Well, actually you don't if you are fine with hauling for buy orders. This case you lose serious profit. If you are the station trader of your own item, you skip the sales tax and the broker fee for the transaction between the two. However your profit won't just be haul_profit + station_trade_profit + fees, if we assume that the item is currently not "properly" station traded.
Let's talk about the generic X which cannot be mass-produced but created by many individual sellers. Its also not mass-bought by industrialists but individual consumers. Perfect example is an implant. Its equilibrium value is 75, meaning that if all the buyers and sellers would be gathered together in an open bidding auction, the bid would stop at 75.
The buy orders therefore must be below 75 since if they would be above, the buyer would be flooded by X that he can't sell. The sell prices must be above 75 or the seller is bought out and his order disappears. How far they are from 75 depends on the competition or the brain of the monopolist. I mean if you are the lone station trader and set up buy orders at 5, you probably won't get a single item as sellers will rather make their own sell order or haul it to other hub.
But what is really interesting is that the prices are usually not symmetrical. I mean they are not 65-85, rather 50-80. The reason is that sellers are usually more patient than buyers. The one who sells X is more likely sets up a sell order, than a wannabe consumer setting up a buy order.
To make it more strange, the average price, the one listed in the price history window is usually also not 75 but higher. The reason is the same: the consumers are more likely to buy an overpriced sell order than the sellers to sell to an underpriced buy order. You can sell X for 149 but you can't buy it for 1.
Why is it important for you? Because as a hauler if you don't station trade you are bound to sell to the underpriced buy orders. If you just set up a sell order but don't station trade, you'll end up undercut since the sell price of an "unproperly" station traded item is usually way above the equilibrium, so the 0.01 punks can keep up undercutting you for long and still be with profit, while your profit is limited by your buy price in the place you haul from. You can easily end up at a loss, buying for 80 since you see they sell for 110 but when the undercutting ends, your item sells for 78 and for this -2 you hauled, updated prices for days and kept your capital locked.
How to "properly" station trade an item? By setting up buy orders in a way to ensure that the average sell price is 75 and the buy-sell region is symmetrical. How to do it? The safe but slow way, that involves no guessing is to make 2% steps. So if the buy orders (several 0.01 things) are at 40 and the sells are at 100, then the step size shall be 2. You buy at 42 and sell your first haul at 98. The exception is if the buy order is already below your hauling pickup price. So if you buy the item for 50 somewhere, you shall set the buy price to 50. It would be stupid to haul if you can buy it locally for the same price, right?
After that every day you update your prices if undercut. Since the distance is 60 and you make 2x2 step every day, in two weeks you'd reach zero profit, which will not happen as the 0.01s will give up and the individual buyers-sellers will accept your actual price before it happens. For example at 60 buy 80 sell the individual sellers will accept your buy order, supplying you with items. Whenever you have enough items to sell, don't haul. As the sell price keep dropping, more and more 0.01 punks give it up and go away. After their stocks are liquidated, they are removed from the sell side, so the sell price go up a bit. Finally you reach something like 70 buy 80 sell.
If you are happy hauling for your own buy order price, do, if not, don't. Please note that if you are busy hauling, the price will decrease due to the increased local supply. Whenever your buy price is below your hauling margin, stop hauling, just station trade. Calculating hauling profit with your sell price is a mistake. Imagine that you can buy for 70 and sell for 80 saying "I made 10 by hauling", while you could buy for 70 on the same station, making the same profit without any movement.
Moron of the day: I went to bring some Electrolytes to my coolant producing planet. I warped to the customs office and switched planet mode to make adjustments on the planet. Soon I heard the shield warning sound. Switched off the planet mode, and just in that second I was in the pod. Warped away and started checking who was the idiot who shot me for mere 8M cargo and 2M fittings. His name was Ammatar Navy Admiral. Since my last visit to that planet I was busy increasing Minmatar standing, therefore decreased my Ammatar standing below -5. Also did not notice that my planet is not in Minmatar space. Anyway, I got a diplomacy book and after rank 2 I could go back to loot my wreck and manage the planet.
Still, I'm not the moron of the day. While my action was really dumb, I'm nowhere near these two idiots who shown up when I was creating new bookmarks in Jita in an empty shuttle:
Don't forget to join the goblinworks channel to discuss trading and industrial ideas and laugh on the morons of the day (50-80 people on peak hours).
Let's talk about the generic X which cannot be mass-produced but created by many individual sellers. Its also not mass-bought by industrialists but individual consumers. Perfect example is an implant. Its equilibrium value is 75, meaning that if all the buyers and sellers would be gathered together in an open bidding auction, the bid would stop at 75.
The buy orders therefore must be below 75 since if they would be above, the buyer would be flooded by X that he can't sell. The sell prices must be above 75 or the seller is bought out and his order disappears. How far they are from 75 depends on the competition or the brain of the monopolist. I mean if you are the lone station trader and set up buy orders at 5, you probably won't get a single item as sellers will rather make their own sell order or haul it to other hub.
But what is really interesting is that the prices are usually not symmetrical. I mean they are not 65-85, rather 50-80. The reason is that sellers are usually more patient than buyers. The one who sells X is more likely sets up a sell order, than a wannabe consumer setting up a buy order.
To make it more strange, the average price, the one listed in the price history window is usually also not 75 but higher. The reason is the same: the consumers are more likely to buy an overpriced sell order than the sellers to sell to an underpriced buy order. You can sell X for 149 but you can't buy it for 1.
Why is it important for you? Because as a hauler if you don't station trade you are bound to sell to the underpriced buy orders. If you just set up a sell order but don't station trade, you'll end up undercut since the sell price of an "unproperly" station traded item is usually way above the equilibrium, so the 0.01 punks can keep up undercutting you for long and still be with profit, while your profit is limited by your buy price in the place you haul from. You can easily end up at a loss, buying for 80 since you see they sell for 110 but when the undercutting ends, your item sells for 78 and for this -2 you hauled, updated prices for days and kept your capital locked.
How to "properly" station trade an item? By setting up buy orders in a way to ensure that the average sell price is 75 and the buy-sell region is symmetrical. How to do it? The safe but slow way, that involves no guessing is to make 2% steps. So if the buy orders (several 0.01 things) are at 40 and the sells are at 100, then the step size shall be 2. You buy at 42 and sell your first haul at 98. The exception is if the buy order is already below your hauling pickup price. So if you buy the item for 50 somewhere, you shall set the buy price to 50. It would be stupid to haul if you can buy it locally for the same price, right?
After that every day you update your prices if undercut. Since the distance is 60 and you make 2x2 step every day, in two weeks you'd reach zero profit, which will not happen as the 0.01s will give up and the individual buyers-sellers will accept your actual price before it happens. For example at 60 buy 80 sell the individual sellers will accept your buy order, supplying you with items. Whenever you have enough items to sell, don't haul. As the sell price keep dropping, more and more 0.01 punks give it up and go away. After their stocks are liquidated, they are removed from the sell side, so the sell price go up a bit. Finally you reach something like 70 buy 80 sell.
If you are happy hauling for your own buy order price, do, if not, don't. Please note that if you are busy hauling, the price will decrease due to the increased local supply. Whenever your buy price is below your hauling margin, stop hauling, just station trade. Calculating hauling profit with your sell price is a mistake. Imagine that you can buy for 70 and sell for 80 saying "I made 10 by hauling", while you could buy for 70 on the same station, making the same profit without any movement.
Moron of the day: I went to bring some Electrolytes to my coolant producing planet. I warped to the customs office and switched planet mode to make adjustments on the planet. Soon I heard the shield warning sound. Switched off the planet mode, and just in that second I was in the pod. Warped away and started checking who was the idiot who shot me for mere 8M cargo and 2M fittings. His name was Ammatar Navy Admiral. Since my last visit to that planet I was busy increasing Minmatar standing, therefore decreased my Ammatar standing below -5. Also did not notice that my planet is not in Minmatar space. Anyway, I got a diplomacy book and after rank 2 I could go back to loot my wreck and manage the planet.
Still, I'm not the moron of the day. While my action was really dumb, I'm nowhere near these two idiots who shown up when I was creating new bookmarks in Jita in an empty shuttle:
Don't forget to join the goblinworks channel to discuss trading and industrial ideas and laugh on the morons of the day (50-80 people on peak hours).
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