Trade Strategies: Commodity Energy

Just a quickie this time. I’ll be introducing a trading concept I came up with. Enjoy.

 Commodities, when traded, have a certain energy associated with them. The idea came to me when while looking over my market orders. It occurred to me that the items in Eve somewhat resemble a food chain. Raw materials are harvested, processed into intermediate materials, and later manufactured into high end products. Interesting idea but how could it help me make more ISK? At one time I was in training as a biologist and I still have an interest in the subject. There is a concept in the study of food chains called available energy. It essentially tells that as you move up a food chain there is less and less energy available for the next level on the food chain. This concept can be applied to the item production food chain as well.

            There are certain items that have a high amount of trading energy. The most notable are minerals and other production materials. These items trade at enormous daily volumes but the profit margins tend to very small. As you move up the production chain, trade volumes decrease as the profit margin increases. These would be your low energy items. If you look at the price history graph, high energy items will have a high trade volume, indicated by the green bars at the bottom, as well as having a narrow Donchian channel, the brown field indicating profit margin. Low energy items will show the opposite.

            Both types of items have their pros and cons. High energy items have a very fast turnaround, making them ideal for day to day income. The disadvantage is the low profit margin. These sorts of items are also a great starting point for the newer trader, since available ISK tends to be smaller. Low energy items are great because of the large profit margins but they often take a very long time to sell. They are best used as long term investments for more experienced traders.

            In terms of application, I would recommend splitting your orders up between high and low energy items. Having plenty high energy item orders will fulfill your daily ISK needs while a few low energy items will ensure long term profits.