In my previous post I mentioned that farming materials is a good method to make gold while playing the game. Provided, of course, that farming is something you enjoy doing. The next step involves learning a little more about the market for the materials that you are gathering. This is a small step, and will mostly likely happen naturally.
The concept is simple enough and is most easily illustrated with an example. Using a mining toon you fly all across Pandaria gathering stacks of ghost iron ore. With all these stacks of ore collected there are several options open for you:
1: You can horde these stacks in your bank, on alts, or wherever.
2: Craft something.
3: Run to the AH and post the lot undercutting everyone.
4: Send to a power seller for a predetermined value.
5: Become a commodity broker.
Option 5 is a method that will put your stock of ore to work for you. The idea here is to post you stacks of ore in a way to influence the current market, and take advantage of maximizing your selling profit. The important part of this approach is to understand the pricing break points for the ore value and the rate in which it is selling. The Undermine Journal has excellent history data for understanding these trends which I plan to cover in future posts. For this discussion I will work with the processes of simply feeling your way through the trends.
Start by looking at the current selling price, I always work with the per-unit price instead of stack price. It helps to normalize the value for partial stacks. For the ghost iron ore, I see the lowest post is 3.40g, I post 2-3 stacks of my ore at 3.60g for 12 hours only. Then wait to see if they sell. If it does sell, repost a little higher. Repeat this until ore stops selling. Let’s say that happened at around 4.00g. Follow this posting trend over a week or so and get a feel for how the market moves. It will be different on weekends versus weekdays, holidays, etc. It is simply in game behavior that drives this, Tuesday and Wed are when there are more raid teams running and less people out farming, supply will be lower thus have more value. Weekends, there are less raiding and more material farming and more supply, prices will drop. Sometimes, it’s still a game.
I personally preferred to slow release my inventory when prices were high, above 4g, post volume, 10+stacks in the upper range 3.50-4g, and only a few stacks again when it gets below 3.5. The reason I prefer the slow release of stock instead of large posts is flooding the market with quantity of material can cause it to drop quickly (a valid strategy), where posting small amounts can keep the price high, allowing you to refresh posts when things sell. The remote armory is a great way to manage this approach without being in game. I would stop posting in the 3.0g range. When the price would drop below 2.75 I switch and to become a buyer.
Switching to buyer mode is where things become interesting, because it’s buying that helps control the market. Now, the AH trader concerned about pure profit will account for the AH posting and sales fees, but that ignores the effect of being a buyer on the price. Other sellers will take note that their stacks sell, and sell quick, thus raising the price back up. For example, if the price drops to 2g, because some farmer isn’t watching the current market, I switch to buy mode. Buy everything below some threshold, based on the current posting trends. If I see there is a large price gap in availability between 4.25g and 3.50, I will buy everything below the 4.25, then repost a few at 4.23. Then post a few at a time as the price drops back down. It’s your selling and buying trend that will control the price swings.
There you have it the commodity trading game. Figuring out when to buy, selling high, tapper off as it gets lower until it’s time to buy and sell. Just be aware you have competitors out there doing the same thing, and may try and trick the market to move for their own reasons. Playing this way can even get you out of the farming game completely as your profits will come from flipping.
So when you are doing this who are your competitors, interestingly it really isn’t other farmers. They want the price just as high as you. The real competitors are the power sellers. The players who craft and sell in bulk, jewel crafters, blacksmiths, and engineers are for the ore market. See, they want the price low, as low as they can make it. They will often seed the AH will very low ore, trying to fool the casual farmer in selling under value. Let them. Just buy the cheap stuff and repost higher.
This type of AH playing is pretty simple and doesn’t take a lot of time. Simply posting will give you the feel for the price ranges and the rest should work itself out. This approach can easily be applied to anything in the game, but is most easily controlled with the raw mats for the major professions.
Hope this helps and feel free to post or send me questions.