On to part 2 of this series. This post assumes that you have:
1. Downloaded the Auctioneer Add-on
2. Scanned the auction house at least thrice a week
How to make more than 27,000g Daily
I was never a gold freak in the game, but this player over here is really raking it in. I was using his techniques but not on this massive scale. Read about my auction house techniques. Click here to find out how this guy is making 27,000g daily.You can use this in conjunction with my auction house trading guide.
Basic Arbitrage
The way the whole gaming the auction house thing works is through a perfectly legal concept called %26#8220;arbitraging%26#8221;. To put it simply, it%26#8217;s buying low and selling high (unfortunately you cannot %26#8217;short%26#8217; commodities in World of Warcraft as in the stock market). If you do it perfectly you can usually profit at LEAST 10% of what you spent buying the product. But that%26#8217;s the worst case, normally you can profit over 50%,100%, or even as much as 500%.
Why do prices fluctuate
Prices of commodities, items, armor, etc. in World of Warcraft, just like in the real world are determined by PEOPLE or in this case the PLAYERS themselves. Let us call all these players as the %26#8216;market%26#8217;. Collectively the market sets the prices on items for a specific period of time. This means that today your Adamantite Ore may cost 1g each but in 2 days it could be 1G 50s each.
Now the prices in WoW are determined by the eternal supply and demand graph. Now the following graph does represent to SOME extent the forces acting on item prices. However, market prices do not move in a linear fashion as presented in the graph.
Prices go up when a particular item suppose Adamanite Ore is high and the supply is very low. Prices usually go up because sellers take advantage of this shortage in supply and increase in demand to command a higher price. Simply put, even if they increase their prices let%26#8217;s say to 2g, people will still buy it because people NEED it and everyone%26#8217;s trying to get it!
Now the story changes when the supply is low and the demand is low. Prices will most likely drop because sellers will try to undercut each other and compete for the few people willing to buy that low-demand item.
As a general rule, do not TRADE items which are low in demand. There will be items which look like a good deal because of the low price, but very few people actually need it. You can either be stuck with that item forever (thank God it does not perish) or be forced to sell it at a super low price.
Conversely, only trade items which are moderate to high in demand. This way, all you ever need to think about is whether there is a flood of sellers selling the same item (high supply) or not.
Why scan the auction house everyday?
Aside from the skewing of data via stupid people who do not know a thing about pricing (pricing too high or too low). Getting a lot of market data will allow you to determine whether a particular item is relatively CHEAP at the moment.
In the next post, I%26#8217;ll teach you how to interpret auctioneer data so you can make more informative choices.