Low Capital Trading

Having received a question from Brullig on FHC about it, I thought I would mention tips here for how to make the most profit possible from trading when you only have a small amount of capital to start with (<500mill).

(1) Margin trading skill: This skill is super important early on to make the most of the cash you have in your wallet. It is most useful when trading items that have low turnover (say enyos or cap mods) as your buy orders will be filled slowly, so the isk you retain in your wallet can be used for more high volume trading (cap rechargers, damage controls etc). More info on it here.

(2) Other skills: Competition in most hubs is fierce and margins will be cut and slashed to their limits. You need to minimise losses from taxes and broker related skills, so do train broker relations etc to their max level as soon as possible. This is even more important since yesterday... a stealthy change from CCP in patch notes:

(3) Standings: By having good standings to the station owner, you pay less taxes. If you trade at Jita, run some missions for the caldari navy - it will help in the long run by saving you some %s!

(4) What hub? Jita is the hub that tends to draw the most active and powerful traders, mostly because a majority of moon goo flows through it compared to any other hub. However, it also means you have to compete against the no job/no life players who can update orders every 5 mins. I started my trading in Hek around 4 years ago, dealing with +2 and +3 implants. It was a slower market, but I was able to control my few item types with much less competition. I could play less hours, yet still make sure my buy orders remained on top and sell orders the lowest.

(5) Regional Trading: If you run missions, set up buy orders in mission hubs for common items that drop and sell orders for common consumables (ammo, drones). Many others do this, but there are usually good margins to be made as you have a pretty constant player base (mission runners never stop grinding!). This requires hauling, but that is almost a necessity early on.

(6) Do you pvp? Especially, in lowsec... when fleets aren't running or you are camped in station, always browse the markets for items you can fit into a cloaky hauler (so you can safely remove from lowsec). Always have an alt in jita to compare market prices - if you see a deal, especially those where the sell price in lowsec is lower than the highsec buy price - jump on it! Dont forget to check out contracts too, people firesale items all the time.

(7) Live in 0.0? This is how I really made my ISKies originally. Trade between 0.0 alliance hubs and jita. Ofc this requires a carrier and your own cynos (or a JF ideally, but you'd be amazed what you can do with a carrier only). 0.0 folk expect a 5-30% markup, so if you have access to a decent hub, then this can be excellent business.

(8) Start Manufacturing: Depending on how many alts you have, train one to Production Efficiency 5 and start building. By producing and selling an item in hubs, you will learn the most about the behaviour of that product, it's cycles, the main competitiors who build the product etc. Since missions stopped dropping meta 0 items, there is actually space for manufactures to make isk on low-end products. However, ammo is always a safe (but low margin) bet too!

(9) Burnout! The fewer orders you have to babysit, the better. Let's face it, trading isnt super thrilling. If you have 300mill ISK, have buy/sell orders for no more than 5 items. If you have 3000mill ISK, then dont dabble in more than 10-20 items. I try not to have more than 40 buy/sell orders up at any time, as otherwise updating them all (especially in hubs) will make you go grey.

And finally...

(10) Raise equity: This is what I did with FCV, and there is no reason anyone can't do it. Easiest if you have RL friends with spare ISK, this can still be done if you don't. Approaching corp or alliance mates, or approach people with ISK and offer collateral. If taking a loan, many people are happy for small (~5-6%) percentage of your earnings, so if you are trading a lot, a loan can be a sensible idea.

As an aside, consider the advantage of more ISK using this example:

Say you have 300mill ISK and lets assume that you can turnover 10% profit per week = 30mill

Lets assume this takes 20mins an evening, 6 days a week, which gives an isk/hour of 15mill/hr.

That's not bad, but you would be better off mining, ratting or missioning all which can easily hit 20mill an hour.

However, lets say a friend lends you 700mill for a total of 1bill. With 10% profit = 100mill/week.

Orders might take 10mins longer to organise per evening, but you are now making 33.3mill/hr.

The point I am making is that 0.0 ratting or mission running have a max profit/hr of around 60mill. And that is by really tweaking all the details (and investing in expensive ratting/mission ships). The profit per/hour in trading is only limited to how much ISK you have to invest. Of course, 10% profit per week is quite a modest amount for an active trader and as an added bonus, trading is super easy activity to have on a second account while pvping with a main. I have made millions while waiting for guns to cycle in big fleet fights with time dilation!

That's all my tips for now - if I have forgotten anything major - do let me know!

Thin Markets in action

At the end of last week I posted about a trading opportunity I called 'Thin Markets'. In this post, I want to illustrate it with a example from my own market activities.

The item I manipulated was the Capital Shield Transporter. This is a prime example of a good item for this sort of market play as supply is controlled solely by manufacturers (and doesn't drop in missions etc). Therefore, as supply has a slow response to demand, the market is very flexible to manipulation hits.

As discussed in the last blog post, I discovered a thin market for this item:

I hope you agree that the above distribution of sales looks a lot like this graph with the sales highlighted in the blue box above representing an 'island' of under priced orders.

But before buying up the stock, I had a quick check of the market trends:

Looking at the graph, it looked like the transporters had bottomed out of this sales cycle and would be rising over the weekend. Additionally, buying up 18 units for resale only represented 30-40% of day's sale volume, so I should be able to shift the stock relatively quickly. Prices normally rise over the weekend too as the weekend warriors log on and get shopping. Following the eve trading motto of 'red below green, buy. green below red, sell', I thought this was a perfect example of a thin market waiting to be pounced on.

And so I bought the stock and relisted:

The items did sell over the weekend, and overall a small but easy profit of 80-90mill was made.

"Thin Markets" - a market opportunity

In this post I am going to introduce you to what I call "thin markets" and how one can take advantage of these markets to turn profits in trading. I will start off with a hypothetical situation and tomorrow I will post some screenshots of me (hopefully) pulling it off.

First of all, lets imagine a distribution of sell orders prices for a random item:

Graph A: We can see the distribution of sell orders initially has a normal distribution at the high end of the price range (y-axis is an arbitrary price, x-axis is the sell price from high ---> low).

Of those sell orders, some will sit there unchanged (ie not actively managed) while others are constantly repriced (ie actively managed by market traders). Over time, the distribution of sell order prices will begin to shift toward lower prices (and volume will disappear from market as consumers make purchases).

Graph B: We can see the shifting of sell prices trending cheaper. What can happen next is when opporunities arise. Some traders/sellers might keep agressively pushing the price lower in order to sell stock as quickly as possible. As such, these actively managed sell orders can become cheaper so quickly that they 'seperate' from the original price point (and those high sell orders which remain unchanged). The distribution of sell orders can start to look like this:

Graph C: The peak in red above is what I call a 'thin market' where an island of sell orders has become isolated in price from the bulk of other sell orders on the market. Sometimes, a powerful market play can be made to purchase all the stock in that red peak, and relist at a higher price point as shown below:

Graph D: By shifting the peak back up, profits can be made. This has the added advantage that you have just removed all stock from those actively trading on the market, so it will be easier to control the market for longer and to sell more products at the new higher price.

Of course, this plan can backfire if a new producer comes along and dumps a new large inventory of stock onto the market and undercuts by a large margin. But that's the fun of the game :)

No risk - no isk.

Tomorrow or these weekend I will post the results of a market play just like the one above, so stay tuned.

Trade Shifts outside of Hubs

To be the most profitable trader in Jita (or another hub), you really need to work from home. 

When devblogs or other clues are dropped about upcoming game changes, those first able to hoard/dump the stock of item X in the hubs stands to gain the most. I'm sure many of you, like myself, read devblogs at work and then realise by the time we get home the markets would have already seen a major shift (and most likely an overshoot of the actual effect,  meaning that buying in late can cause major losses). 

In any case, for those of you in this position - use alts to scan other regions that lack major trading hubs. In my case, given the way T1 and T2 prices have surged in the last 2months, I spent some time poking around the lowsecs surrounding Jita (with my pvp main - 2birds1stone etc). As market orders are updated or filled slowly in lowsec, many sell orders were now very cheap relative to the hubs. So I bought mostly T2 ships off the market, hauled them to Jita and sold them to buy orders for nice profits with a minimum of work. Below is a snapshot of some buy/sells using muninns and devoters:

 

As you can see - I was getting from 12 - 16mill ISK profit per hull. 

So for those of you with a real life - dont forget how the regions surrounding market hubs often lag behind the trade patterns established in those hubs - opening up a range of profitable trades waiting to be exploited. 

Till next time.

Who needs 100billion ISK?

When you start a fund for raising more than 10bill, eyebrows are always raised. Up to that amount and many investors dont think twice - it seems like a reasonable amount.

However, there are many market opportunities that exist that can only be exploited by those with a lot of liquiduity available to them at all times. 

A prime example would be how I made the first 600mill profit for FCV with only 10minutes work. 

Fullerides market in Jita can be pretty volatile, as few people playing that market hold stock off the market to list at a later date (Fullerides are so valuable that they often need to be sold immediately to regain ISK to buy more reactants and so on).

Anyway, a stock of underpriced goods was identified and purchased at 3799.95 pu, and then relisted at 4017.30 pu...

Competition on the market meant I had to cut sell prices to 3980/70...

As you can see, over 600mill profit was made and orders had to be adjusted only two or three times. However, if I didn't happen to have a spare 12bill ISK available, this easy money making opportunity would have been lost.

Have a good weekend, and lets see what market surprises I can hustle up for you...

Share Sale Complete

The sale is over!

While the original IPO plan was to raise 100b, after reviewing my plans I realised that I could fufill my industrial goals with slightly less initial capital and also offer better per-share returns in October. Therefore the total number of shares sold so far is 70, with 10 held in reserve for investors who don't currently have the ISK on hand, or should I need to raise more equity in the future. While 100b was a nice round number, the risk was that during the next 6 months, large piles of isk would sit un-invested and thus would reduce the overall ROI of the project.

And I am aiming for a high ROI :)

So, to start off with - who invested? While I wont be publishing names, I will share where investors came from. Despite the suspicion of scam - FCV has raised funds from 3 main sources: (1) current and former corpmates (2) "Institutions" - in this case failheap and (3) corp ceos who have worked with me in the past and who are interested in investing corp savings.

So, some piecharts:

And to break down those numbers further into who purchased how many shares each:

So with the share sale complete, making space dollars can commence. I will post more info on that soon.

If you are interested in purchasing some of the reserve shares, then do get in touch.

EVE-O thread

The EVE-O MD thread is live.  Viva the eve-o trolls!

VV has posted his audit in there too. I expect the share sale to complete within 48hrs now.

Share Sale Progress

The share sale has been following the following schedule:

Phase 1 - Shares are sold to preferred, corporate and institutional investors
Phase 2 - Shares are sold to the public 

Phase 1 has run from the 2nd of May and so far over 57 shares have been sold, with a further 10 shares reserved. This leaves only 33 shares up for sale.

Later today, Phase 2 sales will begin to the EVE-o public with a MD thread to be posted soon.

A link will go up later with the MD sales thread. If you are interested in getting invested, please send ISK as soon as possible to 'FireFly CEO' as shares are sold on a first come, first served basis.

Audit is done

Great news, Vaerah Vahrokha has completed his audit of this project. 


For details, go here.

If you have any questions, feel free to evemail Cheeba Don.

Now that the audit is complete, phase 2 of the share sale will begin soon.

Welcome

Welcome to the FCV Blog

Instead of a newsletter, I will be using this platform to keep investees and those interested in the project up to date with my activities.

The share sale is currenlty in Phase 1 sales (preferred investors) but will open up to the general public soon. Phase 2 sales will begin later this weekend.

Business proposal and details of the project can be found here.

Shortly I will be posting an audit report done by Vaerah Vahrokha for those interested in getting confirmation that I have the assets, skills and experience to fuel this project.

To note:

To purchase shares - send isk to 'FireFly CEO' - he is CEO of a Firefly Capital Ventures, a one man holding corp created specifically for this project.