This is the first part in a four part series on GE trading.  When the Grand Exchange first opened in Runescape, it ushered in a whole new era of trading.   No more sitting in Fally W2 and hoping for items you needed, or begging in banks for some obscure item. It also opened up some huge opportunities for trading and new and more effective ways of making gold in Runescape.

In the first of four posts on making GP with the GE, I will outline some effective trading strategies (Fundamental, technical and speculative), and in the last I will debunk some of the poor strategies (like buy outs for example). If, after you are done reading fee free to post any questions you may have. There is also a forum over at The Grand Exchange (Thegrandexchange.com) where you can register and ask specific questions about trading and the various methods I will outline here.

Part I – Fundamental Trading

First off, I will start by saying that fundy trading is the easiest and fastest way to make money off the GE. It is fairly straightforward, and is based on real stock trading methods. The kind of trade you do also determines which items you will trade.

There are three prerequisites for items to determine if they are a good thing to buy as a fundy trade. They are:

1. The item must be traded in high volume (Anything in the top 100 most traded items list is good)

2. The item needs to be used up in the process of skilling (People use them up in large quantities)

3. The price graph must be relatively straight (little volatility)

The goal with a fundamental trade is a 5% profit. In general, buying at 2.5% below med and selling at 2.5% above will accomplish that. Done on a consistent basis, you will see your money double every 14 trades. (See the rule of 72 for further study of the reasons for that).

Why high volume? You need lots of buyers and sellers. Items like gold leaf, for example, are used in the ‘value chain’ of making gilded items in construction, but there are so few traded on the GE that it is nearly impossible to make money off them. Teak planks on the other hand are traded in huge volumes, as well as being used far more frequently in skilling.

Finally, why a straight line? You don’t want to choose an item that might jump down after you purchase it. Coal is another example. It is used up in large quantities, and is the 19th most traded item, with 97 million chunks of coal trading hands yesterday. With a 4 hour limit of 10k coal, it is impossible to manipulate, as it is not a matter of purchasing power or GP at that point. You would need a clan 20,000 members strong buying and selling 10k coal each to even make a dent in the price, and no one has anywhere near those numbers, not to mention all of the coal miners would keep pumping cheap coal into the GE to offset any attempted price increase.

An example of value chain for Rune Essence: Rune ess is mined, air runes are crafted, water blast is used to kill an NPC. The final product is a drop that you can either bank or sell (or leave on the ground). Either way the ess is converted and finally used up in the process. Why does it remain flat? As rune crafters skill, they buy rune ess when it is cheap and mine it when it is expensive, keeping the price relatively stable.

As a beginner, once you go through the initial work of finding some items, you can continue to trade them without constant checking of the prices in the GE, making fundy trading ideal for those who either don’t have the time or the inclination to check the market regularly. 90% Of my trades are fundy trades, as I can pull a 5% profit in 5-6 hours. That beats the pants off the return you would get with a buyout clan that only makes 5% every time the GE updates (26-30 hours).