Runescape Merchanting Guide


Table of Contents
Introduction
What to Merchant:
How to Merchant:
Hazards:
Other:

Momentum Trades Overview



Momentum trades are the type of merchanting that most Runescape players recognize instantly. The idea is simple: if the price of an item appears to be headed up (the reasons for and categories of items this happens to most often are outlined below), buy the item, hold for as long as you have the stomach or until the price appears to stop going up and then sell fast before it crashes. But what really separates this style of merchanting from others is that the market is the driving force. Once an item appears to be increasing, other players (perhaps less skilled merchants) will also start to buy the item in hopes of making a quick return. This drives the price even higher due to the familiar laws of supply and demand.

In many ways this form of merchanting can border on a pump-and-dump pyramid scheme when it involves random items. merchanting clans are famous for this. But momentum trades can be very lucrative when they are based on logic and market economics. Some of the considerations you must make if you want to engage in a rational momentum trade - that is, buy items that are going up now - are as follows:
Rare Items - The momentum behinds rare items (party hats, Santa hats, discs of returning, Halloween masks, etcetera) is fairly simple: there is a finite number of each item, growing more limited with every passing day as players lose them and retire from the game. Additionally, in-game inflation is a persistent phenomenon. Over time, there are more and more gold coins entering the economy, causing money to be worth less. Players want to possess rare items and are always willing to (and will be forced to) pay more and more for these items. This cycle of supply and demand is mutually reinforcing, driving upward price momentum. In general, this is a longer-term investment, though it can also be a short term trade.

New Items - New game items have a number of unique characteristics that make them a valuable merchanting opportunity. The first is novelty; new items are intrinsically new. Players are often willing to pay more for something that not everyone has just to possess it. The second is limited supply. When items are newly introduced, depending on the process to obtain them, there are fewer items on the market. Alongside high demand, merchants with fast timing can profit of players anxious to have the latest-and-greatest. Finally, because new items are generally either under- or over-valued, it takes time for the market to decide what they should be worth (the invisible hand, remember); Fewer players resort to the grand exchange price to determine what an item is worth when it's brand new. Until this settles out it is easier to command a premium price for items which, in turn, has the effect of increasing profit rates. In general trade is shorter in duration.

Speculative Items - This category closely resembles merchanting clans with a subtle difference. Items that merchants are involved with tend to have capital backstops. In essence, working together helps to drive up the price of items, even if only marginally. As long as the price increases are rational and not outrageous, this helps to create a safety net for all merchants in the item. When returns become clearer, following the 'pile-on' theory, other players will likely join the party, propelling more profit. It's best to time your exit shortly thereafter before the bloodbath starts. It should be noted that worthless items never qualify as "merchanting items." No, they're junk. Merchanting items are items that have some intrinsic value to them, either as a skilling item that many people use or a weapon/armor that people want. Ashes will never be a merchanting item; this is where the difference between a pyramid scheme and a momentum trade resides. This is a short-term trade.
 
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