Margin Trading Scams 101

I’ve seen a recent uptick in obvious margin trading scams in Jita lately; this is pretty typical for the period shortly before/after an expansion hits, due to the increase in market activity.  Let’s explain how these scams work!

As you can probably guess from the name, it’s based on the Margin Trading skill, one of the most useful skills in the Trade category.  Let’s start by discussing how this skill affects market orders:

• With Margin Trading untrained, when you put up a buy order for an item at X isk, the game immediately removes that X isk from your wallet, and puts it in a “market escrow” account.  When the market matches a seller with your buy order, it transfers the X isk from market escrow to the seller, and the item goes directly to your inventory.
• With Margin Trading trained to 1:  When you put up a buy order for an item at X isk, the game removes 75% of X from your wallet, and puts that fraction into the market escrow account.  You keep the remaining 25%, for now.  When the market matches a seller with your buy order, the game checks to see if you still have the remaining 25% of X in your wallet:
  • If you have at least 25% of X in your wallet, it removes that 25%, and adds it to the 75% in the market escrow.  The seller gets X isk total, and you get the item.
  • However, if you don’t have that 25% of X in your wallet, then the trade is canceled.   The seller keeps the item, and receives no money.  Your buy order is removed from the market, and you forfeit any market fees you paid to create the buy order.  The 75% that was put in market escrow is returned to your wallet.
• With Margin Trading trained to 5, it takes it to an extreme:  The market forces you to put 24% of X in market escrow, and takes out the remaining 76% from your wallet when the buy order is filled.

Now, what happens when you have Margin Trading and you put up a buy order for multiple copies of an item?  It’ll put the amount for 24% of the complete order (X items * Y isk/item) in escrow.  Players can sell to that order in smaller increments; for each sale, it’ll use the market escrow account to pay the full amount for each sale it makes, up until the market escrow is empty.  Once the market escrow is empty, further sales will try to source the full isk for each sale from your wallet, canceling the order if your wallet’s empty.

This feature becomes important when you combine it with a feature of Eve’s market:  When you create a buy order for an item with a quantity of more than one, you can set a minimum quantity.  Players wanting to fill the order have to deliver it at least Y items at a time.

Now, let’s discuss how to scam using this skill!

The basic Margin Trading Scam uses two characters — let’s call them the Supplier and the Purchaser.  The Purchaser character needs to have Margin Trading trained to 5, obviously; the Supplier has no specific requirements, although having the Trade skills trained up and good standings helps. Here’s the steps:

1. Pick an item to do this on.  You’re looking for the following characteristics:
   • Not much market activity on it — or something you can afford to buy out
   • The item needs to be easy to stockpile.
   • The existing market activity on it doesn’t have any large-quantity sell orders (>= 200 units)
2. Stockpile 500 of that item on the Supplier, as cheaply as possible. (If it’s a slow/cheap enough market, you can just buy out the market.  I did a video guide to this for an alliance once; when I did it, I used a meta-3 passive targeter for my example, and I was able to buy out every copy of that item in Jita, Rens, Amarr, and Dodixie for less than 10M isk.)
3. On the Purchaser, you place a buy order for 1,000 of these items at some ridiculous above-market price (say, 20 times the current price).  Set the minimum quantity to 240 units.  When you put up the buy order, it will remove 24% of the isk needed to fill that entire order from the Purchaser’s wallet. IMMEDIATELY transfer all of the isk in the Purchaser’s wallet to the Supplier.
4. Using the Supplier, you sell 240 units to the Purchaser’s buy order.  This will empty out the Purchaser’s escrow; the buy order should stay up (now asking for 760 units), and 240 of Supplier’s items will be handed to the Purchaser.  Trade these back to the Supplier.
5. Using the Supplier, you now create sell orders for the 1000 items, at a price that’s significantly above the market average.  You want to stagger it out, and make it look like some people were competing for price at some point.  Only do 20-50 units at a time, so that they have to buy from a bunch of different sell orders to make the 230-unit minimum.  Set varying amounts that are somewhat believable — say, 100ish at roughly market price, 50 at a bit above market, 50 at twice the market price, 20 at five times the market price, and so on.  Make it look like there’s actually some competition in this market, plus maybe some guys looking for a typo by having a few items at ten times the item’s value… you get the idea.
6. Go around, advertising in various channels, that the Purchaser must have been playing while drunk, and put an extra zero in their buy order.

 
Eventually, a mark is going to stumble across your advertising, looks at the market, and exclaim: “Holy shit, they did put in an extra zero… I should abuse their mistake!” The mark buys all of Supplier’s items, bundling them together in order to make the 230-unit minimum, and promptly tries to sell it to the Purchaser. The game tries to complete the sale, but the Purchaser has no isk in the wallet to finish the escrow; the sale fails, and the buy order disappears from the market.

The scam is now complete: The Supplier has just divested themselves of their inventory at a huge markup over the market price, and the Purchaser has lost only a tiny market fee. In some cases, the mark may not have even realized what happened; they might think that the buyer had logged on and fixed their mistake at the last second.

(Note that the minimum quantity isn’t even technically necessary to make the scam work; it’s a safety measure to prevent someone from cancelling your order prematurely by selling you 1-2 items that they had spare.  The profit in this scam is primarily from getting a mark to buy from your overpriced sell orders, so it’s useful if your buy order stays up for as long as possible.)

There’s some improvements that you can do on this scam to make it less obvious, certainly. In particular, picking more random numbers for your buy orders is useful, as long as you remember the magic number of 24% in market escrow.  Putting sale orders in another station, or using Item Exchange contracts instead of sale orders, helps as well.  There’s also quite a few supplements you can add to this scam.  Two of my favorite add-ons/variants:

• Have the Supplier set up a buy order for the item at well below the market price.  If the mark isn’t paying attention (or isn’t aware of the underlying mechanics), they might chalk it up to lag, and try to sell the items a second time, when the first buy order disappears. If it matches their sale with the lower buy order and they accidentally click OK without noticing, then you’ve doubled your profit: not only did you sell some trash to a mark at an above-market value, but you then bought the trash back from them at below market value.
• Have the Purchaser put up a buy order at Jita for some obscure, rare module — Officer mods are ideal — at an absurdly high price. Empty the Purchaser’s wallet; then, take a ship, fit that module to it, and put it up on contract at a “firesale price” that is still far more than the mod’s worth. The mark buys the ship off contracts in the hopes of stripping it and selling your mod to your buy order… only to find that your buy order fails.

 
So, given that this type of scamming exists, do I think that Margin Trading should be removed? Nope. Margin Trading has an absolute boatload of legitimate uses; it’s responsible for a large amount of the depth in market PvP today.  In particular, it allows you to do a huge amount of arbitrage on a limited nest egg, and is responsible for a lot of the “I turned my newbie 1M isk into 1B isk through trading” success stories in Eve.  It wouldn’t hurt to add a warning or indicator, but the skill’s fundamental mechanic is great, and should be left in the game.  (And besides, how often is it that you get a significant game-changing benefit out of a long skill train?)

That said, if you take nothing else away from this post, it should be this: If you see a item with low volume and an absurd-looking sell order with a minimum quantity, it’s almost certainly a scam.  Remember, TANSTAAFL.  If you’re thinking “I’m going to make some free cash by exploiting this player’s stupid mistake,” you’re probably making a stupid mistake of your own.

(PS: Believe it or not, the Margin Trading skill actually reduced the amount of scamming when it was released; in beta, there was no escrow at all, and ISK was only removed at time of trade execution.)

Useless LP

After yesterday’s topic about an useless item (micro smartbombs), it seems natural to continue ranting about other useless items :)

The Syndicate region, a little slice of NPC nullsec in the northwest, has a well-deserved reputation of being an alliance killer.  What typically happens: An alliance has lived in their own sovereign nullsec for a while, and lose that space due to a war or a breakdown in diplomacy; they announce that they’re retreating to Syndicate to reorganize and rebuild.  Instead, they promptly wither on the vine in Syndicate, and collapse. [1] [2]

The main contributor to this is Syndicate's well-earned reputation as the worst money-making region in the game — it has less opportunities than most of lowsec, and far less than any of the other NPC nullsec regions (Curse, Venal, Great Wildlands).  There's a number of reasons for this:

• When you warp into a belt, the rats pull up next to you and offer to clean your windshields.  Most of the region has poor true-sec ratings; this means that cosmic anomalies spawn infrequently (and are poor quality), and the belt rats are mainly cruisers, with battleships maxing out at 1-2 per spawn and averaging 800-900K isk in bounties.  Escalations, when they happen, tend to spawn in PF-346 or X-M2LR — the most traveled and action-heavy systems in the region.
• When Syndicate residents talk about moongoo, they mean that moon miners produce ripe Camembert.  There are very few high-value moons in Syndicate; the ones that do exist are generally towered by CFC-affiliated entities, who are within one capital midpoint of Syndicate.
• Syndicate LP is about as useful as wooden nickels.  This one’s interesting!

In sovereign null-sec, there are generally no missioning agents to be found; income primarily comes from deploying an Infrastructure Hub to boost the spawn rate (and quality) of cosmic anomalies, and ratting there. [3]  NPC null-sec doesn’t allow you to drop I-Hubs, of course — instead, because the space is owned by one of the pirate factions, the stations will have agents in them.  You can earn pirate corp LP by running missions, and turn that in for pirate goods. Some of the most popular ships and items in the game are primarily sourced via pirate missions in NPC null-sec:

• Curse features agents for Salvation Angels; its LP store is the main source of Angel ships (Dramiel/Cynabal/Machariel) and faction XL projectile ammo, as well as the Angel Cartel Epic Mission Arc.
• Venal features agents for Guristas; its LP store contains Guristas ships, Crystal implant sets, and the blueprints for Synth Blue Pill and Synth Crash boosters.  The Guristas Epic Mission Arc is also available.
• Stain has True Power / True Creations agents, which produce the Slave implant sets (in demand from nearly all PvPers), Sansha ship blueprints, and faction XL laser ammo.
• Taking second-worst place, Great Wildlands features agents for Trust Partners; which produce a single valuable item, the Nomad implant set (in high demand from jump freighter and shield supercapital pilots).

The Intaki Syndicate LP store, however, is firmly in last place.  What can you buy with Syndicate LP that’s valuable?  Turns out, pretty much nothing:

• Edge implants — the most useless implant set in the game.  (Reduced chance of side-effects from boosters.)
• Faction gas harvesters, which have worse performance than T2.  Plus, the only ship in the game with a gas harvester bonus can fit the T2 versions without compromising the rest of its fit.
• Faction anchorable bubbles, which have a smaller radius than T2.  (Their only upside is double the HP.)
• Faction armor plates, that are worse than the Federation Navy plates in every way.  (They’re rare enough that people use them for margin trading scams at Jita.)

Pretty much the only good aspect of Syndicate: that nearly every system has an NPC station in it, so it’s easy to dock up and hide if hostiles come knocking!

—

1: It used to be, a few years ago, that alliances would also go to Syndicate to bulk up and get accustomed to the null-sec lifestlye, and then “graduate” to taking a bit of sovereign null-sec.  Many of today’s high-profile sovereign alliances got their start in Syndicate, including Goonswarm.  However, this isn’t really feasible in today’s Eve.  Something to write about later.

2: The only sov-holding alliance that I can recall that has retreated to Syndicate, and actually successfully reformed while there, is Ev0ke.  (They’ve actually bounced in and out of Syndicate several times now.)

3: Some regions of space are split between NPC-held sovereignty and player-held sovereignty, and get the best of both worlds.  For example, Fountain is mainly player-owned space (with all its attendant benefits: jump bridges, cyno jamming, cheaper POS operation, etc.); however, it also has a central core of Serpentis NPC space, including level-4 agents whose LP stores contain Serpentis ships, Snake implant sets, and faction XL hybrid ammo.  Needless to say, Fountain’s one of the more lucrative places to live, if you can hold the space.

Micro Smartbombs and Titan Kills

The first few Titans to die in Eve were killed via subterfuge, while the pilot was offline.

When initially introduced to the game, the Titan’s doomsday device wasn’t the single-target capital killer that is today; instead, it was a massive AOE weapon that hit everything on the grid for a nice chunk of damage, more than enough to kill anything smaller than a battleship or command ship.  (And even a battleship would die to a DD if it didn’t have at least two 1600mm plates fitted and all hardeners active!)  Furthermore, the original DD also didn’t lock you in place, or disable your jump drive, when fired.

This meant that a competent Titan pilot was capable of killing every Interdictor in a fight with a single press of a button, and then immediately jumping out to an emergency exit cyno.  Heavy interdictors didn’t exist yet — the Titans had been added to the game in December 2005 (with the first ones exiting build eight months later), but HICs wouldn’t be added until December 2007 in Trinity.  During this era, a Titan with an attentive pilot was generally considered impossible to kill.

It should be no surprise, then, that the first two Titan kills in the game were due to the players logging off with aggression.  (The aggression timer was not visible on your screen, back then.)  If a pilot logged out while aggressed, they’d stay in space for 15 minutes with all modules inactive — an easy kill if you could probe them out and get dreadnoughts on field.  The first one, an Avatar piloted by Cyvok, would die because he had fired a DD less than fifteen minutes before hand.

However, the second one (an Erebus piloted by WOTANKN) was killed due to a spy.  How?  The spy was sitting next to the titan in a covert ops, as the titan was waiting out his timer and preparing to log out.  Right before the titan pilot logged out, he hit the titan with a single pulse of a micro smartbomb, refreshing its aggression timer.  The titan pilot finished logging out, having not noticed the damage, and the unpiloted hull was promptly probed out and killed.

A micro smartbomb has a 2km range and does a whopping four DPS (30 damage every 7.5 seconds).  It is useless in nearly every sense of the word.  But, sometimes, even the most useless modules end up having a use. :)

(It would take until June of 2007 for a Titan to die while piloted — the Revelations II expansion added the ten-minute “no jumping” timer to doomsday devices, and less than 36 hours after the expansion arrived, an overconfident Avatar met its demise in Teneferis.)

Modules With A Story: Micro Injectors

This will be the first in what I plan to be a regular series — discussing modules and other items in the Eve universe that have an interesting story behind them. Let’s start with a simple one: Micro Capacitor Boosters.

Most modules in Eve come in three sizes: small modules for frigates, medium modules for cruisers/battlecruisers, and large modules for battleships. There are some occasional exceptions in naming, of course: Frigates use small armor repairers, small turrets, small injectors, small neuts/nos, and small rigs… but they also typically use medium shield extenders. (Consistency isn’t one of CCP’s strengths.)

However, at one point in Eve’s history, there was also a micro size. Only five groups of modules were ever made in micro size:

• Micro capacitor boosters (injectors)
• Micro capacitor batteries
• Micro shield extenders
• Micro remote shield boosters
• Micro smartbombs

Most of these are newbie traps… except for the micro injectors, which are actually quite useful. They require less CPU and power grid than a small injector, but they have extremely limited capacity: Tech-1 versions can only hold a single Cap Booster 150 or 200 charge, or two Navy Cap Booster 100s.  That combination of low fitting requirements and poor performance make them a perfect module for ships that only need an occasional burst of capacitor, but don’t have the grid/CPU to spare for a full-sized small injector — namely, interceptors, Sentinels, and Cruors.

Module Name	Grid	CPU	Capacity	Cycle Time
Micro Capacitor Booster I	3	10	8 m3	15 sec
Micro F-RX Prototype Capacitor Boost	3	8	8 m3	12.75 sec
Micro Capacitor Booster II	3	10	10 m3	15 sec
Small Capacitor Booster I	5	15	12 m3	15 sec
Small F-RX Prototype Capacitor Boost	5	15	12 m3	12.75 sec
Small Capacitor Booster II	5	15	15 m3	15 sec

Unfortunately, because most of the micro modules were generally useless and going unused, CCP decided to eliminate them from the game. Rather than removing the existing micro modules from the game, they decided to choke off the supply: one day, a patch was applied to Tranquility that replaced all micro module blueprints with the equivalent small module blueprints. (I can’t find the patch notes for when this happened; I vaguely remember it happening sometime during Red Moon Rising.)

There’s a limited supply of micro modules still available on TQ; they can be traded on the market and fitted to ships, but no more will ever be made. If you’re addicted to frigate PvP and have some spare isk, the micro injectors are a decent module to stockpile, although they are getting quite expensive due to their rarity; the basic T1 versions go for 3M isk each at Jita, and the good meta versions for up to 35M isk.

Of course, even useless modules can occasionally have a use. An early Titan kill in Eve’s history can be blamed on a micro smartbomb… but that’s a story for another time.

(Astute readers will notice that Micro Auxiliary Power Cores are not listed above. Blueprints for the MAPC are still available, and it’s actually an incredibly useful module that I plan to talk about sometime this week.)