This is the third part in our series on “mistakes we make” where we analyze some of the common errors in trying to increase the value of your Magic Online collection. You can take a look at the previous two installations here and here.

One thing about many of these mistakes is that they are based in reasonable beliefs and practices. The initial premise is a solid one, but it is in the execution that we often go awry. A few of the mistakes I cover today fall into this category.

Trying to Buy What Seems “Low Stock”

“Buyouts” are a strategy that people exploit for financial gain on paper exchanges like TCG Player. In general, this is not a practice I really condone since it can border on market manipulation. Trying to create artificial scarcity is a losing strategy and ethically borderline. That said, if you can identify a card that has not been properly priced in the market and that has only a few copies available you can catch the train before it leaves the station.

One reason buyouts work in paper speculation is because that market can be slow to respond. The MTGO market adjusts much more quickly because there are few transaction costs and no shipping delay. Sometimes “low stock” is a mirage and not a good price signal, as Cooper describes here:

Buying a card that has a low stock on mtgowiki, mainly because of its low stock. (I bought a few Elesh Norns a LONG time ago just because I only saw 4-8 for sale). This is a big one I think (unless it's just me who is the dummy!) because in my mind when I was very new, seeing a card that sees play with such low stock available, albeit temporarily, meant that I thought it was a much better opportunity than it was. Obviously turned out to be a huge waste of time and some tix. Coopes @cooperribb

I don’t recommend trying to buy out a position on MTGO unless you are quite solid in your convictions and have done your homework. A card can be low stock on MTGO Library, for example, but have large stock at MTGO Traders or Goatbots or other major chains. Even worse, low stock will sometimes occur as a result of heavy speculative activity, which means you could be buying into a bubble.

Bottom line is that low stock can be a good signal but is not proof of a good spec. You need to rely on market fundamentals. Unless your bankroll is massive you will not be able to corner the market on a particular card; even if you do, you won’t be able to sell it at profit unless demand is real. Trying a buyout and failing is a good way to get exposed and one of the few ways to lose a lot of tickets in MTGO finance.

Technical Errors with Bots

I’m sure we could do a separate article just on common botting errors. I am not the best person to write that article, but I will note that because of irregularities in botting software it is easy to make technical errors that cost you money.

The MTGO market is fairly efficient, and a pricing error can cost you dearly. This is one reason botting is not for the casual speculator. Jacob Corey has done quite nicely with his Headkilla bot but there were some fits and starts:

The biggest mistake I made was with the bot. I accidentally put all my THS boosters up for sale at my buy price and allowed a single buyer to purchase several hundred for a very good deal. I ended up losing out roughly 100 tix on that blunder, not accounting for any gains I might have achieved. Jacob Corey

There are some good resources on QS if you want to get serious about botting. But be forewarned that there will be some bumps along the road.

Buying First Set Cards

Not all sets are created equal. Cards from the first set in any particular block (“the fall set”) are available for far longer than those in the second or third set. This is a well understood phenomenon in paper, but it is especially true in digital because of the constant flow of cards from sustained drafing.

In paper, a large portion of supply comes from boxes opened by retailers, and the rate of open tapers off quickly in paper as new sets are released. On MTGO, first-set opens will continue for a full year. And there is a lot more drafting of Theros than Born of the Gods, and a lot more Born of the Gods than Journey into Nyx.

As a result, some specs which look good on the surface have much lower upside if they come from a first set. When a new block is released, people sometimes jump the gun, and put too much money into long-term specs from that block. With months and months of drafting ahead that is rarely a good strategy. You may want to focus your specs in the first set of a given block on shorter-term specs rather than waiting a full year for that set to cease being drafted heavily. Here is an excellent analysis by Sylvain Lehoux:

A smaller part of my portfolio was more dedicated to trendy cards and Standard. At this time I was pretty sure that I could identify sleepers, grab some and be ahead of the crowd. I notably remember buying several copies of Bloodgift Demon (ISD) at 1 tix, thinking that such a nice creature will be valuable in the future. As we know, the demon finally hit 0.05 tix as a good junk as it is, and was never played. I did that with other ISD cards, such as Splinterfright and the ISD lands with abilities. Again, not really good bets.

I also bought a playset of Snapcaster Mage @ 12tix/each, I finally sold them at about 7-8 tix each, after a year of waiting.

Speculating on Standard is generally not a great idea I think. Especially on the first set, supply is simply too high. At best, buying at absolute bottom is the only way to avoid big losses. Even absolute gems such as Snapcaster Mage have to drop the first 3 to 4 months.

Along these lines, and after seeing Dismember and Gut Shot spiked at several tix (for uncos) I bought dozens of Unburial Rites, Midnight Haunting, Fiend Hunter and Desperate Ravings at low cost (~0.1 tix) thinking that they will be 2 tix cards later on. It never happened. Again, supply for 1st set is too high to speculate on them.

I would not touch any non-mythic from a first set, and speculating (I mean pure speculation, when you think you have identified the potential of a card before anybody else) on Standard cards in general is pretty risky. -Sylvain

Obviously, the specifics will depend upon whether a set is large-small-small (like Return to Ravnica or Theros blocks) or large-small (Innistrad-Dark Ascension), or will be drafted alone (Rise of the Eldrazi, Avacyn Restored).

But as a baseline, it is critical to factor in third-set scarcity issues. All else equal, I'd rather be invested in Journey into Nyx than in Theros, and you can see the scarcity issues come into play with the price discrepancies in scry lands.

MTGO and Paper Are Not Equivalent

Another common mistake is to assume that the rules of paper Magic finance apply directly to the Magic Online economy. If you are making the transition from paper to digital, it’s really important that you understand the ways that these two markets are fundamentally different. In a future article I will outline these differences so that you don’t get stuck, like Aaron Stuckert did, with dead specs:

There was the time I bought a LGS out of "New Frontiers" at $5 apiece because I had noticed it was worth infinite on MTGO for some reason. Some reason turned out to be due to the fringe casual format "Emperor", and they were still dirt IRL.
"Acceptable Losses" (@Aaron_Stuckert)

Hope this series has been helpful in assessing some of the mistakes we make--and working toward continual improvement. Thanks to everyone who participated and offered the insights that made this series possible.

In terms of specs, this week we should be loading up on M15 mythics since there is plenty of room for growth in coming months. I really like Perilous Vault as a 2-tix mythic with potential breakout once RTR rotates, but you would do well to buy a broad portfolio as Sylvain recommends. Wait on M15 rares and uncommons since they should continue to drop for another few weeks.

Meanwhile, some of the MMA specs we made during flashbacks a couple weeks ago (Path to Exile,  Spell Snare, Pact of Negation, Bridge from Below, Engineered Explosives, and Kitchen Finks) have paid off nicely so these can be sold to generate liquidity.

-Alexander Carl (@thoughtlaced)