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Secrets of the Grand Exchange

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Finance
Apr Gold Premier Club Member 2012

Finance

Posts: 55,678Emerald Posts by user Forum Profile RuneMetrics Profile
This guide will explain how the GE works "internally." With this knowledge, hopefully you guys can go snag some great deals! This guide is written primarily to explain the workings of the Grand Exchange in RuneScape 3, but most of the concepts apply to the OSRS Grand Exchange as well.

I will not reveal any specific items here but the general principles underlying how the GE works should help anyone flip items at a profit. But this information is intended to help anyone who uses the Grand Exchange, including non-merchants.

So, let's get started...First I'm going to explain what the GE is not:

- It is not magical
- Items are not 'spawned' or 'destroyed' through the GE
- You are not purchasing items from Jagex

The GE is simply a trading system; every item bought or sold on it comes from another player. Supply and demand for items are entirely determined by players. But how does the GE match buyers and sellers? Read on...
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11-Jun-2012 09:39:33 - Last edited on 28-Feb-2015 03:24:30 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

Posts: 55,678Emerald Posts by user Forum Profile RuneMetrics Profile
~ Table of Contents *

1.1 Introduction
1.2 Table of Contents
1.3 How the GE matches buy & sell offers
1.4 How the GE prioritizes old vs new offers
1.5 Margins
1.6 Low Volume
1.7 Inactive Offers
1.8 Median prices
1.9 Grand Exchange Item Limits
1.10 Applications of GE Mechanics
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11-Jun-2012 09:42:28 - Last edited on 26-Oct-2014 21:17:58 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

Posts: 55,678Emerald Posts by user Forum Profile RuneMetrics Profile
~ How the GE Matches Buy/Sell Offers ~


For the purposes of explaining how the GE works, I'm going to use Rune 2h swords as an example. It is helpful to think of the GE as a 'stack' of buy and sell offers, all being placed at the same time. I'm going to illustrate this visually with a hypothetical example. Suppose there are 2 people buying and 2 people selling rune 2h swords:

Sell @ 40k
Sell @ 38k
Buy @ 36k
Buy @ 34k

At this point in time, nothing would happen. Why? The sellers are selling too high for their offers to get matched to anything.

Now suppose a 5th player comes along and says "Grr, I want a rune 2h sword now." He buys one for 100k.

What happens? The GE will instantly pair up the offer with the lowest sell offer available -- 38K -- so he will get his sword and 62K back. Thus, he got the best available deal at the time he placed the offer.

Note that the buyer got the cash back here. This is because he placed the most recent offer.

Ok so our 'stack' of offers now looks like this:

Sell @ 40k
Sell @ 38k <--completed
Buy @ 36k
Buy @ 34k

Now suppose someone else comes along and says "Grr, I just want to sell this rune 2h right now." He sells it for 30k. Can you guess what happens?

Yup, the GE gives him the best possible offer at the time. This means that his offer will be matched with the highest buy offer (36K) and he will get 36k cash for the sword. So now the stack is:

Sell @ 40k
Sell @ 38k <--completed
Buy @ 36k <--completed
Buy @ 34k

Again, in this case the seller got the extra cash because his offer was newer.
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11-Jun-2012 09:42:40 - Last edited on 16-Mar-2014 18:05:18 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

Posts: 55,678Emerald Posts by user Forum Profile RuneMetrics Profile
~ How the GE Prioritizes Old vs New Offers *


Ok. Now let's return to original example. Here's the stack of Rune 2h offers:

Sell @ 40k
Sell @ 38k
Buy @ 36k
Buy @ 34k

Suppose a different player puts in a buy offer @ 36k.

Sell @ 40k
Sell @ 38k
Buy @ 36k, Buy @ 36k
Buy @ 34k

Now someone sells a sword for 30k again. Who gets the sword? Most likely, the original 36k offer will be completed. This is because, in the event of an exact tie in price, the older offer is prioritized.

The level of priority given to an older offer is influenced by how much older the offer is. Offers that are days older will receive near absolute priority, while offers that are placed around the same time might split about 75%/25% in favor of the older offer. So offers placed around the same time at exactly the same price roughly take turns.

There is a long line of people waiting for white/blue partyhats and christmas crackers at max cash because these items sell for higher on the street. However, given the number of offers in the GE, and the fact that most people sell these items on the street for higher prices, it may be years before some of the newer max cash offers fill.
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11-Jun-2012 09:42:54 - Last edited on 04-Feb-2016 18:58:02 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

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~ Margins ~


Now I'm going to explain what people mean when they talk about 'margins.' This is a commonly used term among anyone who buys and sells items on the GE. Again, let's return to our original stack of R2h offers:

Sell @ 40k
Sell @ 38k
Buy @ 36k
Buy @ 34k

In this case, the margin is 2k. The margin on any item is the difference between the lowest sell offer and the highest buy offer, at any given time. Here is is 38k-36k = 2k.

Very often, for relatively cheap items like r2h's, to discover the margins players will buy 1 rune 2h sword for a lot of money and resell very cheap. Here this will result in them buying for 38k and selling for 36k, revealing the margin.

If I was interested in flipping r2h's, for example, I would now know to buy a bunch of them at 36001 gp and sell at 37999 gp, because those are currently the best buy/sell offers in the GE and so they would be completed whenever someone instantly buys or sells a r2h. I couldn't guarantee that buying at 36k flat gives me the best offer because the player to whom I sold the sword might be buying more than 1 (in this case he's not, but we don't know) meaning that his older offer would be prioritized over mine.

This is less effective for items limited at 2 or 1 (limits discussed later) or very expensive items, for which the test will be very costly or will only leave you with 1 item left to flip.

For some of these it's best to check the prices using the FC's or forum threads in Item Discussion. These low limit items include level 90 gear, Nex gear, discontinued items, and third-age.

Margins change as people place new offers. For example, there's nothing stopping another player from trying to sell his r2h at 37k flat. This would decrease the margin is now decreased to 1k because the difference between the best sell and buy offers is now 1k.

If you're familiar with real life stocks, margins are basically the difference between bid and ask prices.
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11-Jun-2012 10:12:37 - Last edited on 11-Mar-2014 03:39:32 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

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~ Low Volume ~


Another phrase commonly used by people buying and selling items is "low volume." What does that mean?

Ok, well, again suppose we return to my original example for rune 2h swords.

Sell @ 40k
Sell @ 38k
Buy @ 36k
Buy @ 34k

This item would probably be considered low volume if these were the only offers in place. This is because there are very few items being sold, and very few people buying. What this means is that the margins can shift a lot if someone buys or sells one of the items.

Note that if someone sells 1 sword, the margins increase to 38k-34k = 4k. That's double the previous margin.

Some items become increasingly low volume overnight US eastern standard time, since fewer people are online to buy and sell them. This can be a good time to leave in some "lowball" offers -- snag these items very cheaply, and then resell them much higher later.

You may have to wait a while to sell low volume items, even if your offer is the best one currently in the grand exchange.
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11-Jun-2012 10:12:57 - Last edited on 11-Mar-2014 03:39:06 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

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~ Inactive Offers *


If your last game login was over a week ago, your GE offers will become inactive. This means they are taken out of the stack of active offers, so they will no longer fill even if they represent the best offer currently in the GE.

When you log in again, these offers will reactivate but not sync with the current "stack" of GE offers. Therefore, if your offer represents the best one in the GE, you will slowly start buying items again--but the other player will receive any cash back if your sell offer is too low or your buy offer is too high. Generally it's a good idea to cancel and replace inactive offers.

Beware: if you are in line to get a christmas cracker or a partyhat for max cash, this means you will move to the back of the line.
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11-Jun-2012 10:29:46 - Last edited on 04-Feb-2016 18:48:53 by Finance

Finance
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Finance

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~ Median Prices ~


You might be wondering why your items won't buy or sell at the median or guide price. The median price is calculated based on yesterday's buy and sell offers, and the item's 7 and 30 day price history. The guide price can only rise or fall by a maximum of 5% per day. The GE updates prices at a random time, once a day, no earlier than 3am and no later than 9pm BST. Yesterday's price may or may not accurately reflect the current value of the item.

For some low volume items, the med prices aren't updated every day because not enough of these items are traded. It's not quite clear exactly how many need to be traded in order for the med price to change. The guide prices of these items can be quite inaccurate. Examples include third-age items and discontinued rares.

For many stable items and resources, the guide price works well. For recently released items, or items that are quickly rising or falling in price, the guide price may not accurately represent the street value.

Most often you should do some work to investigate the buy/sell prices of items yourself. For most high value items, there are threads in the Item Discussion forum where you can ask about prices.
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11-Jun-2012 10:30:15 - Last edited on 29-Feb-2016 05:43:41 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

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~ Grand Exchange Item Limits ~


Every item you buy on the GE has a limit associated with it (there is no limit to selling). I'm not going to list these all out here because there's an excellent sticky in the Item Discussion forum about these. The limits are applied over a 4 hour period.

It used to be that these limits were reset when you sold the items back, but this isn't true anymore. Now you must wait the full 4 for these limits to expire before buying more items. If you place an offer larger than the limit in the GE, the offer will be essentially de-activated once you hit the limit, and then reactivated 4 hours later.

Note that items with lower limits (especially the ones limited at 2 or 1) often have larger margins because people just can't buy and sell very many.

If you are a flipper, there are two other techniques you can use to flip items capped at 2 or 1.

First, for non price-checkable items limited at 2 (3rd age is a good example) you can do this: instant buy 1 of them, and then resell it slightly under so it sells quickly. Then buy 1 more way under that price (guesstimate the margin) and resell that one just under the instant buy price.

Or, alternatively, you can get the price from the forums or friends chats and guesstimate a reasonable margin. So for Santas, for example, I might leave in a buy offer 600k under their instant buy price, or 100K ish under the sell price. If I don't get any for 15-20 minutes, then increase the offer slightly and wait again. This way you'll "creep up" on the margin. Once they buy slowly, you can then resell higher. This works for items like bandos and armadyl too, which are limited to 1 currently. Reasonable margins for those are around 300-500k.
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11-Jun-2012 10:30:23 - Last edited on 11-Mar-2014 03:31:15 by Finance

Finance
Apr Gold Premier Club Member 2012

Finance

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~ Applications of GE Mechanics ~


So why does all this matter? And most importantly, why should you care if you aren't a flipper, but are a skiller or monster-slayer just looking to get the best prices for your loot?

Well I've already touched on how you can apply this knowledge to flip items in the above sections of the guide. If you're just looking to sell your hard-gained items at the best prices possible, though, here's my first suggestion:

--> Don't instant sell them! <--

You can *always* do better. How? Well again, let's return to this rune 2h example. Suppose you have 2 that you want to sell.

Sell @ 40k
Sell @ 38k
Buy @ 36k
Buy @ 34k

Instant selling them would yield 70k. But instead, you can do this:

Instant buy 1, then sell all of them just under that price. This would yield a loss of 1gp on the first sword BUT would gain you an extra 6K on all the others, leaving you with nearly 10% more money than if you instant sold them.

Now admittedly this example is somewhat contrived. But why not take a bit of time to squeeze another 50-100k+ out of your skilling items? This is entirely possible if you just have a bit of patience.

What if you're looking to *buy* a bunch of skilling supplies at a cheap price? Well a similar piece of advice applies:

--> Don't instant buy them! <--

You can always do better. To get the best deal, instant buy and instant sell 1 item to find out the margin. Then buy the rest of your items just above the instant sell price. This can save you a lot if you are buying mass supplies.

Also remember that botted items can drop a lot when those bots dump their supplies, so if you're using red chins, dhides, dragon bones, or the like, it won't hurt you at all to leave in a very cheap buy offer (10-50gp under instant sell price) overnight. You might be surprised how much you save.

That's all for now -- you can now post. :)
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11-Jun-2012 10:30:31 - Last edited on 02-Feb-2014 22:31:34 by Finance

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