Thursday, 3 December 2009

Explanation of flipping in Runescape

Basically flipping is quite possibly the easiest method of Grand Exchange trading there is, and the one that has been around the longest period of time in some form or another.

Simply put you buy a product such as feathers in the old day for 6gp, and quickly put up for sale at 7gp.

Contrary to popular believe this is not a bad form of reselling whereby youbring prices down or drive them up, all you do is maintain an equilibrium that has been settled upon over many months between supply and demand.

A couple of years ago I did it to great effect with fire runes, buying at 10gp at the afternoon GMT and selling at 11gp during the night, the reason this worked is because the vast majority of players did not have any or were just about to produce them. What happens in the case of that is that at the end of the night more will get put into the GE simply because it is needed which didn't exist earlier. However it happened, buying in one timeslot and selling at another is a great trick, not too many can stay on the computer 12 hours and there are too many people simply buying in one world and selling in another for it to work effectively.

Fire runes are good for something like this for a beginner, yet they will not bring in vast sums of money, simply buy for minimum price or middle and sell maximum.

16 comments:

  1. So when you buy minimum, you're pulling the price down, then when you sell maximum, you're pushing it up again?

    Bear in mind that I'm a noob at economics, why does it sell at max, when you can buy them at min?

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  2. It is quite rare for that to happen actually, only working in something like 50:1 of cases, what tends to happen more often than not is that I will buy say...duel rings for 1600 min price when the middle is 1700 (purely as an example, don't quote me on percentages lol)

    what may happen is that the price will drop but since the usual good buy price is 1650 it will stop at around that yet many would've panic-sold at minimum and I can sell middle price for 50gp profit or simply buy lots at 1650 and watch it go up again.

    There is an important factor to point out here, it could continue dropping or simply hold steady but since duels are supremely valuable for the gaming, banking and skilling applications if you simply buy at around 1650-1750 you should have no problem making money as there will always be someone to fleece lol

    If you hold onto them the chances are they will rise 1-2gp and then that will be your cue to sell at about maximum price -5gp.

    So long as you do not pay much more than the cost it would take to acquire a cut gem, gold bar and the necessary runes to enchant it you should be able to sell them for profit, simply put, if the buy prices rises above 1700-1750 stop buying and switch to something else until the supply outweighs the demand and costs fall again.

    This is basically what all market makers do, contrary to clans who purposely create demand and over supply, we simply react to it, we buy in times of plenty to stop the prices crashing, and we sell in times of scarcity to make sure it goes no further...the money we make is the fee for the risk we take :)

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  3. I've heard tell of this before, the old style merchanters stabilising the market with buying and selling. The knowledge to do that borders upon the mystical from my point of view.

    I can get my head around the merching clans, because that's just an elaborate scam; but watching the tides of merchanting in order to pick the best to surf up, that's magic.

    How do you know when to intervene and when to just let the market sort itself out? Is there ever a time when, for example, coconuts are rising out of control and you'd love to scream, 'Merch stop farming! We're over-stocked!' LOL I think I'm seeing you all as a kind of quartermaster. LOL

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  4. Yes, there will always be a point when the price is soaring beyond all hope of redemption, my personal rule is to always sell after 1-2 days, regardless of whether something is set to rise if it hits my target sell price.

    Black chaps have soared to a ridiculous price of 8500 for whatever reason I do not have a clue, I simply bought at 5400 and sold at 6000, there comes that little voice in your head sometimes that tells you to risk it and buy again at 6200, then 6400, then 6600...ignore it.

    Once you have sold off an item you are far better off taking that profit and placing it in something else otherwise you run the risk of simply buying the stock of someone who chose to sell at that point, if he has 20,000 more than the market can handle the price will drop like a stone, andit may be months until it gets so high again.

    Basically we all watch items whether we know it or not, we all have preconceived ideas of what is a good price to buy and what is a good price to sell, all market makers do is take that akashic knowledge and buy and sell in bulk at roughly those points in order to create supply or demand :)

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  5. The biggest reason is that people are impatient, if someone wants to go off to the pest control now they don't really want to be standing around for 30-60 minutes on the off chance that someone may sell some black chaps for minimum price or even middle, they will simply bang an offer in for maximum in the hopes of getting it in seconds.

    Similarly, if someone has been collecting something such as green chaps for ages from the elf rangers and simply dumped them in the Lleyta bank they may go to the GE one day and want a quick sale..

    Someone like me will always be there to accommodate them,simply by giving them what they want and then giving someone else what ttthey wthey want too :)

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  6. Interesting post there Spar. There are some other ways to predict the performance than your "intuition". Mainly that past performance is the best predictor of future performance. Having a set system will help you avoid losing money, and help you to choose the items you plan on merching.

    Small transactions, like collecting chaps (why wouldn't u alch those?) don't have much of an affect on the GE. Using the 180 day graph and gauging the daily price against the average is far better. If it is below the average, the items is under prices, and in high supply. Motivated sellers are out there to dump it. Buy below the mid. If it is over the average, it is a sign not to buy it, as the supply is low and people will pay a premium, and the price will probably come down to the equilibrium.

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  7. Exactly what I do, black chaps for instance, I wait until they are at around 5400 or certainly under 5500, yet I will not pay more because I know that the average price of them overall is 5600, and I don't like paying premiums when trading lol

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  8. Thank you both. I'm having quite an education here. :D

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