crowded in there.

Orian,

I’d stay away from gold to gems right now. If you need bag space, turn your for character slots into bag men or create a couple of guilds. If you go the guild route, you’ll need 2500 influence to get 50 slots, which has a fixed cost of 5g if you buy it from the guild promoter. Below is the cost per slot for your storage choices listed best to worst at current gold to gem costs.

1. A free character slot, 80 slots with 4 15 slot bags (2.6g or 3.25s per slot)
2. Guild Bank, 50 slots (5g or 10s per slot)
3. Purchased character slot, 80 slots (16g or 20s per slot)
4. One Bank space, 30 slots (10g or 33s per slot)
5. One Bag space with 15 slot bag (7g35s or 49s per slot)

I can understand your frustration but the difficulties you are currently seeing are not being caused by power traders. Below is how I believe we got into our current situation and why I think prices will continue to fluctuate.

Logun.5360:

I haven’t been hit as hard as others but that is because my expenditures have been limited to buying bag space and my income has been more than sufficient cover those expenses. However, It was disheartening when the buying power of my gold in regards to the cash shop decreased by roughly 60% in a very short period of time. At that time, I had roughly 1500g which would have cost me $3,750 to purchase, had I bought my gold with real money right before the first major drop, I would have seen a loss of roughly, $2,250.

It is now much cheaper to create a guild and buy influence for bag slots, than it is to buy gems for an bag slot, bank slot, or character slot. Which to me, seems unintended.

I haven’t been playing the game outside of the TP much lately. In fact, I’m wearing the gear I made for myself when I first turned 80. But, when I consider that most people make their money farming (which gave terrible returns before the bot bans) and that they also have expenses like repair bills and way points, I would be really discouraged with the rapid raise in prices for things like pre-cursors and T6 mats.

All this being said, i think two things happened that caused the problem we see today. One, a vast supply of gold (maybe as high as 40% entire economy) was essentially converted (destroyed) with the launch of the Halloween. As I’ve stated in my other thread, I use a mutual/hedge fund strategy to make the majority of my gold, so every night I’m essentially buying and selling every raw material in the market. When the Halloween event went live, the trading post went dead (at least in everything other than candy corn). Now I’m exaggerating a bit but the decease in actively was incredibly reduced on the buying side of the market some in part by people doing other things but I believe it was mainly do to the destruction of huge portion of total GPD of GW2. Gold to Gems to Chest to…Candy Corn. The bots had yet to be banned so the supply side drove the entire market down to vendor price or near to it on many items because no one had any money…The house edge was so bad on those chest that ArenaNet had to create magic gold fountains to try and get some money back into the economy. Which leads into the second part of the problem. Magic gold fountains (crappy Halloween item conversion in the Mystic Forge) and drastically reduced supply from banned bots. These two things, plus the introduction of Ascended gear, lead to a raising market and massive price increases on T6 items. And since a large amount of gold was added back to the economy through means other than cash to gems to gold. The decreased value of gold to gems remained roughly the same, obviously by intent.

You asked me how I’d fix the system? I really don’t know, especially with knowing so little of what is going on from the ArenaNet side. However, I think ArenaNet has created a serious problem for themselves. They have built a cash shop that generates the majority of it’s money from gambling. Players don’t want to gamble, they want to know the price of an item and then they can decide if they can afford it. Even so, it’s not so bad because it’s gambling, it’s bad because it’s gambling at terrible odds. How long could a casino stay in business if the house edge on blackjack was 99/1 instead of 51/49? Players spent tons of real money gems and got candy corn, some spent hundreds of dollars trying to get a chainsaw skin and got jack. Rightly so, they got mad and complained about it on the forums and ArenaNet acknowledged it. So next time around, instead of offering direct items, they again offered the gambling chests but wait, they doubled the odds… so now instead of 99/1, you had a 98/2 chance of getting what you want (I don’t know the percentage to get a chainsaw skin, i’m just using 99/1 as an example.)

I realize ArenaNet needs to make money, I can totally respect that and I’d like to support them. I’d buy power trader potions for straight cash if that was the only way they were offered. But they are in a dangerous position in terms of driving off long term customers for short term gain. If they don’t change their system, we will potentially see great swings because an increasingly smaller and smaller group of people will need to be persuaded to gamble to generate the cash they need, and they have tied cash, directly or almost directly, to the exchange rate of gold.

It’s a pretty low risk speculation but it’d take forever to work through that much supply. So that leaves ArenaNet doing something like they did with butter, which is possible but hardly something you’d want to buy into. Instead of buying them off the AH, just hold onto any supply you acquire, maybe you’ll get lucky but I’d put my money in steady earnings vs. lottery tickets regardless of how cheap you can get them.

Rylek.4501:

Vlad Morbius.1759:

John Smith.4610:

I cannot go too far into our process, but we often set goals; in an expanding market though there is a split between preventative and reactionary measures. If you read my last blog you may remember one of my favorite aphorisms, "Certainty is the mother of quiet and repose, and uncertainty the cause of variance and contentions.”

Creativity requires the courage to let go of certainties, In these matters the only certainty is that there is nothing certain. This is one hell of a gamble, especially when you consider that the vast majority of people involved in this complex in game economy are not students of economics nor do they understand the consequences of monopolization and their closest interpretation of Sherman would be a tank. You sir may gamble the future of this economy based on your machinations but at the end of the day many ordinary people could well be your undoing.
Some, no most are here to play the game not to play the market. To continue down this path will most assuredly cost your company many of their real life resources at which time an economist will be the last person they need. Consider that while you’re playing economic dungeon master.

I love this post and agree 100%. The out of control ego from most of the Devs who post on these forums is truly mind boggling.

Lol, I wonder if Vlad gets infracted more than me…

Thank you,

I haven’t been hit as hard as others but that is because my expenditures have been limited to buying bag space and my income has been more than sufficient cover those expenses. However, It was disheartening when the buying power of my gold in regards to the cash shop decreased by roughly 60% in a very short period of time. At that time, I had roughly 1500g which would have cost me $3,750 to purchase, had I bought my gold with real money right before the first major drop, I would have seen a loss of roughly, $2,250.

It is now much cheaper to create a guild and buy influence for bag slots, than it is to buy gems for an bag slot, bank slot, or character slot. Which to me, seems unintended.

I haven’t been playing the game outside of the TP much lately. In fact, I’m wearing the gear I made for myself when I first turned 80. But, when I consider that most people make their money farming (which gave terrible returns before the bot bans) and that they also have expenses like repair bills and way points, I would be really discouraged with the rapid raise in prices for things like pre-cursors and T6 mats.

All this being said, i think two things happened that caused the problem we see today. One, a vast supply of gold (maybe as high as 40% entire economy) was essentially converted (destroyed) with the launch of the Halloween. As I’ve stated in my other thread, I use a mutual/hedge fund strategy to make the majority of my gold, so every night I’m essentially buying and selling every raw material in the market. When the Halloween event went live, the trading post went dead (at least in everything other than candy corn). Now I’m exaggerating a bit but the decease in actively was incredibly reduced on the buying side of the market some in part by people doing other things but I believe it was mainly do to the destruction of huge portion of total GPD of GW2. Gold to Gems to Chest to…Candy Corn. The bots had yet to be banned so the supply side drove the entire market down to vendor price or near to it on many items because no one had any money…The house edge was so bad on those chest that ArenaNet had to create magic gold fountains to try and get some money back into the economy. Which leads into the second part of the problem. Magic gold fountains (crappy Hollaween item conversion in the Mystic Forge) and drastically reduce supply from bots. These two things, plus the introduction of Ascended gear, lead to a raising market and massive price increases on T6 items. And since a large amount of gold was added back to the economy through means other than cash to gems to gold. The decreased value of gold to gems remained roughly the same, obviously by intent.

You asked me how I’d fix the system? I really don’t know, especially with knowing so little of what is going on from the ArenaNet side. However, I think ArenaNet has created a serious problem for themselves. They have built a cash shop that generates the majority of it’s money from gambling. Players don’t want to gamble, they want to know the price of an item and then they can decide if they can afford it. Even so, it’s not so bad because it’s gambling, it’s bad because it’s gambling at terrible odds. How long could a casino stay in business if the house edge on blackjack was 99/1 instead of 51/49? Players spent tons of really money and got candy corn, some spent hundreds of dollars trying to get a chainsaw skin and got jack. Rightly so, they got mad and complained about it on the forums and ArenaNet acknowledged it. So next time around, instead of offering direct items, they again offered the gambling chests but wait, they doubled the odds… so now instead of 99/1, you had a 98/2 chance of getting what you want (I don’t know the percentage to get a chainsaw skin, i’m just using 99/1 as an example.)

I realize ArenaNet needs to make money, I can totally respect that and I’d like to support them. I’d buy power trader potions for straight cash if that was the only way they were offered. But they are in a dangerous position in terms of driving off long term customers for short term gain. If they don’t change their system, we will potentially see great swings because an increasingly smaller and smaller group of people will need to be persuaded to gamble to generate the cash they need, and they have tied cash, directly or almost directly, to the exchange rate of gold.

CMF.5461:

@ Minion of Vey.4398

That actually was very insightful and I think a key idea that helped complete something I was missing.

Earlier in this thread Logun.5360 posted a video to a class room discussion about an economics class. A long video but I sat and listened it as I did some farming, dungeons, and other stuff in the game.

At the end of that video the instructor did a small experiment where he had a group of buyers and a group of sellers. Long story short the buyers and sellers without knowing all the rules and theories of economics made trades that showed the true market value of an item.

Your post Minion of Vey.4398 helped clarify that whole bit for me. Figure out the true value and then you are able to buy low and sell high without needing to do any sort of market manipulation or pump and dumps.

I have admittedly always been poor on MMOs and never been successful at any sort of in game economy, but I am finding I need to learn if I want to get anywhere in this game.

CMF,

I’m very impressed and delighted that you took the time to watch the lecture, as it is about an hour and a half long! I thought it was pretty funny that one girl messed it all up because should couldn’t remember her cost. I bet the professor was like, I know someone who’s not going to pass this class.

Anyway, the man talking is John Geanakoplos. He is the current James Tobin Professor of Economics at Yale and the Managing Director of the hedge fund group know as Ellington Management, which manages around $30 Billion dollars. From 2007 to 2011, they have had a total return of 59%, which is incredible. The old saying of those who can’t do, teach, definitely doesn’t apply to him. His entire Yale course for the semester is posted in 24, 1.15 minute videos. I’m really glad they were posted because I’d never have had enough money to get into a place like Yale. He does get into some mid to high level statistics at some points, but if you don’t like it or don’t understand it, you can fast forward past the mathematical stuff and just listen to his theories and principles. I particularly enjoyed and learned a lot from his lectures on the Merchant of Venice (#7), Social Security (#10 &24), and the Mutual Fund Theorem (#23). Like you, farming and trading can get dull for me and it’s nice have something that can occupy my brain and potentially gain me something other than GW2 gold.

Minion of Vey.4398:

See Post Above

Excellent Post!

I would definitely recommend setting up a watch-list on spidy to anyone who wishes to make their living off the TP. For those of you who run into trouble creating an account, try using your google+ account to login. I’d recommend you add all white and blue crafting items below 1s to your watch-list. You can do this by clicking the items tab at the top of the page and selecting crafting, then filtering for while and blue items. I’d also concentrate of the raw crafting materials vs. any second generation materials. Minion is right, you will start getting a feel for the range an item trades at as well as how much you can move through the auction house on a given night. However, I can’t keep track of them all as he does, so I use a spreadsheet to record my bid amounts, if you take the time to do this, you’ll be more likely to avoid unintentionally selling at a loss.

Additionally, when you go to post your auctions, make sure that the lowest selling price is really the legit lowest selling prices. Many times people just throw 1 or 2 items up on the TP somewhere in the middle between the real bid and ask amounts. On most occasions, this is due to pure newbness but their are people who will place a sell bid right above the buy bid in hopes that you will choose to sell your item directly to them instead of selling it at the actual lowest seller bid. So, check before you match lowest seller.

When I encounter situations like the above, I purchase these items and list them right below or in the actual sell wall (depending on how big it is). However, this doesn’t apply to big ticket items, for those items, it is usually better to wait for someone else to buy it before listing your items. This leads me to my last piece of advice and a common practice that can lead to a slightly larger ROI on each trade. When you are checking for sell walls, you may notice multiple small amounts between the current lowest seller and what I call a hard sell wall (this varies by commodity but you’ll start picking it up but as a very very very rough guide, let’s say 1,000 units for blue and 25,000 units for white). This is a natural thing that happens when instant demand slips for a short time. However, if you are confident that this is the case and that it is not a new sell wall that is forming, AND you’ve done the math to make sure it is profitable, you can buy up these smaller orders and re-list them right below or in the hard sell wall. It will take time and experience before you can start doing this successfully but once you can, you’ll be able to add a few more percentage points to the profit on each trade.

Horheristo.3607:

Logun.5360

I’m glad you took your time and fully responded to each part of my post.
It was, unfortunately, meaningless…
I still make far more gold than a very high % of the community per hour, and as matter of fact – it is people like you who push my gph even higher.

But I’m no hypocrite and I’d like to see the majority of the population remaining more pleased for a better thriving game, than to face with more players who will eventually decide to rage and eventually quit over the ever-so-difficult market.

By the way, I don’t need a major in anything, I’m smart enough to get around on my own, and would wildly guess that probably better than you as well.

I have no problem with farmers, they are an integral part of the economy. I’ve farmed a plenty in many other games. Part of the fun then was trying to figure out ways to do it more efficiently than everyone else, as in the AoE farming video I posted. I support your right to farm and I hope you will see the benefit of a fair market value for your goods as more people become active on the Trading Post. The GW2 market will never be as efficient as any of the US stock exchanges but I believe it will be better than any WoW server auction house, maybe better than every other MMO except EvE, we’ll just have to wait and see.

Ryuujin.8236:

John Smith.4610:

Arbitrage is transferring value between two markets, flipping is attempting to create opportunity between buy and sell price in a single market.

Oh, I stand corrected then :o – flipping is an actual term? It sounded so… colloquial I assumed it was just slang.

The moar you know xD
http://en.wikipedia.org/wiki/Flipping

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.

http://en.wikipedia.org/wiki/Day_trading
http://en.wikipedia.org/wiki/Spread_trade

BabelFish.7234:

I’m not calling you a villain. I think you’re a GW2 entrepreneur who is taking advantage of a chaotic market which has a by-product of hurting others.

Now excuse me while I read on this Soros guy, you make him out to be as evil and vile as Nathan Rothschild when he bought London by spreading false information of Napoleon winning the Napoleonic war.

Read up on him, he’s a good example of what happens when someone who’s good with finances and is morally ambiguous spots a weakness they can exploit.
The Rothschild incident I mentioned is a much better example of malicious, morally devoid profiteering.

Babel,

I had sometime to reread the thread this afternoon and it occurred to me just how rude I was being to you. It was uncalled for. Regardless of our difference in opinion, I could have made my points without being so coarse but I didn’t. Please accept my sincerest apologizes.

BabelFish.7234:

What were to happen if a player (like myself) was to invest a large sum or real life money into the gem store, convert it to gold and buy every last rare type of commodity (such as ecto).

Then what would happen if I destroyed every last one of those ectos?
What would the effect be on the TP?

ArenaNet would probably send you a gift basket for christmas But after that, they’d probably just up the drop rate or instantly restore the items you destroyed. They have interfered in the market before, remember the butter, logs, and something else for chests in the mystic forge? Some people made 1,000s of gold off of that. I wasn’t one of them.

BabelFish.7234:

Who is hurt by this system?
Traders who artificially inflate the market and then cause crashes for their own profit
(normal traders who buy and sell within a 2-3 week period will be unaffected)

There are many valuable economic lessons that one can learn in this game and as such, not be forced to learn them in real life. I have never pumped and dump. I have been very straight forward in the “Gold per Hour” thread and made no secret about what I believe would happen, what I made happen, and what might happen. I have broken demand walls that were high and supply walls that were close the vendor price, thus increasing fluidity in the market. The only people who were hurt were the speculators who hoped to make a quick buck without having any idea what was going on. Despite what you may think, I’ve made my fortune not on the misfortune and exploitation in others but on sound, legal, earning principles that are used in the real market.

If you’d like to learn more about the real villains in the world, you need look no further than Liberal Demagogue Investor George Soros and his manipulation of the currency and oil markets.

http://en.wikipedia.org/wiki/George_Soros

Your comment on the Rich in Sweden illustrates an ignorance the is common to liberals, and that is the difference between taxing income and taxing wealth.

You see, the wealthy already have their money and need only fear wealth taxes such as death, inheritance, and estate taxes. In 2005, Sweden abolished all of their wealth taxes, and that is is why the super wealthy moved there, because they’d rather pay an exorbitant income tax rate of 57% on $10,000,0000, ($5.7 million in taxes) instead of an estate tax rate of 55% on a $2,000,000,000 ($1.1 billion in taxes).

Taxing income is the main barrier of entry into the wealthy class and it hurts those who want to move up in life.

Taxing wealth is taxing the money you’ve already earned, a second time, at a much high rate. The greatest irony to me is that the primary reason that liberals advocate a wealth tax is “fairness”, when it’s obviously robbery by vote.

BabelFish.7234:

In real life insider trading is illegal for the same reasons that my system deters organized market manipulation. In fact this system is more lenient then the real life counterpart. You’re still able to organize under this system, however the impact your group tries to make is limited by reducing the period of time that your artificial boom/bust cycle will impact the average user.

Please read these short articles, so that we are both on the same page. Then after you are done, we can talk about what is legal in the real world, what is legal in the game and if the game should mirror the real world.

Insider Trading
http://en.wikipedia.org/wiki/Insider_trading

Institutional Investors
http://en.wikipedia.org/wiki/Institutional_investors

Market Manipulation
http://en.wikipedia.org/wiki/Market_manipulation

Murder
http://en.wikipedia.org/wiki/Murder

BabelFish.7234:

Sweden did it successfully and are currently one of the best countries in the world to live in with a incredibly low crime rate per capita and is home to a large portion of the world’s richest people despite having a larger economic impact on them.

Coincidence? I think not.

Gullibility and self-delusion are dangerous, Sweden is not the socialist utopia that liberals would like us to believe. Additionally, you point to the one spot of false hope in the otherwise universal collapse of the current socialist European states (Greece, Spain, etc. etc.)

http://www.forbes.com/global/2001/0319/034.html
http://www.paoracle.com/SocialismWORKS!/index.php?sw=Sweden

BabelFish.7234:

Dear god, that is not a revolt. A revolt is what happened in the Russian revolution or what is currently happening in Syria. In the video game world a revolt is what happened with BioWare’s ME3 or Blizzard’s D3.

Were we not talking about real world examples? Revolts happen when you can leave the system in the real world. I can leave the game, I think it’s reasonable that we call massive amounts of people leaving a game a revolt. Because none off us are going to storm the offices or ArenaNet when we can just leave if we were not enjoying ourselves.

BabelFish.7234:

People revolt when one of two things happen:
1) the system is totally unfair to the masses (my system actually benefits the masses by limiting the amount of damage players like you can cause to the market)

2) when a product (or in real life-government) is so unsatisfactory that people feel they have been genuinely tricked, lied to and have lost their faith in the institution/company that provides said product.

1) The last thing I want in a video game is all things “fair” for the masses. When there is nothing to strive for but mediocrity in a game, there is little reason to play. WoW changed the model of their game after they were purchased by Activism. The game has been continually dumbed down since then and “fairness” abounds. (see my post at the bottom of the third page of the “Gold per hour” thread for specific examples of what WoW did wrong and why I came to GW2).

2) As to this, I believe you should have more reason to attack ArenaNet for it’s current business model of selling randomness out of the cash shop, not my investing in the TP, which you could totally avoid if you didn’t want to play it, just as I totally avoid anything outside of the TP (except WvWvW)

BabelFish.7234:

Personally, I think the points you’ve made are dripping in bias and melodramatics.
This system clearly would hurt investors trying to manipulate the market (not invest, you can still invest in this system) and from what I’ve seen of you you’re one of the people who tries to manipulate behind the “scenes”.

This system would essentially be the newspaper to the nose that you deserve.

You have not put forth a system, but an idea, and a bad one. It is based on a government system that when it fails, it fails spectacularly, and when it “succeeds” you have Venezuela and Cuba. Lastly, it relies on the premise that the video game world should mirror the real world, which it obviously shouldn’t.

I’ve been getting a growing number of PMs and while I enjoy helping people, I’m starting to spend more time on the forums than in game. So, I figured I’d share a recent PM that I sent to a new trader in hopes that I can save some time by just linking to particular posts when I’m PM’d.

You need to pick a number of items that are selling within the profitable range and spread all of your money across them in bid orders. Look at the buy listing data on the graph, look at the spikes down for offers, see if you can make a profit buy placing a bid for the item at the down spike. For example, if you see an item that spikes down to 14c, calculate your break-even point to see if you can sell it within the avg. trading range. 14c/.85 = 16.47c break-even, so if you see that you can sell at 21c then, 21c-16.46c = 4.53c profit, but 4.53c looks like nothing. However, if you put in orders for 10,000 units at 14c at night (knowing that the market can churn that supply) and sell them for 21c the next day, then you’ve made 4.53g profit. It would take you 14g to buy 10,000 units but you’d get a 32% ROI. I wouldn’t advise you put your gold all on one item though (that’s spread trading overnight and it’s dangerous) , but instead, find one item, like above, and place orders for 500-1,000, then find another similar item and do the same thing, and another , and so on. With 25g, you should be able to place bids on 20-25 items of this type. This way, you are “hedging” and “diversifying” your investments. Some of your items will spike down and you’ll need to hold them a little longer (or sell them if you notice a crash, it’s ok to sell at a loss, you aren’t married to this item and you should dump it if you notice a new down trend)but overall you should be up. From this point on, you’re just growing your investment by ~10-25% every day. Every night, put all of it back in the market, then sell the stuff from the previous night. And if you are diligent and stick to the system, an interesting thing is going to happen…compound returns on your investment. And if someone asks you if you would rather one million dollars today or a one penny doubled every day for 30 days, then you’ll know how to answer, and you’ll know why you should be investing your money in real life, as early in life, as you can.

Gold at 25% ROI & A Penny Doubled

Day 1 I 25 I $0.01
Day 2 I 31 I $0.02
Day 3 I 39 I $0.04
Day 4 I 49 I $0.08
Day 5 I 61 I $0.16
Day 6 I 76 I $0.32
Day 7 I 95 I $0.64
Day 8 I 119 I $1.28
Day 9 I 149 I $2.56
Day 10 I 186 I $5.12
Day 11 I 233 I $10.24
Day 12 I 291 I $20.48
Day 13 I 364 I $40.96
Day 14 I 455 I $81.92
Day 15 I 568 I $163.84
Day 16 I 711 I $327.68
Day 17 I 888 I $655.36
Day 18 I 1,110 I $1,310.72
Day 19 I 1,388 I $2,621.44
Day 20 I 1,735 I $5,242.88
Day 21 I 2,168 I $10,485.76
Day 22 I 2,711 I $20,971.52
Day 23 I 3,388 I $41,943.04
Day 24 I 4,235 I $83,886.08
Day 25 I 5,294 I $167,772.16
Day 26 I 6,617 I $335,544.32
Day 27 I 8,272 I $671,088.64
Day 28 I 10,340 I $1,342,177.28
Day 29 I 12,925 I $2,684,354.56
Day 30 I 16,156 I $5,368,709.12

P.S. Trolls, this is an example only, ROI% will fluctuate up and down. Additionally, you will start hitting diminishing returns because of the 6 stack per 60s ArenaNet cap and the fact not all of your bids will be filled.

Telegraph.7509:

This is actually similar to what happens in a lot of markets in the real world, no? The main thing that keeps those market in check is the presence of several of these “rich investors” who may compete against each other. If one rich investor sees signs of somebody buying up a market, he can do the same and try to crash the other guy’s speculation by dumping early.

Yes and George Soros usually wins.

BabelFish.7234:

This system is pretty much fool proof unless you get thousands of players together and they all start over or under bidding for weeks and weeks and weeks but that’s the thing: if the masses aren’t happy with something they have a right not to buy it and thus cause the prices to reduce.

That’s called a revolt and they often happen under extremely oppressive governments.

BabelFish.7234:

Zid.4196:

OP is a communist.

This is actually a socialist system I’ve suggested. Learn your different types of government. :p

Both have failed every time they’ve been tried. Jeez, enough of us have to deal with this in real life, must we also be subjected to it in our video games?

BabelFish.7234:

Just read another thread which supports my thesis
http://www.guildwars2guru.com/topic/76013-buy-group/

We can’t let people organize, that wouldn’t be fair.

Seriously, if ArenaNet made any of your changes, I’d gladly leave this game myself.