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  1. #1
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    Arby's Paper - Explaining the AH market

    Explaining the Market
    - by Arby


    Introduction


    For a long time, I’ve been trying to figure out patterns in the market by reading gold-capped blogs, only to be disappointed time and again when expectations don’t face up to reality. There are a few guides on the Consortium that are very, very useful (thanks Acry!), but the vast majority of them point out the painfully obvious, or require you to spend so much time into gold making such that you cannot find time to enjoy the bulk of the game itself (i.e. raiding, questing, PvP).

    I’ve been playing on a very highly populated server, and it’s quite likely that you are too. You’re probably in a top 20 server. Such servers present a unique challenge because there are many other goblins besides you trying to make gold. Long story short, making gold on such a server is many times more difficult than on a small server where you can squash the competition rather easily. However, large servers are better for the overall game experience, so that’s presumably why you’re playing on one.

    Here I will present a collection of my hypotheses that will aim to make you a smarter, more efficient goblin. If you’re looking for “real” advice in the current market, this is it. This really is it.

    What kind of player are you?


    Are you a wind trader with 5 alts and lots of time, a casual gold maker, or a raider just trying to build up a comfortable nest egg so you can take gold worries off your mind? My hypotheses are mostly aimed towards the casual gold maker, who wants to hit the gold cap but are struggling to, but already have sizeable capital. But maybe the latter type of player could also find it useful.

    I personally play with only one alt, and 4 professions. I hate leveling, I really do. I also hate grinding rep for recipes but I’m forced to. I’ve about 2 hours to spend a day having fun, and that’s it. There’s absolutely no reason why I should “play” (work?) in a game which I don’t enjoy.

    Well, if that sounds like you, then read on!


    Part I. The Rules of the AH Game



    1. Other people are richer than you

    This is the #1 fact you have to live with. Unless you’re a player who has been playing for ages, there’s likely to be someone richer trying to sell the same things you are.

    2. Other people have more time than you

    Obvious fact #2. But it’s okay.

    3. Don’t wall

    Walling is 99% of the time a bad idea if you’re trying to get rid of competition. They’re not going away if there’s profit to be made. Only wall if you’re willing to dump. Major markets, such as glyphs, gems, enchants, potions and so on move far too quickly and have far too many people trying to bring prices down through undercutting. The fact is you’re never going to corner the market for “current” goods. It’s a viable option, however, for previous x-pac stuff such as transmogrifiables, twink enchants etc.

    4. Bots exist

    Many people bot the AH on high pop realms, undercutting you every 5 minutes or less. Just look for the level 1 orcs with gibberish names and no achieves whatsoever. I’ve come to the conclusion that the same gold sellers who perpetually spam trade chat also engage in botting and so on. That is to say, it’s unlikely you’ll ever get rid of them by reporting. Don’t get me wrong – from experience reports do work! But they have so many hacked accounts that it just doesn’t matter, and they’ll be back tomorrow.

    Blizzard is sluggardly in handling this, but eventually they do their job. By doing mass banwaves, they get to the root of the problem and extinguish it – at least for a few weeks, until new botting software is created.

    5. Don’t fight the bots

    It’s like trying to beat a computer at math.

    6. Use bots to your advantage

    In the same vein, while bots throttle your sales, they’re great to buy raw materials from. A server that is heavily botted has tons of cheap ore and common herbs. Eventually, prices of rare raw mats will also drop steadily, but not as precipitously as say, ghost iron ore. So buy lots of them while they’re cheap.


    What kind of market is it?


    This is the number one, most important, essential, indispensible thing you have to learn if you want to make gold.


    • Is it a buyers market?
    • Is it a sellers market?


    A buyers market is a market where demand controls the price of the goods. There is simply more stuff on the AH than people wanting to buy it. A sellers market is where supply controls the price of the goods.

    I’ll be frank with you – it’s a buyers market 95% of the time. The 5% when it is a sellers market occurs right after a patch and a large banwave hits, such that demand greatly outstrips supply for 2-3 weeks.

    This is when you rake in the dough. Try to plan for these weeks, such as taking a holiday off work etc. so you can invest more time in the game.


    Use the time in a buyer’s market to prepare for the sellers market

    Quite simply, you want to be the buyer when it is a buyer’s market. Aim for around mid patch where there is just so much raw materials lying around that you can buy huge amounts for very low prices because nobody wants them.

    READ PATCH PREVIEWS so you know what to stock up on. For example, if living steel is going to be used to make high-level raid quality items, then stock up on them, as we all know the market has since crashed and is likely to crash further.

    If A can be turned into B easily, then B will be priced accordingly

    If something can be made into something else without limits such as a one-day cooldown, then the rule of the thumb is that it is not going to make much profit before long. Powerful epic items (such as Relic of <Chinese God>) are exempt from this rule early on in the patch, but are quickly subject to it as time wears on. But I assume that you’re primarily dealing in the major markets, so…

    Let’s take the Cataclysm example of the carnelian. If 3 carnelians can be transmuted into an inferno ruby (the best gem in Cata) with a cheap, common herb, then it is very unlikely that you will make much profit through buying carnelians and doing just that, because the price of 3 carnelians is likely to be = 1 inferno ruby, or very slightly less.

    Long story short, people aren’t dumb.

    But if A can become B which becomes C which can be disenchanted into D…

    Aha! Now we’re talking!

    The more “steps” you introduce along the way into the crafting process, the more profitable it becomes, because the majority of players are likely to ignore the fact that these steps exist when pricing their goods. That’s the basis of the elementium shuffle.

    Sometimes it is useful to hedge on the fact that some of the materials used in the chain to turn A into D are going to take a tumble as demand falls throughout the expansion, or drop rates are adjusted.

    For example, trillium bars (B), which can be turned into living steel (C), which is essential in creating epic craftables (D), is likely going to be less important once guilds have bosses on farm and do not need to “max-out” their toons for progression. Expect prices to fall hard.

    The lesson is to always look for indirect, unobvious ways to turn As into Bs, as less people are likely to be aware of it. Have a think about it and see what you can come up with!


    Part II. Making the most of your time



    I hope I have already explained how to theoretically make gold in a seller’s market. That’s the easy part. Now we will move onto actually SELLING them, and day-to-day operations in a buyer’s market (the other 95% of the time).

    First of all, in a seller’s market, you ideally want to camp the AH for 4 hours prime-time on end so that you can sell stuff while demand is highest. Here are some tips:


    • Always wait for the first raiding weekend to see how prices fluctuate
    • Always be on the lookout for goods with only a few listings so that you can reset the market
    • Don’t spend a fortune resetting the market as prices drop to “appropriate levels” very quickly. It’s hard to put a finger on “appropriate” but with experience you will learn


    Don’t diversify too much!!!!!

    I think this is the most common mistake most people make. It’s okay to diversify into slow moving markets but it’s NOT okay to diversify into fast moving markets when it is a seller’s market.

    For every item you diversify into, you spend more time checking Auctionator or TSM if it has been undercut. If you’re selling 200 different items, then you’re going to spend god-derping ages scanning the market every time. That’s dumb.

    What you should be doing is to concentrate heavily into the most popular markets such that you are scanning through 20-30 different items MAX. What you want to do is to scan your sales every 5 minutes or less and relist so yours is always cheapest.

    Do 2 things at once

    Have lots of stacks of your goods in your bags you can immediately undercut once you’re no longer cheapest. You want to cancel as seldom as possible, and do it all in one go, and retrieve them from the mailbox.

    Also, you can do stuff like transmute or craft while scanning the AH – so do 2 things at once for maximum efficiency.

    Day to day sales

    This is when it’s hardest. Generally, the best thing to do day-to-day is to flip big ticket goods such as mounts, pets and so on instead of getting into undercutting wars with 3 other human competitors and 2 bots. Then you and the other 3 humans are the losers.

    When sales are slow, diversifying also helps. For example Netherstorm pets are a small but steady source of income and every little bit helps. I also like bottlenecking people from leveling professions, especially enchanting, JC and BS. But chances are that whatever market you may find, other people have already found it first. You take what you can get.

    Else, log on during prime-times (generally evenings) and sell what you can, but don’t expect to make much from small ticket items. I always find prices are highest mid week and drop somewhat on weekends. Ultimately a normal person will not be able to “beat” a basement dweller with a 10 hour heat map every day, but you can make up for that during demand spikes.

    Using trade chat as an alternative channel

    It’s not very efficient to sell in trade chat, but it helps when markets are slow. While on the AH, also try to advertise in chat – it doesn’t hurt.


    Lastly, know the limits of the Undermine Journal

    TUJ scans once per hour. That means that market prices can actually be significantly lower than listed, only it just doesn’t appear because cheap items are bought so quickly. Take this into consideration and try to figure out the times when bots post their daily stock, so you can jump right in on the cheapest goods.

    This article is by no means complete, and I will likely add to it in the future. I hope it has been useful to you. All comments are welcome, and a big Thank You for reading it.
    Last edited by arby2001; November 22nd, 2012 at 03:17 AM.

  2. #2
    US-Stormrage(A)
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    Don’t diversify too much!!!!!

    I think this is the most common mistake most people make. It’s okay to diversify into slow moving markets but it’s NOT okay to diversify into fast moving markets when it is a seller’s market.
    This guide is a decent read, but I have to disagree with the above statement to some degree. I am always diversified into a lot of markets, and I simply just don't check for undercuts on many of them very often. Plus, there are ways to be very efficient at checking undercuts on pertinent markets to where it's not terribly overwhelming. If I know I'm going to make my money back at the very least, but that I will more than likely make profit, then I'll diversify like crazy and just not worry if it takes longer to sell it all.

    All that being said this is a luxury afforded by having capital and a ton of experience and I suppose it wouldn't apply to just anyone. It definitely makes sense as you build capital to stick to a few markets that are working for you until you really feel comfortable diversifying.
    "A buyer has been found..." - The most beautiful words in the World...of Warcraft.

    Check out my Goblineering Guides:

    Overcutting
    | The Art of the Offer | Flipping MoP 80-85 Blues | Smelting Success

  3. #3
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    I understand your concerns. While it's perfectly okay to post in side markets (assuming you have a main/mains) and leave them idle for some time, my real point was not to overload your scans with too many items, as that slows down the process of undercutting when the market has very high activity.

  4. #4
    US-Azshara(H&A)
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    5. Don’t fight the bots

    It’s like trying to beat a computer at math.

    6. Use bots to your advantage

    In the same vein, while bots throttle your sales, they’re great to buy raw materials from. A server that is heavily botted has tons of cheap ore and common herbs. Eventually, prices of rare raw mats will also drop steadily, but not as precipitously as say, ghost iron ore. So buy lots of them while they’re cheap.

    I love this saying...don't fight the bots...use them to your advantage...I take botted goods and move them cross faction.
    Process that botted material to a much more valuable item.
    @jimmyolsenblues on twitter https://twitter.com/#!/jimmyolsenblues

  5. #5
    US-Stormrage(A)
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    Quote Originally Posted by arby2001 View Post
    I understand your concerns. While it's perfectly okay to post in side markets (assuming you have a main/mains) and leave them idle for some time, my real point was not to overload your scans with too many items, as that slows down the process of undercutting when the market has very high activity.
    I'm going to have to disagree as well. Markets that need this kind of attention usually don't have the GPH to make it worth excluding all other markets for, if you have to undercut that much you're fighting to many people and it's not a seller's market, it's a buyer's market. Make use of the TradeSkillMaster Desktop Application and common search terms to speed up your scans, and this issue of "too many items" won't be an issue at all (and it never was).

  6. #6
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    I have to agree with Xsinthis.
    On my server some markets are very popular to goblins. The competition is camping the AH all day long and therefore I decided to leave these markets and concentrate on markets with a higher GPH.

  7. #7
    US-Sargeras(A)
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    Quote Originally Posted by arby2001 View Post
    Don’t diversify too much!!!!!

    I think this is the most common mistake most people make. It’s okay to diversify into slow moving markets but it’s NOT okay to diversify into fast moving markets when it is a seller’s market.
    I disagree with you here, like some others, but you touch upon the why in your next section. It's all about time management. I work transmog, snatched items, level 90 crafted sets, tinkers/dragonlings, gems, enchants, darkmoon cards...probably one or two other things that's slipping my mind I only spend about 1 hour a day solidly working on *just* goldmaking stuff, on average; most of that is when I dual log scribes and mill a few hundred stacks of herbs, but I only need to do that every few days to keep my scribes and shoulder enchants. The rest of the time I can multitask and do it while I'm doing other things. The joy of two accounts.

    Believe me, a number of the markets I'm in move very fast. pvp gear and enchants especially, but I do quite well in them without spending all day on the AH on a main toon.

    Again, time management. Probably the hardest skill for a new goblin to learn, and it did take me a bit to get it down to where I'm as efficiant as I am now, but probably the most important skill we all make use of.

  8. #8
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    Okay, let me explain further. Before 4.3 I stocked up on gems and enchants, which were my main markets. On the first raiding weekend and a bit after that, I was selling gems and enchants as fast as I could list them, literally. Probably within 30 seconds to a minute. That's a seller's market, there's just no way to spin it otherwise, but for maximum profit you want to relist as much as possible, obviously. And I found a human can relist faster than a bot. I think the main reason why I outsold the competition significantly was because I relisted every minute or so, compared to their relisting every 5 minutes. I theorize that this is because they were going through long scanning lists, while I kept mine minimal - just about 15 to 20 of the highest selling items.

    As for diablous - I'm quite surprised, but I like the way you do things. On my server if I don't babysit my contenders and enchants (except the epic rep ones) they get undercut in less than 5 minutes.

  9. #9
    US-Stormrage(A)
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    Quote Originally Posted by arby2001 View Post
    Okay, let me explain further. Before 4.3 I stocked up on gems and enchants, which were my main markets. On the first raiding weekend and a bit after that, I was selling gems and enchants as fast as I could list them, literally. Probably within 30 seconds to a minute. That's a seller's market, there's just no way to spin it otherwise, but for maximum profit you want to relist as much as possible, obviously. And I found a human can relist faster than a bot. I think the main reason why I outsold the competition significantly was because I relisted every minute or so, compared to their relisting every 5 minutes. I theorize that this is because they were going through long scanning lists, while I kept mine minimal - just about 15 to 20 of the highest selling items.

    As for diablous - I'm quite surprised, but I like the way you do things. On my server if I don't babysit my contenders and enchants (except the epic rep ones) they get undercut in less than 5 minutes.
    If they were selling that quickly, and you were profiting, I'm wondering why you needed to relist so much, the demand should have eaten through your competition's stock at that rate

  10. #10
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    This is a decent guide for people like me who are new to gold making, but most of this information is common sense...
    Goals:
    Reach 100k - Earn an average of 5k per day. - Buy a full set of T3 (any set) from the BMAH

 

 

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