3- Introduction 4- Beginning of Chapter 1a 5- What are the 2 Types of Trades 6-8 Fundamental Trades 9-16 Volatile Trades 17- Beginning of Chapter 1b 18- Using the POP to Help You in Trading 19-20 How to Get Out of a Trade 21- More Advice on how to get out of a Trade
4- Beginning of Chapter 1a
5- What are the 2 Types of Trades
6-8 Fundamental Trades
9-16 Volatile Trades
17- Beginning of Chapter 1b
18- Using the POP to Help You in Trading
19-20 How to Get Out of a Trade
21- More Advice on how to get out of a Trade
22- What Items you should NOT use
23-24 Number 1: Price Manipulated Items
25- Number 2: Still Moving Items
26- Beginning of Chapter 2
27- Real Chart Formations
28- Formation 1: Trend Lines
29-31 Using Trend Lines for Price Rises
32- Using Trend Lines for Price Restrictions
33-34 Using Trend Liens for Price Drops
35-37 Formation 2: The Pennant
38-40 Formation 3: The 1-2-3 Bottom
There are very few guides out there for merchanting on the Runescape Grand Exchange that match up to this. This guide uses Real World Techniques that will help you in game as well as helping YOU rack up some out of game knowledge.
Since this guide is for both beginners and experts, the beginning part will talk about the basics to give a better understanding of how to read the graphs.
This guide will go over the basics that everyone should know, all the way to the real life formations that only you and a few others know.
The 2 types of trades: Fundamental and Volatile
Different items act in different ways. There like people, they have their own personalities, their traits you could say. They have a tendency to do the same thing all over again, and like people, they get affected by every day things.
You can’t compare two twin brothers for example and say they are the same! It’s not right. Go ahead, ask one on the street; they will say that they are not alike. They are all independent.
By saying that though, they do sometimes follow item trends that affect each other. For example, if one sibling gets sad, the other one is sad because he is worried about his brother.
Firstly, look at the definition of Fundamental: “serving as, or being an essential part of, a foundation or basis.”
It’s the basics, the foundation. You would be looking for an item that serves an important role in Runescape. For example, Law Runes. Sure, everyone uses them, but they are a necessity to teleport, create teleport tablets, and gain XP. Imagine if you had to walk all of Runescape all the time!
A fundamental trade can usually be found in the Top Most 100 Traded Items section of the Grand Exchange Database.
Like I said before, each graph as a different “personality” but yet many share similar “traits”. Most fundamental trades are similar.
This item has had only a few movements over the past month. It is relatively close to the blue line and not drastically changing in price.
Fundamental trades are perfect for players that have a low budget. These items yield a suitable profit. Since prices are stable due to people buying AND selling, there is minimal risk.
Many of these items are bulk items, such as runes, ore, bars, logs, etc.
Fundamental Trades are not recommended for investing, and should be used for when you are flipping.
These trades are what I like to call Volatile trades after the item itself. What is Volatile? One of the definitions is as follows.
“…characterized by or subject to rapid or unexpected change.”
This means that the item changes rapidly and many times can or cannot be predicted. These items can prove the most profitable, yet they are the most risky of them all.
As an item is beginning to crash down and is near its previous low, a trader can see the opportunity to buy into the item quickly. Buying into this item would be cheap, and you could sell it when it rebounds at another price.
You can see in this close up of the highlighted area in the previous image that the price was near its previous low. This item was a successful investment for many people as it did end up rebounding the very next day.
Here is another example of a Buying on the Fade technique for a Volatile Trade. On this occasion though, the price began to go up a day earlier than expected.
Cosmic Runes are going up quickly. They are going up at a rapid rate. People are still trying to buy because the item is near the blue line, yet it might crash if not enough people buy into it. One trader sees that he could take advantage.
The trader sees that he can get the item for a price near medium since the item is near the 30-day average mark. He can wait a few hours till the price rises above the 30-day average, sells it, and makes a profit!
This again is a real example used by one of our merchanters in Lumbridge City. He was able to make a good 400k profit with this volatile trade.
Volatile Trades are commonly used when Investing such as in Example 1. Others use it with flipping such as in Example 2. But, when with flipping, you should check prices every 15 minutes to see the best time to buy and sell.
Both yield enormous profits, and at the end, you will make money.
What Items you should not use and using the POP to trade
There are some rules that will help you learn what to do in a bad trade, what to do in a good trade, and how to make sure that you can avoid getting hurt even more by a bad trade. These are Rules 1,2, and 3:
Always assume that you are wrong until proven correct. Being to confident can ruin your thinking process.
Always assume that you are wrong until proven correct. Being to confident can ruin your thinking process.
When proven correct, press your winnings, but buy less that what you originally bought on a ratio of 3:2:1.
When you are in a bad trade, make sure that you get out of it quickly. Don’t hope for a turnaround and wait longer.
For a more in-depth explanation, go to my other guide on the POP.
Lets say that you began investing in Clean Lantadyme. Everything goes well, its going up so much, you don’t know when to stop! There are some things to look for.
The main thing to look for is a trend line. Many times, prices peak up or go down to a certain point. This is repeated various times. This is a good hint that you could use to your advantage while trading.
(Clean Lantadyme Chart)
As you can see, the price peaks of the chart do not go past a certain point numerous times. Since you see this, you know that you would sell when the price meets up to that point. As you see, the price went down as soon as it hit the line. The day it hit the line would be the day you sold out, resulting in a profit.
Not every item is usable to merchant with. Yes, you “could” use the item, but we want items that we can use that are profitable. Many people don’t know these things, just dive into an item, and BOOM they lose all their money. Here are the items that we are going to look at.
On Runescape, there are clans that work supposedly to “benefit the people” while in fact, they usually are scams. Not all of them are, but they all are. But there is one thing that they all do. They bring up the price of an item, and they bring it crashing down. Then “BOOM!”, the item is useless. Now, many items that are crashing are bought out and raised in price a bit for profit, but in most cases, they are rendered useless (Look at what it did to Uncut Jade).
(Chart of Uncut Jade)
Do you see that chart? The price crashed from around x5 where the price is now, and the price is barely moving at all! It has been hanging around near 50gp for almost a full 6 months! It would take forever for that price to even rise up to 100gp!
(Chart of White Warhammer)
Some people don’t use any items at all. When no one wants them, no one is selling them, or even buying them. So, they just stay still. How do you think you can trade with that? You just plain can’t.
Trend Lines and
Real Life Chart Formations
Finally. This is where things start to get into the real world. True, those other facts can be applied to the real world, but these are used every single day by real investors. As I said before, these can also be used to predict price drops as well as a rise in price. We will be using 3 formations that I think will help the most while on the Grand Exchange.
Look at the other side, you know some economics that people you know don’t even have a clue about!
Trend lines can normally be seen with your own eyes after a second looking at a graph. It is so easy that I've used Trend Lines many times before. In fact, we even used a trend line at the beginning of the guide to find out when to sell some items! They are extremely helpful. But many times, trend lines predict other things besides rises in prices. Sometimes, they predict a fall in price as well.
The first section of Chapter 2 will discuss using Trend Lines to your advantage in predicting price rises.
(Antifire 3 Graph)
The following is one of the more recent graphs. As you can see, the Trend Line could be used to predict 2 price rises, the beginning of the last complete spike and the more recent beginning on the uncompleted spike. You would have been able to match up the prices and seen that there was a Trend Line.
(Teak Log Graph)
They don’t have to be vertical on an upward trend. They can be horizontal too! You just have to buy when it hits the line and watch the item carefully, since the item usually does not fall below that certain point.
If you look at this close up of a graph of Ranging Potions from late 2010 to early 2011, you can see that for a few months, the price of the item did not go past a certain point. Once it did, the price broke out above and went skyrocketing up higher than 75%!
As you can see, this looks like the Antifire (3) Graph from before. The thing is that it is a downward trend. The price of the item instead of not going below a certain point ends up not going above a certain price. If the price were to begin going upwards under the trend line, you could buy and know that you could sell when it hits the line. You have to be careful though, because it is risky.
Here is another graph of the Dragonfire Shield. This shows another downward trend, but the prices never break above a certain point. You can see that this item has kept the same downward trend for over 8 months!
For me, this is the hardest graph to find on the Grand Exchange. It does take a bit to search for it, and its not the easiest, but at the end when you find it, you can make a good amount of money. It is common that this formation happens with items that are usually above a decent price, ranging from bulk items that are worth 1k each to Santa Hats that are worth over 100m!
The following is the graph for Santa Hats. This displays 2 great pennants. The formation occurs when 2 trend lines both below and above the price peaks form a triangle moving inwards. When the price breaks above either line, it goes sharply in that direction. This forms after a large rise in price.
There are times where the Pennant can prove a crash in price. This can be seen in the Red Halloween Dragon Mask. The price has just been at a standstill and has begun to creep downward bit by bit.
This is a very useful formation. Many of you probably know this formation already, then again, for those who don’t, that’s why it is included in this guide! I bet you that most of the time, this formation works perfectly, it just matters if you are paying attention or not. Here is what the formation consists of.
The formation consists of 3 points, points 1, 2, and 3. Point 1 forms when there is a fall in price. The price then rebounds up. It reaches a point a few days later and begins to fall in price. It reaches a price near point 1, goes up in price again, and goes past point 2.
Yes, the guide is at its end. And trust me, my hands hurt from typing all of this. But even though the guide is finished, you are just starting to learn the tips of the trade! Sooner or later, you will be able to learn even more things, or help others out who don’t know a clue about merchanting. This is only a stepping stone into the Grand Exchange and even the real world.
If you use what you learned in this guide, you will be on your way to millions in no time, and on the path to possibly investing in real life!
Linkbuilder, Owner of Lumbridge City
Opkulu, for the Cosmic Rune Example
Ferbguy101 for the Antifire (3) Example
And the rest of the LumbridgeCity Community
The Runescape Community and Jagex Ltd.
The GrandExchangeCentral for your wonderful Graphs
And You for Reading this Guide