The end of BWE3! Guild Wars 2 has been one of the most exciting new releases this year and the only milestone left now is release! This weekend I finally got around to testing out the market system in GW2. Having played a lot of MMOs with needlessly complicated or tedious markets, I was greatly refreshed with the simple market system in GW2, very reminiscent of the futures market. I quickly got drawn into the market as my day-trading experiences reincarnated within me.
The market operated on a simple bid/ask market platform. Players could place bids or set items up for sale or place market orders at will. Probably by combination of the fact that this was the Sunday of the last BWE event and the relative infancy of the game, I found the market in GW2 to be amazingly inefficient. In almost all high volume commodities the spread between bids and asks were almost always 5 copper. With a base price of 20 copper and a listing fee of only 5%, the opportunity for arbitrage was ripe and I instinctively began trading copper ores.
The liquidity in the market was impressive for such a young economy. My bids and asks were filled within seconds and I turned around my savings multiple times within the span of 10 minutes. In the short hour that I played with the market I gained a return of almost 200% and a trade profitability rate of 100%. If only I had those odds in the real world.
What struck me about the system is that the ease with which I participated in arbitraging opportunities indicated that not many were yet acting in the markets. Furthermore I began to wonder if the construction of the system and the slight lag that it imposed upon placing orders created this artificial 5 copper spread. The game limits buying goods to a single stacks and, although this may not hold true for others, I found the typing of orders to be relatively fickle and my typos often delayed my orders. I wonder if given the relatively small amount of traders, the inability to insert orders fast enough caused the spread in the bid and ask. I know that before the days of HFT and electronic trading became the norm, arbitrage definitely existed in real-world markets. Today the markets are extremely tight and any slight opportunity is immediately acted upon by some server in New York.
It would be quite interesting to study the shift in the GW2 market as more and more traders come in to close these gaps. The real market doesn’t provide the stability and ease that a more unsophisticated market such as GW2 provides because the volatility and spread of contracts is so small which magnifies risk and increases the amount of leverage needed to gain a small profit.
My short foray into GW2 trading has ignited a spark within me that I intent to fan into flames once the game is released. I plan on forming a trading fund with guild members and create some for of banking/fund management system within the confines of the game. Perhaps there is even room for a third-party to step in and become a broker-house. If the market becomes large enough and one becomes reputable enough, it could be conceivable that an entity could step up to act as a mediator and issue complex securities such as options.
Either way, I’m sure that a large enough crop of sophisticated traders will participate in the GW2 markets to greatly increase the skill required to stay profitable in the market. I plan to stay on the top and I look forward to trading with you all… May the best man win. 🙂