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Julij2's short term investing guide

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Post by Julij2 1/11/2013, 6:37 pm

Short term investing guide

Part I: Introduction

Short term investing is one of the most lucrative forms of investing. It is quite similar to overnight flipping, but the main difference being the duration between completion of buy and sell. Duration of short term investments can vary from 24 hours to as much as 3 days. Less than 24 hours is considered to be an inactive flip, and more than 3 days is considered a long term investment.

The main advantage of short term investing is its profit and speed. It's not as profitable as long term investing but the speed of an investment makes it up. With short term investing you're aiming to use the most of the item's potential in shortest time possible. Initial rises (which is when the item stops falling and begins rising) are always the biggest, and after its rise will never be as big as the initial one1. With every new update, you'll be getting less and less money for every coin that you have invested. Also note that grand exchange mid prices can only be increased by 5% each update, while the item's actual price may rise beyond that, which it usually does since the item has to be traded above 5% to reflect the same rise on general exchange mid prices. Same 5% cap rule applies for graphs as well.

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1There are rare exceptions to this, however. It's extremely hard to predict them, if not nearly impossible. Sometimes recent updates may have such an impact on an item, but most of the time it seems like there's just more demand or less supply for an item without any good explanation.

Part II: Getting started

For short term investing you'll be searching for items with lots of fluctuation. With looking at the item's graph, you can find out how much the item actually fluctuates. All items with stepped graphs are taken out of consideration2; due to their low volume of trades they update slowly and it may take days before they actually start moving.

Examples of a stepped graph:
Stepped graph:

Stepped graph:

You can immediately spot a good item to invest in by its graph. Their graphs will have a good amount of fluctuation and it will take less than a week between their lowest and highest point. Good example is frost dragon bones graph.

Example of a graph with good fluctuation:
Graph with good fluctation:

Graph with good fluctation:

More information about graphs: Graph reading basics (clickable)

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2Stepped graphs may be ideal for long term investing, but they're absolutely horrific for short term investments. Even though it may seem that item is just about to rise, it may still take several days for that to actually happen. Rarely rises happen so quick on stepped graphs and to make successful short term investment on stepped graph requires a lot of practice and sometimes luck.

Part III: Finding the proper item

You've been given a slight idea on how the graph of a good item should look. Finding the good item for short term investing is not as hard as it may seem. You'll be looking for crashing items3 that are 1-2 days before the rise. On the graph that means 1-2 days before reaching their lowest point.

The easiest way to find them is by their percentage drop. As you know every item has a 5% cap4 on how much it can rise/fall. If the item's percentage drop gets smaller with every grand exchange then that indicates its future rise. This is so called the decrease of the fall. I recommend searching for items that have a percentage drop between 2% and 4%. If the item drops more than 4% then it will probably continue to fall for the next few updates. In this case, I recommend tracking it; wait for the drop percentage to lower. If it falls for less than 2% then that is the indication of a rise happening soon. In this case you can still buy in, but you'll be getting less stock and the price may already be above its lowest point.

Note that with drop percentages you still have to consider support/resistance levels, recent updates, and other things that may also impact the item's price.

More information about support and resistance levels: Graph reading basics (clickable)

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3This may scare a lot of people as they generally think that crashing items will cause you to lose money even more; this is incorrect. Crashing items are less riskier and compared to rising items they don't make you lose serious money if they crash even further. However, make sure you still consider the reasons why the item is crashing. Only buy the item if the crash is in consequence of natural fluctuation. If said crash has something to do with recent updates or the item has been crashing over a longer period of time, then it is suggested to stay away.

4This only goes for grand exchange mid price and graphs while their real prices may rise/fall for much more.

Part IV: Buying the item

When buying your stock you need to be very active. People notice when an item's price is lower than usual, so prepare yourself as you may have a lot of competition. Be patient and buy your stock just as if you were flipping it, but do not sell it yet. Your ending stock will be lower than any other form of investing, but this is an advantage as you'll be able to sell it very fast and with some practice for a way higher price than you would have expected.

A good indication that you'll be getting your stock for a good price is the item's actual price. If the item in which you choose has an actual price that is below its mid price in the grand exchange, that means the item is still crashing and it is cheaper then it would usually be. If the prices are around mid, it may still be worth buying; although you may not be getting your stock at its lowest price. If the item is above mid, then it's already rising5. In this case I suggest you to move on as you won't be getting your stock at its lowest price. Not to mention you probably won't acquire enough stock to be worth it in the end.

Don't be frustrated if you haven't managed to buy a good amount of stock. Use the same principles to buy your stock as if you were flipping it. Never buy your stock instantly as you'll be ruining your overall profit6.

More detailed information can be found here: When to buy/sell (clickable)

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5Remember that graphs are made based off past prices. The rise won't be reflected on the graph until the next grand exchange update. 6This does not apply in every situation, though. If the item is heavily under price and you don't find any logical explanation why it is so, you can instantly buy your stock (if the price is still good). Although it is advised that you first try buying it for low price anyway, just to be safe.

Part V: Selling the item

After you've bought your stock, I suggest putting a sell offer in right away because the item is just about to turn around there's a strong possibility there will be a lack of offers in grand exchange, enabling you to sell your item right away. For every investment, set your goal price, but don't put in unrealistic offers. I get the goal price by adding 5%-10% to my buying price. If you haven't caught the lowest point then add lower percentage (%), if you did catch the lowest point you can add more percentage (%).

The reason for such huge rises is due to people buying the item. As a result of the item being just about to rise, they want to get a hold of as much stock as possible, which creates a huge demand for it. On the other hand, they don't want to sell it yet as they'll be waiting for it to reach the highest point. That creates the huge bubble and the differences between low and high prices can be enormous. Due to your relatively low stock, you'll be able to take advantage of it and sell your stock or at least a large portion of it for a high price.

The initial rises are usually the highest ones. If you wish to keep the item for longer, then that's your decision; however, it's advisable to sell it as you'll be getting a nice chunk of profit, and at the same time you'll free your cash. It also eliminates risks of premature item crash7.

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7Some people might not agree with this mentality. They will tell you to hold your stock until the very end. You may be getting more profit with this thought process, but you have to be aware that the more you hold onto your stock, the riskier it gets. Not to mention that graphs are made out of past prices, which means that when a graph reaches its peak the item is already crashing in the grand exchange. Therefore, if you're going to hold your stock, make sure you price check the item as often as you can or it can end very badly for you.

Advanced methods

Part VI: Short term update investing

This method requires a lot of work, but it can yield some nice profits over longer period of time. Basically you'll be using the Behind the Scenes article at the beginning of each month and find items that will be affected by the upcoming updates, causing them to either rise or crash.

The first step is to find a proper item. This requires some good Runescape knowledge, so the more you play Runescape the more you'll know how affected the item will be by the update8. You'll also know you found a proper item when the grand exchange mid price is different than the actual one by a large margin. This is the indication that the supply or demand changed drastically, which is one of the consequences of the recent update.

The second step requires the constant observance of the item. Because the item's supply and demand has drastically changed investing in it isn't possible through reading its graph, as it will usually just show one big rise or fall9. You'll have to check prices of the item at least a few times a day to get a rough idea what the trading range of an item. With this you'll be able to discover low and high prices. The method itself requires a lot of attention and is not one of the most popular, but that's what makes it so profitable. Most people just tend to long term invest into updates. With short term investing in proper items you can easily out-profit them as the margins on these kind of items can easily surpass 10% on daily basis.

Avoid investing on Tuesday's, as it is usually an update day. Most people hold their stock and then they try to sell it after the update. This creates a huge supply while not so much demand because people buy stuff before the update actually happens to be prepared. Although this isn't always the case, as the update may differ from what it is speculated to be. One good example was Vorago's release. People bought Rocktail Soups, causing their price to rise to a certain height. Most of the bosses were extremely easy after Eoc's release, so it was speculated that Vorago wouldn't be much of a challenge itself, perhaps a little harder than Nex. The boss itself was the ultimate challenge and at first the top gear was required, which caused further rise to the Rocktail Soups due to it being the best healing food in-game.

More information about investing in updates: Investing in updates (clickable)

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8While playing Runescape isn't really a necessity, it's still highly advisable for these methods of investing. If you don't know how the items will be impacted by the update, you could potentially lose a lot of money.

9This really depends on graph type. If the graph is stable then the updates will be rare and the only way to invest is by regularly checking the price. If graph normally has a lot of fluctuation, then at the beginning short term investing won't be possible. However, when mid catches the actual prices that will be reflected on the graph and said graph will once again start to follow the actual price of the item. For this to happen it may take several days, but after that you'll be able once again to invested by reading the graph, although it will be quite a bit harder.


Part VII: Lowballing/highballing

This is a very lucrative form of investing that consists of buying your item for an extremely cheap price (lowballing) or selling your item for an extremely high price (highballing). In short term investing your stock is really low, so that makes a perfect opportunity to sell it for a higher price than it would usually sell for, or you buy small stock for a ridiculously low price.

For lowballing you'll be searching for crashing items. The best time to lowball the items is right after the crash. The prices at the time are messy and many people will attempt to get rid of their stock. That will create a huge supply on the market. Supply will quickly cover the demand. At that time people may start panicking due to their stock not selling. If they panic dump their stock you may be lucky enough to get a portion of theirs. To determine a good buying price you'll have to properly read a graph; find a price that you think it will be good enough. There's some luck involved, but with knowledge when to lowball you can turn the odds in your favor.

For highballing you'll be searching items that are just about to rise. When the item is about to turn around there will be people mass buying it hoping to rake in some profit. At the same time they won't be instantly selling it as they'll probably wait for it to reach the high price. That creates a huge bubble, as supply will be severely drained and it will stop covering the demand; people will start buying items for higher prices. That enables you to sell your stock for way above it's actual price. Try selling your stock as if you were selling it at peak.


Part VIII: My own method of finding items

To find good items for short term investing I personally choose to utilize the Geupdater.com site. Grand exchange central is a good alternative, as it offers many more items, but I still prefer geupdater as it's more user friendly.

Choose the merchantable items icon on top of the page. You can group items by low/med/high risk. It's more of a wealth thing than the actual risk, so don't let that deceive you.

Merchantable items icon:

Now search for items that have a percentage drop between 2%-4%. You can search items with lower/higher percentage but I tend to avoid them for short term investing. In this case I immediately saw the Armadyl Battlestaff.

List of items:

I inspected the graph and I saw that it is just about to hit the support level (not really the best example as graph is stepped). The grand exchange price is also below mid which means I'll be buying the staff for a good price.

Support level:

Price check:

Next grand exchange update/next day:

As you can see the drop stabilized and the drop percentage got lower; good indication item is about to rise.

Next grand exchange graph:

Drop percentage lowered:

Grand exchange price is already above mid, meaning the rise has already begun. If I would sell now I'd made ~500k for each battlestaff. However, I'll wait one more day to earn some more money on it.
Price check next grand exchange update:

The end result:

One day to buy, one day to sell and 8m profit.

Buy:
Sell:

I hope this guide will help everyone who struggle with finding good investment opportunities.

Julij2


Last edited by Julij2 on 30/12/2013, 9:49 pm; edited 43 times in total
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Post by Vallaquenta 1/11/2013, 6:44 pm

Very nice information. Maybe add a bit more personal experience with this? I for one have an example of about a year back where I succesfully managed to do this short term investing with Rune Scimitars. Their prices were at a super low point. Got a stock of 2k build up in roughly 2 days before they went up again. I made about 2k profit per scimi (low wealth back then) Smile
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Post by Julij2 1/11/2013, 6:57 pm

Vallaquenta wrote:Very nice information. Maybe add a bit more personal experience with this? I for one have an example of about a year back where I succesfully managed to do this short term investing with Rune Scimitars. Their prices were at a super low point. Got a stock of 2k build up in roughly 2 days before they went up again. I made about 2k profit per scimi (low wealth back then) Smile
Hey Vallaquenta. The guide is still in construction. It's easier for me to post it hear so I can get a glimpse of how it will look then write it in notepad. I'll add my personal experience with short term investing and my method of finding items.
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Post by Vallaquenta 1/11/2013, 7:21 pm

Julij2 wrote:
Vallaquenta wrote:Very nice information. Maybe add a bit more personal experience with this? I for one have an example of about a year back where I succesfully managed to do this short term investing with Rune Scimitars. Their prices were at a super low point. Got a stock of 2k build up in roughly 2 days before they went up again. I made about 2k profit per scimi (low wealth back then) Smile
Hey Vallaquenta. The guide is still in construction. It's easier for me to post it hear so I can get a glimpse of how it will look then write it in notepad. I'll add my personal experience with short term investing and my method of finding items.
Very nice looking so far though Juli!

I especially like that image of the Lantadyme; it really shows how hard it's going to be falling down right now (good time to invest in a few updates I guess) Smile
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Post by G50 12/11/2013, 6:36 am

I wanted to actually move away from flipping and start investing. My question to you use, how often (if any) do you have unsuccessful investments using this method?

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Post by jokerman 12/11/2013, 3:36 pm

is it weird i find dropping items much easier to read then rising items? 0.0
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Post by Julij2 12/11/2013, 11:20 pm

G50 wrote:I wanted to actually move away from flipping and start investing.  My question to you use, how often (if any) do you have unsuccessful investments using this method?
If you put a lot of effort into it then you're guaranteed to succeed more times than fail. Just remember not to push it. Wait for the right opportunity and at the end your success rate should be over 90%.

jokerman wrote:is it weird i find dropping items much easier to read then rising items? 0.0
I have to agree with you. Maybe just beacuse not many investors are interested into rising items.

I still have some things to add. I'll add them when I have more time.
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Post by hjmille 14/11/2013, 8:25 pm

ive never invested my self because i could never be sure enough about items, but after seeing this guide i feel as if its not as hard. i am going to try to find something tonight and track it. thank you very much man.
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Post by Julij2 1/1/2014, 1:09 pm

The guide is now finished and it is a subject of review.

Still thinking of adding more pictures but atm I'm satisfied with amount of them.
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