A bit over 10 years ago, I became interested in investing. The subject was vast but I was intent on learning it for my own financial security. After some research, […]
A bit over 10 years ago, I became interested in investing. The subject was vast but I was intent on learning it for my own financial security. After some research, I used the income tax return I received as seed money for my first attempt at investing in the stock market. That started my self-study of the stock markets, fundamental analysis, technical analysis, and securities.
Fast forward to the present in Eve and we find ourselves in a renaissance. We now have Fortizars that offer more options for interacting with the market. We have tools to assist in managing trade and charting displays. Casinos are about to be banned under the recently-announced EULA changes. The dynamics of mining and variable-scale production will be changing in the next expansion. As an individual player, this is the best opportunity you will have to attack the market.
Before we delve into forecasting prices, let’s talk about the fundamentals.
FUNDAMENTAL ANALYSIS – For the purpose of this example, we will discuss the nature of PLEX. Before I even start inspecting a chart, I must answer some key questions about a security. I need to be able to articulate the supply and demand dynamic of the item.
Why do players want to buy PLEX? Basically, in order to add game time and other services offered by the developers. Beyond this, PLEX has been a sort of standard; itself a form of currency. Out-of-game services such as voice communication servers, fan sites, and meet ups have at one time or another been supported by payments of PLEX or its corresponding ISK value.
Why do players want to sell PLEX? Mainly in order to exchange it for ISK. This is a CCP-sanctioned way for players to effectively “buy” ISK from each other, as opposed to buying it by directly sending their dollars to an unauthorized ISK seller.
There’s a lot more to say about PLEX, but these main features will be enough to help us decode the price charts.
TECHNICAL ANALYSIS – We will identify the information in price charts, patterns, and indicators used to corroborate our hypotheses about where the price may be heading.
This is a one month view of the price action of PLEX. We can see that there is an upward trend. The trading volume for this period is stable.
A. This is the trade channel. When drawing these lines, make sure to do it in such a way that you make contact with as many of the individual bars as possible. The bottom line represents the floor. Every time the price reaches this point, you will notice that more purchases are made, causing the price to increase. The top line represents the ceiling. Conversely, when the price reaches this point, it causes the price to decrease.
Note when the bars go beyond these stated support lines. This should clue you in on market sentiment that is beyond what has been considered normal for the time period. Notice the last few days of the chart. The bars suddenly started plateauing right at the upper support line but did not quite clearly surpass it.
This reinforces the validity of the upper support line. Players are not interested in buying PLEX beyond this price point. There is a sentiment of being overbought. It will be easier to sell PLEX at this price, which will drive down the value.
B. Relative Strength Index (RSI) – this technical indicator signals whether a security is overbought or oversold. If the black line crosses above the yellow dotted line with the value of 75, then it is time to consider selling this item. Look at the lower left side of the chart. In the same month, this indicator signaled an overbought sentiment, prompting a price correction that drove the price down for several days in a row. This finding further supports our hypothesis.
COURSE OF ACTION – Using the information we covered, we have identified sell signals for this item. I predict that the price will settle at around 1.12 – 1.13 billion ISK during the week. How much will it gain back once this price correction is completed? That answer will lie on how the player base reacts to the upcoming expansion. The changes will encourage higher demand due to the influx of new players and new structures. At least within the first month of release, I expect a fever pitch of PLEX purchases that may drive the price up as high as 1.3 billion ISK.
Regardless of whether the alpha clone state and New Player Experience are received well, I think an exit point of 1.3 billion ISK is realistic, if only for the likely interest in the new Engineering Complexes. However, if enough true new players ultimately stay in the game, then it’s possible to surpass my modest prediction. If that were the case and CCP fails to execute a series of oppressive PLEX sales to curb the velocity, I would prepare to react in a post-PLEX-bubble environment.
Investor Group Update
Although we maintained our usual trade activity, the result did not fare as well as we would have hoped; we only managed a 2.5% pay out this week. Although this is only half of what we usually make, I’m not terribly worried. Compared with our competitors, we performed well enough to still make waves in the leader board. If this were not the case, then I would be worried. That would mean that we completely failed to act on a universal trend or simply were too inactive for the time period.
In order to make transparent my own pay out from this activity, I will be taking 10% from the profits earned for the week. From there, I will take half of my pay out and transfer that to a separate corp wallet that will be designated for philanthropic activities. These corp wallets will be available for review by any investor.
Now let’s see how we did this trade week.
This is the most varied Top 10 list we’ve posted so far. Due to our inability to conduct intra-day PLEX and skill injector trades, we had to compensate by increasing our activity in the module and implant market. You will also notice that we did not trade anywhere near our usual volume of ships. After comparing the margins, it seemed more productive to shift that effort into a more varied basket of modules and implants.
Moving forward, we will have to adjust our methods to accommodate a longer play on the RMT portfolio (PLEX, skill extractors & skill injectors). This will also prompt further investigation on building materials, which will be suitable for this type of strategy. Expect price analysis reports on these items in the future.
Thank you very much for reading. Good luck and happy trading.