She arrives early, maybe after a quick workout or a cup of coffee, but always with enough time to get a feel for the markets before they open. She skims the financial papers and the news wires and listens to internal reports from her firm on expected market movements for the day. By the time the trading bell rings, indicating markets are now open for trading, she’s already got a feel for the pace of the day and a plan of action as to how to achieve profit. Some of her peers will be trading for the long term; others will be looking for a quick turnaround. She has a plan in mind herself, and will work towards that purpose all day. She quits the day early, soon after the markets have closed, but her mind is constantly racing as to how to improve her game. For trading is a mindset, not just a form of employment, and goes well beyond the boundaries of nine to five.
Wall Street is obviously a very different game than WoW. But it is, indeed, a game nonetheless, and it is in this overlap that we can learn a few things that might apply to building riches in World of Warcraft.
There are many, many different types of traders, all in different markets and with varying approaches towards reaching their profit goals. And, less we come off as ethnocentric, it should also be mentioned that the vast majority of the world’s traders don’t actually work on Wall Street, but in one of the many other trading hubs throughout the world. However, regardless of where a trader conducts their business- be it their bedroom or Broadway- there are certain tools and terms that remain consistent to all players in the game. And here again we see some overlap with WoW.
At the heart of these trading rules is the bid/ask system. It is with these simple terms that a trader can set the parameters by which they think they can profit. Put simply, a bid is the amount for wish a buyer is willing to pay for an asset. The ask price is the amount the seller will sell it for. Both terms are in absolutes meaning that the bid price is the maximum price the buyer will pay and the ask price the minimum equivalent on the seller’s side. The difference between the two is called the spread. We’ll summarize quickly here:
When first you log in to do your daily WoW trading, get a feel for the market(s) that you’re involved in (or wish to be involved in), and decide on a limit in price (a bid) that you’re willing to pay for the items in this market. As you’re doing so, also decide your selling (or asking) price. You should, of course, be both a buyer and a seller in WoW at all times. You may not do both every day, but by having a set price in mind for each end of the trading equation, you can always generate profit, even when prices are moving downwards. This is a much more effective means of trading items because, just as on Wall Street, it removes all emotion from your trading and thus increases your profit potential. When you just “look for good deals” or “buy it when you want it” you may make choices based on your emotions, instead of logical and profitable decisions. Put another way, your ‘wants’ and what ‘looks good’ can change day-to-day and minute-to-minute even but, by deciding on pre-set bid/ask amounts, all emotion is removed. It either meets your criteria or it doesn’t. This is also another example of an area in which a tool like Auctioneer can help you trade profitably.
Having decided on your bid amount, you simply buy out any items priced below this threshold and bid on any others that have bid prices below the threshold. Alternatively, if the markets are up, place the items you wish to sell for your on the AH for your asking price. If you set your AH bid amount different than your buyout amount (which we don’t advise) then the bid amount of the item should be your ask price. Otherwise your ask price is the amount for which you set AH auction to bid/buyout.
Just be sure that your spread covers the amount of the auction house cut and every sale you make will be profitable. The only real trick then, is deciding on realistic levels of bid and ask. Of course we all want to sell items for twice as much as we bought them for (or more) but this is unrealistic, and the goal is to actually sell the items while the market is high, not to keep losing money on AH deposit fees. Items with no deposit fee are exempt from this and may be placed on the AH with a bit more of a longer term outlook if you wish.
By way of example, let’s talk about Titansteel bars. We select this item because we have heard from many readers that they have been ‘stocking up’ in anticipation of patch 3.1 and they want to know when the price is going to rise and it will be time to sell. Well, to that we say, “When you say stocking up, what was the cost of either creating or purchasing the bars?” Often the response is between 70 and 80 gold. We next want to know what the fair price (or average ask price in Wall St. terms) of the bars is on their server at the moment. The common answer is in the mid nineties. So the answer as to when to sell is then ‘now’. If you can make 15 to 25 gold on a single item, and you have a bunch of them stocked up, then sell. It is more profitable to continue producing or buying the bars at 75 gold and reselling them for a modest profit than it is to hold them all and wait for ‘the perfect time’. Or, in the words of the English essayist Samuel Johnson, “Nothing will ever be attempted if all possible objections must first be overcome.” So, sell when you can make a profit and stop waiting for that perfect time that may never come. Remember that WoW, like Wall Street, is a long-term game and the goal of the profiteer is to build wealth steadily and consistently, not in a single day. Yes, there will be times when the market will be higher than you recently sold for, or lower than what you bought an item for, but so long as you do your research, the steady income beats out the big sale any day.
As we sign off, let’s go back to our Wall Street trader for a moment. Her title is more descriptive then it initially suggests. She is, indeed, trading her assets. At times she is a seller (when the market is high) and other times she is a buyer (when the price is right). There is actually very little skill involved beyond knowing how to set her bid and ask limits based on the information at hand and adhering to this regime without the impediment of emotion. See if you can’t muster a bit of this same mentality in your WoW trading and be sure to let us know how this approach works for you.