Tuesday, June 18, 2013

The Secondhand Market

One of the first things I did upon entering the MTGO client was take a look at the classifieds. These are a quick way for players to buy, sell, or trade cards. There are also a large number of bot chains in the classifieds. Most of them are run off of MTGOLibrary's bot software; MTGOLibrary is a service which is free apart from a royalty on every dollar made. The bot chains have varying prices, as people do, but you can be guaranteed there will be a noticeable disparity between how much they buy for and how much they sell for. (Hint: the second one is way higher).

Some people run multiple bots to increase the number of
transactions they can perform and their visibility.
e.g. the Aurelia chain above

I learned about this disparity the hard way. Initially, one of the tips I read about going infinite said to play the market, and take advantage of opportunities for arbitrage. I decided to employ this by buying a Savageborn Hydra for a little under 1 tix. I soon found out there was nowhere (even the places that advertised as such) which bought the Hydra for 1 tix. I'd lost out on my first investment, and that sucked. Admittedly, it was only one dollar, but it was still a losing investment.

This experience taught me two important things about the market, and specifically bots.
First, the prices bots display are often not reflective of their current prices. It will display somewhere in the right range, but expect it to very by +/- 0.5 tix. It's not much but it can mean the difference between paying an extra dollar or not.

This bot might only be buying Sphinx's Revelation for 25 tix.

While this is not too significant for larger buys, when trying to make money through arbitrage, it really matters to know that prices are stable, or else you take on risk disproportionate to your possible return.

Second, bots will try and stiff you. And not just by buying low and selling high. Since the lowest denomination of currency is 1 tix, for smaller purchases with humans, if you can't find a card of theirs of equivalent value they want to trade out, you may have to spend 1 tix just to buy that card, which is crappy if the card is worth a few cents. The bot system has found a way around this by storing credit; unused tix from the last purchase are stored for future purchases. The good bots will also have tickets available if your credit ever goes above 1 tix so you can "cash out", so to speak.

Be careful though; even if a bot says they store credit, that might be a farce. The vast majority of bots won't be petty enough to do this since they want return customers however. In the end though, it's the difference of 1 tix, so not too big of a deal. (Though those tix here and there can add up...)

The more important thing you want to avoid is bot chains where you can't cash out. If you make a sale to a bot chain, be sure they hold tickets that you can take. Otherwise all you have is bot credit, which might not be worth much at all. Early on, I found a trade opportunity where I could buy Wit's End for 0.05 tix and sell for 0.5 tix; I leapt on that opportunity, only to find that my new credits at that particular bot shop were nonconvertible into tix. This bot shop had inflated prices on everything, and their stock was equally worthless. Luckily, I wasn't out much at all, but that was another lesson learned.

Back to the main point. When I say bots will stiff you, I mean they will buy cards from you for 1.99 tix instead of 2, and sell cards to you for 2.01 tix instead of 2. Since they make so many transactions a day, keeping one tix per transaction can be huge for them. There are some bot chains which stay away from this practice, and I tend to give them more business. In all other cases, where the price of a card is not right around the dollar, it's better since a variance of 0.01 tix for a 2.50 card makes little difference.

In the end, I did manage to sell the Hydra off, along with one other rare for 1 tix. This put me back in my original position, plus a negligible amount of credit and down one bulk rare, so effectively unchanged. In the next few trades I made, I found that arbitrage, while existent in the MTGO market, is really not worth the effort and risk. I'll go into why it really does not work with some more tips on how to effectively use the market next post.

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