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Insider: Short-Term Trading on MTGO

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The Wide Beta Spotlight: Update

As you are no doubt aware, the Wide Beta Spotlight was cancelled. This removed a unique opportunity to observe how the MTGO's secondary market would work without at least some of the major bots operating. While a bit disappointing, speculators should always be making plans and executing strategies with the best available knowledge, adapting to inevitable surprises and learning from mistakes.

Fortunately WoTC seems to be adopting the same philosophy. Forcing a half baked client on MTGO users looked like it was going to be an error. The process of transitioning to the new client will be interesting as a premature move will cause a market crash. Cancelling the spotlight indicates WoTC is wary of repeating past mistakes.

Short Term Trading

My philosophy when it comes to speculating is usually dominated by the fundamentals of the MTGO market. Redemption, rotation and seasonality are the top of my list for trends to stick to. They are straight forward, and trading strategies based around these major themes don't require a ton of analysis or time to implement. They do require patience though, with some trades needing a number of months to bear fruit.

But it can be profitable to deviate from this type of fundamental investing. The price movements on MTGO can be sudden and large, so having a feel for short-term trades is a good skill to develop once you have the hang of the basics.

Thought Process

From now until the Fall, the set values for Innistrad (ISD), Dark Ascension (DKA), Avacyn Restored (AVR) and M13 are all destined to drop. But individual cards will still fluctuate in value depending on their utility in constructed formats. Essentially this is engaging in stock picking in a bear market. The overall trend is bad, so for casual speculators it's best to pay attention to the broader trend and steer clear of this strategy. But for more sophisticated speculators, there's still opportunity for profits.

Reading the results and commentary from the first SCG Open of Dragon's Maze Standard gave me some ideas. With Jund and Reanimator still on top, it looked like Thragtusk's reign as the top creature in Standard was set to continue. This is where I went to mtggoldfish to examine the recent price history of Thragtusk and determine if there was an opportunity.

The chart looked favorable. Thragtusk had some price weakness prior to the release of Gatecrash (GTC), when it hit the 8-9 tix range. Following that, there was a period of price strength until the start of April.

It looked like 9 tix was a short-term price floor and with the renewal of interest in Constructed that always occurs with a set release, the price should go higher in the short term. With the early results coming in for Standard, Thragtusk being at a short-term price floor, and the preoccupation of MTGO users with Cube draft, all signs pointed to a favorable short-term trade with low risk and the potential for 4+ tix in profit per card.

Taking a Position

After getting interested in Thragtusk, the next step was to examine the state of the market. This involved scouring the classifieds to get a sense for the depth of the market. If there were a ton of humans selling it for 8 tix, then it was probable that the 9 tix posted at most bots was too high and that a price drop was looming.

This is not what I found. There were relatively few humans selling Thragtusk, and most were trying to sell in the 9 to 10 tix range. This indicated to me that players were not actively willing to sell this card at market prices. Once this became apparent, I felt it was time to start buying. It looked like there was a good opportunity available and I set my buy price at 9 tix or less.

In order to start buying, I do a search for 'Thragtusk' and then buy any listing I see that matches or beats my buy price. Goatbots was selling at 8.75 tix, so I bought a bunch from them. Nova also had a few copies for less than 9 tix. Various other bots had them around 9 tix, including cardbot, but I only bought one play set from them.

Cardbot deserves special attention because it is one of the longest running smart bots around and has introduced numerous innovations to the MTGO secondary market. More importantly though, many other bots (and humans) rely on them for pricing in some form or another. By electing not to clean Cardbot out of Thragtusk, I was able to accumulate a substantial position without alerting the broader market to what I was doing. This extends the period in which making speculative purchases is possible. After I had taken my position, I posted to the QS forums.

Next Steps

After confidently going deep on Thragtusk, I started thinking about other short-term opportunities. Similar thinking suggested that Geist of Saint Traft was also a good short-term buy, especially since Pat Chapin examined Bant Hexproof in his article from Monday. Mike Flores was also playing Bant Hexproof in the SCG Open. Both of these writers can move the market to some degree by influencing what decks players adopt and try out. A resurgence in hexproof strategies aided by the printing of Unflinching Courage seemed to be in the offering.

Going deep on Geist, for similar reasons to Thragtusk, was an easy decision. Geist of Saint Traft also has the added benefit of being a Modern staple, and interest in Modern should be stoked by the release of Modern Masters. Adding this all up suggested a short-term window of opportunity clearly laid out for this card.

This type of short-term speculating is somewhat riskier and requires more attention be paid to the market. With the effects of rotation looming, the window to potentially sell cards at a profit is smaller, and a distracted speculator might miss out on a price spike. Know your risk tolerance and your ability to pay attention to the market before engaging in short-term opportunities such as the ones described here.

Portfolio Update

This is a brief rundown of what I am buying, selling and watching in the market.

Selling:

  • Nothing to sell this week.

Buying:

  • Gatecrash (GTC) boosters have been bouncing up and down in the 2.9 to 3.0 range, and I continue to buy these every day in order to build my stock. I expect prices to rebound in the second half of May and packs are liquid enough that I have no qualms about buying these at the moment. There's no upper limit to how many I would buy at prices less than 3 tix.
  • Restoration Angel, Geist of Saint Traft and Thragtusk have all seen recent price dips. All are Standard staples and when they hit or came close to short-term price floors, I couldn't resist wading in and buying up a bunch with a short-term flip in mind. Each of these were mentioned in the forums.

Watching:

  • I'll be paying attention to paper tournament results now that DGM has hit Standard, in order to get a sense for future metagame shifts.
  • Thundermaw Hellkite, Huntmaster of the Fells // Ravager of the Fells and Hellrider are all cards with short-term potential. Similar to my three buying targets from this week, they are all close to a short-term price floor and are played in Standard.

23 thoughts on “Insider: Short-Term Trading on MTGO

  1. Too bad you share this information AFTER you went in, when price of thragtusk is allready back up to 10… I guess if we all start buying now it will go up to 13-14 again.

    1. Most of my articles try to describe the process though which I speculate on modo. This one is no exception. It details exactly how I came to the conclusion that Thragtusk is a good speculative target. The combination of past history, playability, and heading into release events pointed to it holding value.

      I suggest that understanding the process will serve you best in the end. Examine Hellrider and Thundermaw Hellkite. Both of these have fallen in price recently including price drops in the last 36 hours. Both have seen play in Standard. Are they good value? I think so. But compare those cards to Thragtusk at 10 tix. Which is better value? It’s very close in my mind.

      Thanks for reading!

    2. I think we should be thanking him for sharing with us at all… He’s made money out of Thragtusk and might not have if he had shared before.

    3. I’m interested in this bit: “If there were a ton of humans selling it for 8 tix, then it was probable that the 9 tix posted at most bots was too high and that a price drop was looming.”

      So your reasoning is that if humans were selling at 8, it would have been because they were trying to beat the bots… bots would have dropped their prices further, causing a dip. Right?

      1. Basically this comes down to the question of, ‘what is the price of a card?’. If cardbot lists at 9, but there are lots of buyers and sellers at 8, then I’d suggest the true price is 8 and that cardbot will eventually start lowering prices or the buyers and sellers at 8 disappear. That kind of divergence is just not sustainable over the long run.

        The bots make their money by moving volume, and if they are not selling cards, they are losing money. When there are a lot of humans buying and selling at prices different than the bots, something has got to change.

        When I looked for the bottom end of the Thragtusk market, there wasn’t a bottom end. Most prices were around 9 tix, so 9 tix was a good estimate of the ‘true’ price. This gave me confidence that buying at 9 tix was fine and that a price drop was not looming.

  2. Thragtusk was a good buy at 9. Is it still a good buy at 10? Seems that way.

    Note that many of these cards may continue to drop during DGM pre-release and release events, which only take event tickets. Player demand for tickets should depress the price of singles across the board, right? We can expect a rebound in two weeks after the release events end.

    1. That’s the idea, players ‘need’ tix and so they act in a short sighted way and sell the cards they aren’t using at the moment. In a couple of weeks when they ‘need’ a card to play Standard, prices rebound.

      Thragtusk at 10 seems fine to me.

  3. By the way, Matt shared this information almost 1 week ago on the forum. Sebastien and I were already in the buy process when Matt posted on the forum and there were plenty of opportunities to buy at less than 9 tix.

    I like the philosophy Matt, you must teach someone to fish instead of simply giving him fish.

    On another topic, bots are more agressive than they were during this prerelease have you noticed? They offer a really good buying price for mythics (especially hotlist bot). All the other release they were protecting themselves with ridiculous buying price to make sure they don’t lose money but it is a different story now! I saw voice of resurgence at 28.95 buy on hotlist yesterday. Way higher than I would expect from mtgo. You have more experience than me, what would explain this?

    good article again

    1. I feel there is more cards that are impacting Standard in Gatecrash, which means that prices start out higher because they are in demand. Using DGM cards in Standard right now is a competitive advantage for those that can afford them versus those that cannot.

      On the other hand, the cards with the most impact from GTC were rares, most of which were reprints, ie the shock lands. Boros Reckoner did hold 10+ tix for a while, which is higher than any DGM rare at the moment.

      Also, I think the bots take cues from paper prices early on. With Voice of Resurgence going to 30+ in paper, this has translated into a high initial price. Once the market settles down, supply and demand will drive prices, but at least initially, going off of paper values is probably what the major bots are doing.

      Lastly, I think there is more competition with a new range of well designed bots, such as Goatbot.

  4. I’m always glad to get any tips or info about good spec from Matt or Jef/Seb, even if it’s 24h-48h later in the Thragtusk case. Even at 9.5-10 (when I bought some) I’m happy and confident to speculate here.

    I rather have a tip later that will give me 40% profit than no tip at all, and it’s not a problem if I missed the very initial peak because Matt did call me right at the moment he bought his Thragtusk in order to allow me to make 50% profit.

    I’m still very satisfied to pay my QS membership for these kind of articles and info about good spec AND learn about the logic behind.

    Following the reasoning, Thragtusk is still a very good buy at 10, and maybe even 11 or more. With a target sell at 13-14Tix within 2 to 4 weeks, it’s more than descent.

  5. Good article. Thanks for sharing the whys/reasons for your decisions. It’s much more important to learn what we are doing on mtgo than just buy this and that

  6. It seems like buying as much GTC as possible at 3 or less is a good long term value because when the format switches over to D/G/R there will be an overabundance of D and a shortage of G and R, finally raising their prices. My question for you is in the meantime, say I played in a pre-release even and am sitting on a ton of unopened packs, do I sell now while I can still get 3+ a piece for them or do I just draft them during the release events? I realize this question is more from a player’s perspective but I wanted to see yourthoughts on what to do with those initial packs of the last set.

    1. Right now, I think that DGM boosters are depressed in price because the only limited events happening right now are tix only. So, players are selling packs in order to play more.

      Once pre release events finish, players will be able to use boosters in queues and other events (though not the 16 person sealed queues), so we should see them bounce back in price on Monday.

      But, after wednesday, prizes for constructed will switch to DGM boosters, which will put pressure on pack prices.

      So, for you, as a player, I’d for sure not sell any packs today, and just use them for playing. Enjoy Dragon’s Maze!

  7. Not looking so good for DGM boosters at the moment… they have now dipped to as little as 2.75 or less…. 🙁 maybe a decent time to get them now though, hopefully they spike soon though

    1. I’ve revised my expectations on DGM boosters and I expect them to continue to fall. It looks like I made a mistake in comparing DGM to RTR or GTC, both of which need 3 boosters to draft. Although you can draft DDD right now, normal drafting only uses one booster of DGM. This was my mistake, and I overestimated demand from drafters. Once DGM is awarded as prizes for constructed, starting tomorrow, this should continue to bring prices down.

      DGM boosters will find a bottom when the EV of a pack approaches the price and/or when M14 replaces it as prizes for constructed.

    1. I don’t know, but it’s possible! With M13 removed as payout from the 2 man queues, this cuts down on supply, but you still need M13 drafts and DEs to fire to raise prices. However, there is not much time until M14 hits, and in the mean time Modern Masters will be released.

      1. Looks like I’m incorrect here, I’ll have to check this later but this just came over twitter from Worth,

        Worth Wollpert ‏@mtgworth 2m

        As Lee just said to be clear, 2 man queues that used to pay GTC, now pay RTR.

        So, Pauper and Momir are still paying out M13. Which suggests to me that M13 will stay depressed in price until M14 is released, and then will be undraftable, which will then completely tank the price.

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