Grand Exchange Advanced Investing Techniques

Chapter Four - Advanced Investing Techniques

Guide written by: Merchant in the Dark

Predicting The Future - Updates, And Their Effect On Prices

Few things have as direct or as dramatic a connection to the RuneScape economy as game updates. Besides introducing new items into the game, by providing new activities they dramatically affect the supply and/or demand for existing items already in the game.

Investors can profit from these updates by closely watching the RuneScape news announcements and behind-the-scenes articles. Jagex often leaks hints about upcoming updates, which allows you to prepare accordingly.

There is one major update per month,and several smaller ones. If, for example, you heard that a new RuneCrafting minigame was coming out with great rewards, it would be smart to stock up on items such as rune essence and varius talismans.

The PvP world update in October 2008 is a great example. Few updates can match the scale of the introduction of new PvP worlds and, as I predicted, the update had a huge impact on the prices of PvP related items. Items like armor, weapons, and food skyrocketed. Unfortunately, I didn't stock up on these items before the update - and once the update was in place, it was literally impossible to obtain them. Instead of giving up on profiting from the update, I used the "Item Chaining" technique to make almost 30M profit.

Updates almost always happen on Tuesdays and Saturdays. Be sure to buy the items before the update occurs, or else you might find it difficult to obtain them even for highest in the GE.

Maximizing Profit With Item Chains

An Item Chain is a group of related items, whose price trends follow each other. Most "item chains" will be familiar to skillers - Runite Ore, Runite Bar, and Rune Plate for example. In this item chain, Rune Plate is the top level item - the one that's bought the most by the public. Runite bar comes second and, finally, runite ore.

When the top-level item in a chain rises or sinks in price, the other items follow, in order. If a rune plate rises by 1k, then you can expect runite bars to rise by about 250gp each (5 bars to a plate), and runite ore afterwards. Other common item chains include cooked and uncooked foods, Summoning scrolls, pouches, and components, and many crafted items. Item chains offer profit potential in several ways:

• Maximizing Profit

You can maximize your profit when investing in an item by also buying other things in the object's Item Chain. During the PvP Update, for example, I invested in Rune weapons, Runite bars, and Runite ore. Often, the item at the bottom of the price chain offers the best percentage of return.

• Bypassing GE Buy Limits

If you're getting stuck with the item buying limits while you invest, you can maximize your profit by buying into other items in the object's Item Chain. This lets you buy more items per four hours - instead of only being able to buy 100 items, if there is a three-deep item chain you can buy a total of 300 items that are all linked to your original item.


"Exchange Price" vs. "True Price"

Caused by the "Price Fluctuation Psychology" discussed in Chapter 3, The "True Price" of an item is the price that players are willing to pay for an item. The "Exchange Price", on the other hand, is the average price in the Grand Exchange. The "True Price" of an item can be within 5% of the Exchange Price, either below or above it. The True Price is often related to the item's trend - if the item is falling in price, the true price is often lower then the Exchange Price, and vice-versa. We discussed in the previous Chapter how to earn more buy selling when the "True Price" was highest and buying when it was lowest - now we will learn how to take advantage of a high True Price with Grand Exchange Arbitrage.


Grand Exchange Arbitrage

Arbitrage is, quite simply, the act of buying an item low and selling it high. This handy tactic makes use of items with a high True Price - items that are only buying or selling at the highest price. These items are almost certain to be rising, which makes this tactic possible.

The Grand Exchange updates once every 24 hours, although on a rare occasion it updates more then once. If you happen to be online when the update takes place, you have the opprtunity to engage in Arbitrage. Choose an item with a very high True Value that has risen in value during the update - then calculate what the top GE price was for the item BEFORE the price update. You can do this by subtracting the total price rise from the current high price.

You then put up an offer in the Exchange for as many of the items as you can afford - for one gp OVER the previous day's high price. You will out-offer every single offer from the previous day, and most likely completely fill your offer. Wait four hours, then re-sell the items at the current day's high price - you just made instant money.