Free GE merchanting guide.

Preamble

Ok this has been posted in response to many crap guides being posted up in the sales section and being claimed to be worth lots of real life cash...this guide does not claim to have any similarities to other guides, however I would not be surprised whatsoever if this guide is very similar to others being sold...

I do not wish for people to bag out this guide (although you obviously can). The guide is for the people who don’t want to pay or were not able to pay and still like making money. This took me about one hour to write, im giving it away for free, unlike many people charging for similar things and it came off the top of my head. I do not claim anything to be ingenious or clever in this guide, except for the fact that IF done properly and correctly, it will make you on average 2.5% profit on your invested money.

This guide is quite long, as I take a while to explain a few concepts. You might know everything in this guide, if so don’t bother getting upset, the guide wasn’t written for you. It’s for the people who don’t know these things. Be warned that it is the equivalent of four pages of word document text and most is dry, boring material. But making money is not a walk in the park. Unless you have judgement skills and can use basic logic skills you will not make money with this.





Basic Idea

With the GE, it’s obviously no longer possible to flog off coal and ten times what it should be sold at. Quite obvious. It’s also a lot harder to buy rare items and expect them to go skyrocketing to heaven in price. I’m sure most people have seen the complete LACK of movement from any party hat in the GE over the last who the fuck knows how long...

Another of the recent ideas is to invest, you buy item X just like a rare, and hope it goes up in price on the GE, then you sell it a week later for more. This idea will work, and can make you rich, however there are problems with this idea that make it not as good as it could be. If the GE was done properly, there would be no exact limit to listing prices. If some idiot wanted coal at 10k ea then go for it, but no, jagex wants you to not rip each other, because of this the price rises and drops can only go within certain limits which are quite small and makes making an huge fortune in 2 days quite hard.

Because of this, the most effective way IMO to make money purely through the GE is bulk small margin merchanting...

This means in principle you buy lots of item at X price and sell at a small margin above X in price. (THIS WILL NOT WORK if you try to buy at the lowest price and sell at the highest).




Kinda Like a Stock Exchange

Why NOT buy at lowest/sell highest? The GE is run almost (Ill explain why not exactly later) exactly like the stock exchange, items are stocks and they run a simple depth chart to see who buys from who and who sells from who.






Here is a picture of a REAL stock and its depth chart. As you can see above there are two main columns, one for the buying orders and obviously one for the selling orders. The important thing to see here is HOW the orders are...well...ordered.

The orders at the top are the ones who will get processed first (ie they get the item first). The buyer who is first is the order at the highest price, makes sense the person who wants it for the highest price gets priority, and likewise, the person who is selling for the lowest price gets priority over other sellers who put orders at higher prices.

The other thing that’s interesting to look at is a third and fourth small column over on the far left and right, it's called 'number' and shows that there are multiple orders at the same price...obviously this means that there are X people who all want to either sell or buy the item at the same price. In this case the person who placed his or her order first gets priority over others.

Now I know that sounded very boring but it can be used to explain a lot of odd things that happen to your orders. Lets say we are buying coal, and going to merchant it now. If I listed at the lowest price possible, I would get put at the absolute BOTTOM of the depth chart. This is because I’m the latest person to list AND I’m at the lowest price, over time I might become the oldest person on that price level, BUT ANY single order that listed AT ANY TIME even 1gp higher in price would get priority over me for coal...

Given that, I don’t think I would get ANY coal at all. What about if someone sells at the lowest price? Surely I would get some then? NOPE, because even though someone selling at the lowest price would be the top priority on the sellers list, you are not the top priority on the buyers list...

In short, when there is ANY overlap in price between the buyer and seller in the entire depth listing, ie SOME number of coal is going to sell/buy within another margin then the TOP priority orders are cancelled out and they trade... So what’s the lesson? If you want to buy an item, you have to be the TOP priority buyer. Therefore you will practically NEVER get anything from the GE whilst listing at the lowest price possible, unless there are exceptional circumstances, for example, the price is crashing AND OR the lowest price happens to BE the middle range price too. We will assume for the moment that this is NOT happening.

SO we will not be listing at the bottom price, and not selling at the top. OK?



Buying in Bulk

Back to what we will be doing. We want coal, so we have to be the top order in the depth listing, at the same time, we want to also not pay too much, because obviously we want to resell the item for PROFIT, so the less we pay the better, sometimes this can be very hard to judge. The good news is that somewhere in the world of RS, someone is ALWAYS desperate to sell coal and someone is ALWAYS desperate to buy it. All we have to do is make sure they don’t meet each other =p

So generally its a good idea to not list more than 1% below the normal (middle range) price. It depends slightly per item and you'll have to check it out yourself. For this example, dealing with coal, I would say go 1gp below at max and quite often I would be happy for the middle range price exactly. A good way to see how easy it is to get the item is to list a buy of 100 for 10 under middle price, wait 10 seconds and see if anything happens, if it doesn’t, re-list that order with a slightly higher price, and see at what price exactly you start to get coal instantly. This will tell you what the lowest selling coal seller is selling for, and can give you an idea of if the price is going up or down. Coal that can be bought for 5 under middle price is quite obviously going down in price (this is not hugely important, and ill go through the different tactics later). Make sure you don’t list for 10kazillion coal at middle price if for some bizarre reason the price is crashing and at the current moment you can get it for 5 under middle instantly.

You want a buying price that’s not going to get done instantly, and will probably take at least an hour to get finished, this is why one below sometimes is better...obviously the time it takes will depend more on how many of the item you WANT. 10billion coal will take months to clear, even at max, it only trades in volumes of 8 or so million a day, do some math. Even with 100k coal bought you have about a 1% share in the volume traded per day, that’s a lot peoples so be patient.

Half the time taken to buy will be because you waiting in line, when you list there WILL be someone, probably 10 people in front of you, they might want 1million, 100, or 10 coal between them, and there’s no way of knowing how long it will take or how many coal it is. The other half is once your in the front of the list for THAT price, you just have to wait for enough people to sell at your price or lower, and every time someone who’s higher in price puts in an order, yours will sit there and just do nothing, so being low in price might seem smart but we want to do BULK trading with LOW profit margins here, so don’t be greedy.



Selling in Bulk

OK, so we got our coal, now we want to resell. Well now we understand depths, this time we can explain it faster. Its pretty much exactly like buying, except this time we have to get a lower price to be higher priority in the depth. Obviously listing too high will put us at too low a priority, but also listing too low will sell our coal at practically no profit or even a loss. Here’s a couple of easy ways to roughly judge your selling price...

Putting it halfway between Highest and Middle price is roughly a good start. Another more specific way would be to follow my 2.5% margin mark. So take the items middle price, work out 2.5% and put it for that much higher in price. For coal this would be like selling about 5-6gp higher than what you paid. Again don’t list everything at once, test the water, if it sells instantly, then your not listing high enough in price...we want to sell it to the occasional member who comes along and is desperate to get coal NOW. they will probably list the coal at top price just to get it instantly, but we have to be the top priority in the depth in order to get his money. Selling the stuff should be just as slow as buying it, there’s no point in sitting around waiting for it to go, take a 6 hour break at least.

If your item hasn’t been bought or sold at ALL in 12 hours, then you have a problem and need to change price. If you have got some gold/coal in the 12 hours but no ALL of it then you might not have a problem. As soon as you get some coal/gold that proves you are the top priority at THAT price, and the only thing stopping you from getting more is either no sellers/buyers at that price OR too many people listing below/above and taking your priority away. Again there’s not much point in re-listing it, wait it out a little while and see what happens.




The Fun Part

Ok now ages and ages ago (at least to me it seemed it) I said that the GE isn’t exactly like a stock exchange. The most important feature that is not part of the GE is the rules in place to stop any one trade from buying AND selling one item at the same time. In RS there is no such rule, and members are free to listing a buy for coal at 185 and a sell of coal for 190. This gives members much more freedom to manipulate prices in the GE to their own purpose as they can basically reduce the supply of coal at lower prices whilst increasing the supply at higher prices. NO I did not say that the total supply OR demand changed. But the supply at 185 would go POOF, whilst I bought it all, and the supply of coal at 190 would go up dramatically. Especially if I say, bought 100k coal one day at 185, then listed another buy order for 100k coal the next day at 185 AND listed a sell for 100k coal (the coal bought yesterday) at 190.

I just forced a whole lot of people to pay 190 instead of 185, and kept it that way by having the supply of coal at 185 KEPT in my direction only. To make this effective, I must have the second 100k coal buy order in there for as long as possible, but at the same time, if the order was finished it would be useless. In this case I would re-list another long before it was finished in order to keep pressure on the market at that price. All the while I can sell 190 coal freely and the money gained goes back into more orders at 185 priced coal. By having both buys and sells at once you can have a much tighter control of the supply at certain prices and thus control the overall price to a certain extent.




Trading Whilst the Price Drops

Now unfortunately, we cant always buy into and item, say coal, that just happens to be going UP in price at the time, and I don’t personally believe that you should just give up on that item until its 'finished' going down. This goes back to just boring investing. We are trading on the fact that there are desperate people in the markets every second, and this is still true whilst the price drops, it just becomes more important to watch your prices. For example, if you list a buy at middle range price, and the GE prices change, you can find your order is now middle +X gp, this might only be 1gp, but it could be 3 or 5 or some large number off the middle range, in which your order goes from being not very aggressive to suddenly being a high-end order, and you start looking like a desperate buyer.

The only real tactic to avoid this is to watch your items prices and not leave huge orders on without checking them every now and then (at least every 12 hours, hopefully 6 or 3). Also to get better at predicting a drop in price. For example, coals going up, its gone from 185 to 205 over the past week, (this is not really happening just making it up), coal doesn’t usually go much above 200, I would expect soon the price to go down, each day the price has gone up, I would expect that one day the price will stop going up, the net change in price will be zero. This is a perfect signal that the next day the price will drop. If you have to buy, re-list at lower prices by 1-2gp, be safe and careful. Remember your not trading on the price going up, your trading on just being able to sell for 2.5% higher than you paid.

Whilst selling, your listings may go from being 2.5% above middle range prices to being 3-5% above middle range. This is the worst thing that can happen, obviously it wont take much before the middle range price is far less than you paid, and any sale will net you a loss. There are two ways to handle this, take a quick get-out listing at a price that’s maybe as little as 0.5% above what you paid (usually 1-2gp). Or hold onto your items until the price is finished dropping and goes back up again. I DO NOT like the second option, you have to wait, that is bad, investing = bad. And you do not know it will go back up (good for you if you do know it will) or how long it will take.

When the price is going down, you want to quite simply shift your price range so that instead of buying at middle-ish range price, you buy more at middle minus 2-3gp (1.5-2%) and sell at more just over middle range price (0.5%-1.5%). This will help you handle the fact that prices don’t just rise and rise, and yet, we can make money.





I hope this helps you make money to your best.

 

Good guide. But many people looking for guides (including myself) don't want to even wait 2 days to make the profit. You are just stating what most people already know. Don't get me wrong this is a good guide, but it wasn't really needed (for me at least). Nice job and well written. 8/10

P.S. Glad you didn't charge for it

 

Yes, thankyou for that.

It has come to my attention, that there is an alleged system which prevent users from buying and re-selling the same item over some time period or over some profit limit. I have not encountered this system, but I cannot say without doubt that it does not exist. If it does this guide will only serve usefull to show you how to price your buys and sells very effectively, another guide posts about converting set items into sets to avoid this system. This guide could help with the placement of orders so that you actually get to buy and sell the bits you need, as Im sure plenty of people will try this set system now it has been posted. Unfortunately this guide must now be taken with a semi-large grain of salt.

 

Quite nice, Might use this.

 

Please stop leaking my guides. Mods please delete this thread. Thanks.

 

Great Guide, 1 Problem..

when you buy something from the g.e., you CANNOT re-sell that same item in the g.e. for 4 hours.

so make sure not to buy within 4-5 hours of g.e. update.. or you could actually loose gp

Goodluck!

 

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A very nice guide. Well done writing it, it must've taken you a long time. It explains some interesting concepts very well that I wasn't aware/educated on.

10/10

 

good guide m8 i miss the good old days of basic merchanting

 

Very in-depth guide, I'm gonna try it but I know it's not making much money for me when I only have 3m =\

 

It is basic, but it has lots of quality information that i can use, thanks.

 

10/10. I cant say anything else. Thanx for giving it out for free...and not like other noobs who actually sell guides to make money...i Mean get a life wtf?