General topics about Barons of the Galaxy
Dispelling the Myths about Traders or "Flippers"
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EventHorizon Posts: 23
12/14/2017
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So apparently my hardcore foray into what many players call "flipping" or what is normally just referred to as trade, international trade, interpanetary trade etc has touched a few nerves and sparked some intense debate on the local channels. I will be 100% honest here about how much I've been able to make in credits and how much work is involved.
How much am I earning? Currently my income daily, IF I'm on top of my trade network and the last few days my internet was down so I haven't been able to do that, is about 5 to 6 million per turn which translates to about $750 million per day. I suspect I could get this even higher if I put in even more time and built even more transports but it probably maxes out around $ 1 Billion per day. It took me a while to figure this strategy out and longer to be able to produce all the transports required and understand how to set up their order loops etc. If I were to start from scratch again I suspect I could be up to about $500 million per day in less than 5 days.
How do you earn money trading?
The answer seems quite simple. Buy low, transport to another city and sell high. In practice however there is a lot more to it. First of all you need to do your market research. For this you'll need a pen and paper because the existing report in game has one fatal flaw that basically makes it nearly useless for traders. It's one use is to see changes in trade percentages over the last 500 turns. The flaw is that it doesn't show trade volumes, average, high, low or most recent. Trade volumes determine how much you can trade between cities and how quickly demand % will change in response to your trading activity. This is important because trade depends on wide margins between buying and selling. While you can sell high you also have to pay twice the market rate to buy the goods in the first place. For trading to be worthwhile you need a margin of at least 500%. You might look at the market and think well that's not very common. BUT it's more common than you think because the margins for higher end products are multiplied. Components are worth 3.25 times their demand percentage and End Products are worth 7.5 times their demand percentage. So a 500% margin for raw materials translates to about 150% for components and about 75% for End Products. Because a single point change in demand percentage has a much more significant impact for End Products and Components you have to increase this to compensate for the more rapid deterioration of profit margins. I generally won't trade components for less than about 225 to 250% margin and End Products for less than about 150% margin.
It's important to understand how trade volumes work. For those who aren't familiar the trade volume of a city determines how much of a good can be bought to raise the demand by 1 point or sold to lower it by 1 point. For traders this is especially important on the low end because you buy at twice the demand % but sell directly at the demand %. When you set up a trade loop between two cities for a given product you have to consider how long it will take before the demand percentages converge to a point where your trade will no longer be profitable. The absolute bottom is going to be where your sell % is just twice your buy% but in reality is that it's somewhat higher because you're never going to set up the perfect trade network, and some trades will go into the negative for you, especially as your trade network grows larger and the time required to adjust trades every day grows larger. So trade volumes are important and the reality is that unless you have a very large margin on a given trade or have the time to switch up trades more than once a day (which honestly seems largely unworkable for anyone who has a job or any kind of a life outside the game) you're going to want to avoid buying in any city with less than 200 trade volume and mostly want to focus on cities that have 300 or better. In cities like Rabat with 1000 to 3000 trade volumes you can run multiple trades for the same product, each with a different selling or buying destination, if you use level 1 transports at 500 cargo capacity. While upgrading your transports will make more profits for you in the short term, it will also tank your routes more quickly (especially if there is a large disparity in trade volumes between buy and sell markets) and end up costing you more over the course of a 144 turn cycle (24 hours) and even worse if you happen to have a day where you have to let your trades hang because you don't have time to get online. If you really want to get into micromanagement you could tell your transports to fill only at the current trade volume but that's a lot of micromanagement and probably not worth your time to fuss with. In practice some of your routes will be slowed by other players buying at the same time as you and forcing your transport to take additional turns to fill. Volumes will also change in response to your trading activity and other players' activity. Such is the chaos of a market system.
So, as you can see most of the work in trading is in the repeated rounds of market research and reassigning trades on a daily basis. I don't bother with raw materials trades because it's rare to find 500% plus trade margins and even when you do it is a very narrow market because there are only a small number of raw materials where you're going to have a lot of competition from producers that will throw most of your calculations out of whack anyway. The money is in components where margins tend to be the highest (at least right now because of the size of current cities on earth - and yes earth is mainly where you can actually do a proper trading strategy, everywhere else there just aren't the trade volumes or the diversity of nearby markets to make it worthwhile) and in end products where you can make the biggest profits, especially in interplanetary trade (but also require more maintenance to avoid crashing your margins and suddenly costing you a lot of money).
Doing all this reasearch probably takes at least an hour to an hour and a half on a daily basis with pen and paper in hand and A LOT of clicking on the demand tab of the view screen until you have surveyed all Components and all End Products (low and high percentages), written down the buy and sell percentages (these need to be adjusted so that you have a standard for Components and End Products or it can get very confusing very fast) that meet your minimum standards and eliminating any with too low trade volumes (unless the margins are very high), and finally ranked your trades from best to worst. That's the first step.
The second step is to check your list against the trades you already have running, adjust any trades that include products that are in your list (usually this means changing either the buy or sell destinations or sometimes both), mark all the product trades that are no longer profitable or only minimally profitable and then switch them up to ones that are. This process requires that you have a proper naming system that includes Product Abbreviation then Buy City then Sell City for your transports so you can find and organize them more easily on your Assets page. It also involves A LOT of micromanaging because not only do you have to change destinations for move to and buy/sell orders but you also have to adjust the order of orders so that transports that still have old product can go sell them before starting the new loop.
I'm still in the process of perfecting this but I would guess that to maximize market potential you could go as high as 30 plus transports on Earth and probably a half dozen or more Frigates (freighters are too slow) for interplanetary runs (the jump gate tolls and the cost of frigates both to build, upgrade and maintain means you have to have even higher margins to make it profitable). That's with the existing market and level of competition in trading.
So, if you think trading is "easy" you couldn't be more wrong. It's actually quite challenging, both in terms of time and in terms of understanding some key game mechanics and doing the necessary calculations. Next post I'll address the myth that trading is parasitic and has no benefits for cities or non-trading players.
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Lorian Vyorin Posts: 8
12/14/2017
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You can post long paragraphs about basic day trading techniques all day but you're not going to convince me that flipping products in this game is some complex process. But whatever man we've all moved on anyway
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Maharava Posts: 29
12/14/2017
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Remember, kids, trading ONLY WORKS if someone's building cities up for you
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EventHorizon Posts: 23
12/15/2017
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Maharava wrote:
Remember, kids, trading ONLY WORKS if someone's building cities up for you
and the reverse is also true. Building cities only works if someone's trading for you. Or more to the point, building planets and solar systems rather than trying to favor one city over another only works if you have people trading, often in large volumes. This is even truer when the game is underpopulated and too few players are spread too thinly over too many systems and cities. Temporary imbalances in demand percentages are unavoidable because of the gap between plans laid and plans realized and how the market changes unpredictably in the meantime. Long term disparities where players waste resources trying make one city grow, rather than distributing evenly to make all cities grow, is a choice that players make, and from a global or even systemic perspective it means that while a few players may gain prominence in their isolated fiefdoms, the system as a whole will suffer because of that waste . Yes, competition is part of the game but at what level does it make sense to let that override the need for cooperation? Traders are in the unique position of both wanting populations to grow because it increases trade volumes and increases trade opportunities as well as holding no loyalty to any particular city, but rather to the planet and system as a whole. They want all populations to grow, not just the one in a specific city. One city growing to a large size while others wither and die (and 30% of the posts in local are anouncements of cities failing) is completely useless for traders. ALL trade involves redistributing the profits earned in production so that corps can profit indirectly from the growth of the market as a whole. In this game it is unavoidable that players will do so and that some will specialize in that. This is an important counterbalance to the tendency of many players wanting to just build their own individual cities, which in many cases is likely because it is less time consuming and makes the game simpler to play. It is not that trading players are behaving parasitically. It is that the game design makes large scale trading so time consuming that only a minority of players have the time and energy to sustain it and therefore only a small number gain a lot of profits from a lot of activity. Because trade is important to growth we should find ways to make it easier to do and to rebalance the game so that both producers and traders can gain an equitable share of the profits.
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