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Greetings, Confabulators!
In my quest to stop prefacing all of my articles that deal with MODO prices with, "I'm not the guy to ask about MODO Finance," I have looked into MODO a bit more.
Is it because I care about the MODO market? No, not really. The prices don't make any sense to me and I think the effort I expend would be better served elsewhere. Either I lose a bunch of money while I figure out an entirely new system or I learn without investing and waste time I could be making money at a system I understand. Both of those sound pretty lame.
Do I want to improve at speculating in a market where the client is buggy, it takes real effort to convert cards into real cards if I want to sit on them and where buying, selling and trading is a pain in the ass? Still, I think at least paying attention to price changes in MODO is a good idea because they can sometimes forecast price changes in paper prices, a market where prices are a bit more sticky.
So what are some things we should look for and some things we should avoid when we're trying to see if MODO is predicting an imminent price correction?
First, An Aside
I wanted to write about price corrections a bit more broadly, but I feel like you all know the non-MODO stuff well enough to teach it back to me, or at least you'll be able to grok it if you read it elsewhere or someone brings it up. It's not terribly counterintuitive for the most part and doesn't really bear going into a ton, but I think it's at least worth highlighting a topic you understand to establish it as the basis for a lot of the conjecture I did, as well as serving as a touchstone for what comes later.
Let's blow through this quickly. It's going to deal with spread.
We all know what spread is, or, if we don't, we'll quietly nod our heads so everyone else doesn't see that we don't and remember to look it up later. It's the percentage difference between the best buylist price and the best sales price.
A large spread is bad because dealers are buying expensive cards for very little. A low spread is good because dealers are paying close to what they sell the cards for.
A negative spread is both possible and good because it does two things. First, it highlights an opportunity for arbitrage. We all know what arbitrage is, or, if we don't, we'll quietly nod our heads so everyone else doesn't see that we don't and remember to look it up later.
It's basically an opportunity to buy a card at retail for one price and buylist it for more, resulting in very little work on our behalf. It's somewhat misleading to call it "free money" if we don't understand all the factors involved, but it's not a bad way to think of it to point out that it's a good thing.
The second thing it can signal, where arbitrage is onerous or where we think it limits what could be significant upside, is an impending price correction. How do we get spread? Simple--there are two different numbers associated with a card, one influenced by what players are paying and the other by what dealers are paying.
When the dealers want a card in stock, they will raise their buy price. It takes a bit of time for the entire internet to get the message and if middlemen like us are slow or not completely thorough about ferreting hidden copies out, they can sit at the old retail price while the new buy price ratchets up higher than the old retail price. Dealers generally want a card in stock because they plan to sell a lot of them, are selling a lot of them already and need to restock, or because they think they will be able to charge a lot more money in the future.
Why else would they pay more than the card is available for some places at retail? They want the copies now and a strong buylist price increase gets them in. If you're not in a hurry to "arb" the copies off and you can get them, why not wait a minute to see where the new price ends up?
I didn't plan for this brief aside to be so substantial, but these things happen. What does this have to do with MODO?
A Different Kind of Spread
This isn't easy to calculate like the spread we commonly refer to, nor is it as easy to quantify. What I am noticing is that sometimes there is a spread between the prices of a card on MODO and in paper. As the difference between the prices shrinks (it's also possible for this to be negative, especially in wacky cases like random uncommons on MODO) the more it looks like a price correction due.
There's no arbitrage opportunity between paper and MODO, so that simplifies things quite a bit. Still, provided the MODO price started out lower, and it almost always will be at this point, as it approaches the paper price, it's worth noting. Not every "hit" is going to be a potential spec, but every instance is worth mulling over.
This was the first card I looked at. Now, Sidisi's price is all over the place and while the paper price is on a steady decline from a peak price right after release when it got an undue amount of credit for how good Treasure Cruise and Dig Through Time are, the MODO price has always been a bit too high. Up slightly from its historical low, and up 5% (not great, I know) in the last few days and down a bit today, I took note of the fact that it was on a perceived upward trajectory and decided to see if there was a reason it was up.
I don't think there is, and I certainly don't want to pay its paper price right now. MODO copies are poised to turn into paper copies with greater frequency, I really don't like Sidisi as an EDH general in a world where The Mimeoplasm exists and the card is seeing little play in all formats, so I am inclined to let this sink lower.
Could it hit bulk mythic status? That's the interesting thing--the MODO data paints a less clear picture than the paper data. There are mythics in the set that are already well on their way to junk status. Let's look at their graphs.
Less B.S. about potential playability coupled with the inclusion in the "Speed vs. Cunning" duel deck has shown us what a real trash mythic in Khans looks like. Again, the paper picture painted is much clearer, but MODO is still showing an overall downward trend, and that's without the interference of duel deck copies.
Sidisi looks as though it might rally. Interesting to note, Zurgo did quite a few fluctuations over the past few weeks, and those "peaks" mean nothing other than changes in supply, probably, and those are around the order of 5%. We're going to have to start demanding a little bit more out of of "rallies" before we can call the card a mover and/or shaker.
What should we do about Sidisi? I am not inclined to do anything right now, but since it isn't behaving like a "normal" trash mythic, it bears looking at. I think it's got a ways to fall yet, but if we see a jump of more than 10% on a daily update on MTGGoldfish, I would take another look. Significant play increases, significant upside in older formats or the peculiarities of MODO are all potential explanations, but the data should make it a little less murky if it starts to spike. I'm starting to think a >5% increase or decrease is attributable to noise more than a signal for cards under 5 tix.
What Looks Better?
This is what we want to see! We have the MODO price on an upward track while the paper price is falling. The spike in paper is attributable to hype for other formats like Modern where it is dandy at dealing with all sorts of problematic creatures. But with the hype surrounding the card in paper dying down slightly, we're seeing the price attenuate.
We're at peak supply for the card both in paper and on MODO. No one is drafting this set, no one is redeeming this set and no one is busting a ton of boosters. People who bought in big speculating and couldn't find any greater fools are undercutting each other on the race to the bottom to sell out. Meanwhile, MODO is showing us a rocky but overall steady increase. The card is up 24% just today. If it goes up tomorrow as well, we're looking at a real signal.
Also, while the price in paper is declining, the slope of the downward curve is changing. It fell more sharply initially than it is now. Could this also signal a plateau soon? I don't know, but I do know that no one is really watching this card right now, even me. Its paper price is trending downward so no one gave it a second thought. However, the MODO and paper price are converging slightly.
While I'm not prepared to call this a buy, this is the sort of thing you want to see. There is indeed a ton of noise in the price of Anger, and it could drop by more than 24% in the next day or week and bear that out. Still, this is significant and Anger is a card that is heavily touted somewhat frequently and it's worth paying attention.
Teach a Man to Goldfish
I use quite a few resources to check prices in paper, but for MODO, the best one I have found is MTGGoldfish. I see they're starting to offer articles, and while I am going to refrain from commenting on that, I will say that their pricing utilities for MODO have the kind of features I like to see and their "movers and shakers" page is worth checking out.
Here is how I would work this site into your routine and how you can check for these convergences like we're starting to see with Anger of the Gods in under five minutes a day.
Go to MtgGoldfish.com
Click "Prices" in the Upper Left
You can go to the "Movers and Shakers" page in the dropdown menu and check the daily and weekly changes lists. You can toggle between formats as well. I think any price increase below 10% is almost solely attributable to noise unless it's repeated over a few days. The Weekly change part is useful in this regard to see if a price change is a fluke or if it's a trend.
Is Temple of Triumph in a new deck? Check MODO dailies to see what's going on. Is Hornet Queen recovering price-wise in paper or is it still on a downward trajectory? Click on the name and check out both the MODO and paper prices. Do we want to start trading for Windswept Heath right now or wait for peak supply? Take about five minutes out of your day to check out this page as part of your routine.
Seeing Jeskai Ascendancy down could signal it's seeing less play in paper and it may be time to try and out it, or it could signal how difficult the deck is to play on MODO and peoples' frustration. Try to reconcile things you see here with trends on paper. A move on MODO could be due to an isolated incident, a MODO peculiarity or metagame preference, but any sign of concerted movement between the two formats can reinforce our inclinations.
As we get to understand the peculiarities of Magic Online a bit better, we will be able to explain a few of the quirks in the price movement moving forward. Other discrepancies are not as easy to explain and could signal an imminent price correction.
Is every card with neagative spread a good arbitrage opportunity or a signal of a price shift? No, of course not. We need to be judicious when we identify them. But we're not going to notice the real "hits" until we start looking, and with a five minute investment per day all that's necessary to discover cards that may start trending on MODO a week or so before paper, it's worth looking.
