Sunday, November 16, 2014

How It's Made: Price Flagging

I owe my partner in crime, Etienne Erquilenne, a huge debt for adding a much needed second pair of hands onto this whole Prosper project.  His IRL expertise is completely invaluable, and has freed me up to accelerate the development schedule measurably.  But, as I've expressed on the blog before, I'm very much a fan of open sourcing.  So let's look under the hood.

Volume Flagging

Volume data was straight forward.  Since they never go negative, and rarely jump by orders of magnitude, it was pretty easy to wrap the values up into a normal-ish histogram.  Below is Tritanium:
1yr of Tritanium Volumes - The Forge

Not perfectly normal, but close enough where we can use percentiles to check the "sigma levels".  
For those who aren't statistics nerds, we can say things about values depending on how far they are deviated from the normal.  +/- 1 deviation (sigma) should be relatively normal behavior.  +/- 2 deviations should be extremely rare.  The further we deviate from the norm linearly, the exponentially fewer values we should see at those levels.

Since volumes are largely well behaved, I used this principle of sigma flagging to highlight extreme outliers to report for the Prosper show.  

Price Flagging

Price values aren't so well behaved, and using the same approach is not going to flag useful data:
Just looking for straight price outliers isn't useful.  The only things that will flag are long rises/declines which represent the extremes of the last year.  We'd like to use the same extremity methodology for prices, but a different approach would be required.

Deviation From a Trend

The inspiration came from the Bollinger Band chart.  Simply, it puts a simple-moving-average trend line and then moving-deviation bars around the chart (red lines on matchstick above).  If we instead characterized the distance from a trend, we'd be able to say things about "this is an extreme deviation".

This is a far more "normal" plot.  Also, Etienne rolled in simple-moving-median to compensate for items that might have outrageously bi-variate behavior because of a paradigm shift due to a patch.

Unfortunately, without some sort of second filter, we're going to flag everything every week, and that's not a useful filter.  So Etienne added a voting scheme and "highest votes" binning technique to properly classify the outcoming flags.



Results So Far

So far, this is my favorite validation that the pull is working as intended:


Here we see a peak last week, and a drastic crash in progress.  Though we would have reviewed the data anyway (fuel is a forced group in the tools), finding it in the expected flagging group is a great sign.

To explain what I see in the first graph: we see a spike in pre-Phoebe stockpiling, then a rapid dump off once the patch hit.  What I also see in the above is an heavy overcorrection in the price, dumping it much lower than really makes sense.  If you were watching this product, this would be a great opportunity to buy hoping for a snap-back.  Especially looking at the bottom RSI chart, closer inspection shows that the product is crossing heavily into "oversold" territory, and is strongly signalling an artificially low price.  Of course, balance these price signals against the volume flags (perhaps slightly anemic) to temper expectations. 

What's going on under the hood is the tool is checking the closing average against the white-dotted moving average line.  Though the moving average will catch up, right now the distance from the trend is WAY out of whack.  Especially since it's voted for "very abnormally low" for 5 days, along with 2-3 votes for "abnormally high", this was going to end up in the charting group regardless.

Great... but

Now I have a new problem... too much good data.  To keep the outlier segment inside 15 minutes, I have to filter the pick list to 15-25 items.  Etienne's new tool flagged 500 items, and the true-positive rate is astounding.  For those looking to get into some powerful market automation, this methodology is extremely powerful and should help boil down opportunities like nothing EVE has seen before.  Though we still lack the means to automate "black swan" events like expansion releases, the flagging methodology is very useful for the active trader.

Also, for all of its power, we're up against a problem where the show format and the goals don't match.  Two of the chief goals of the show is to showcase investment opportunities and general trend information going into the weekend.  Unfortunately, the flags are very good for a very short period.  Many of the flags show high pops during the week, after the action has expired.  So, if the trend isn't cooking on Tues-Weds, the show will miss the opportunity to report it.

Lastly, it's a little hard to use this as a direct day-to-day trading tool because of the way the CREST feeds update.  Rumors are that CCP is going to roll out a "one day" CREST feed to simplify keeping the dbs up to date.  

What's Next?

We have some tasks on the table, but the short term goals are:
  1. Bring in destruction data
  2. Do inter-hub analysis
  3. Build indexes
Things are moving along pretty well.  I expect that zkillboard data will be live by the first week of December, and a few more QOL updates should make the show prep move along easier.  Also, rumors of new CREST feeds should improve the quality of data we're pulling (or make our lives even more difficult).  Regardless, with new hardware coming in at home, the ability to automate more should make things move more smoothly.

Wednesday, November 12, 2014

Who Reads the EULA?

The developer portal went live recently, and I've been excited to see it finally release.  I've been specifically eager for the blog portion that should serve as a better direct communication channel between CCP and 3rd party devs.  It has been an excellent resource so far about API updates and changes.

HTFU Devs

Though CCP's new ~6wk release cycle is a great boon for the community at large, it's really demanding to keep up as a 3rd party dev.  Recently, I've been spending more time building/anticipating flex capacity, because without being able to quickly change at release, 3rd party devs will never be able to keep up.

I think it's telling with the lag in the release for IPH in the face of Crius changes that we're going to have a really interesting tool environment coming forward.  If you have the ability to code, or want to learn, better get in while the getting is good.  There is going to be more and more need for 3rd party developer support in the community.

Thankfully, CCP_Foxfour and CCP_Nullarbor keep the hits coming on the 3rd party dev side.  So, despite the challenge of getting started, the API's and resources have never been more solid.  Tune in to #devfleet on twitter and /r/evetech on reddit if you're interested in tracking more of the player-side of the dev environment.  And subscribe to the official developer portal!!!

New API EULA

As an active or aspiring developer, go read the new EULA.  Like actually read it.  It's been very well written and is pretty easy to understand as far as TOS go these days.  In all, I'm very pleased with the vast majority of the language.  SSO remains free to develop for (as long as you've ever had a paid account), CCP won't be throwing any surprises on the license/TOS without appropriate notification, and overall the terms are by and large agreeable.

The one point I want to complain against is the monetization rules.  TL;DR there are 3 valid ways to monetize an app or service:
  • ISK for service
  • Ad support to cover costs (but frown upon profiting)
  • Donation jar style contributions
The problem I have is that it's verboten to gate features behind a paywall.  Some of the older players may remember "EVE Is Easy" causing a shitstorm a couple years back when they tried to sell subscriptions to exclusive PVP tutorial content.  Though I still think CCP was right to stamp down this particular type of service, the standard Patreon model isn't far off from this, and I'm kind of a fan of that kind of service.

Monetization

"If you're good at something, never do it for free".  Though I'm doing the project for the actual love of the work, you can't talk about doing this much work without someone asking about: how do you become one of those YouTube/Twitch guys who quit their job and play games 24/7?  And though I'm not against making a few bucks on the side (beer and coffee are always appreciated), I'm not looking to quit my job and make EVE graphs 24/7.  This work is squarely in hobby territory, and I'm more than happy to keep it there.  

Unfortunately, CCP kind of ties my hands on how to grow the work to something more.  To cut to the chase, I hate ads.  I don't serve them on the blog, YouTube, or Twitch.  I would only include ads for a direct EVE product like PLEX retail, news site, or player service.  And then only as live-on-air style.  This is no way to keep up with dev costs or hosting services for anything more beefy than this blog.  

I've been mulling starting a Patreon for the project, but am hesitant to start it up.  I don't think it's kosher to gate content, even if it's a "Patrons get it 1wk early" kind of service.  Though I'd never gate the main show (delay would make the show worthless), doing interview supplementals might work... except that I'd feel like a heel inviting guests to help enable me to make a quick buck.  Another option is syndication with another service like TMC/EN24, but I would probably be paid in ISK.

So I want to open up the question to the readers/viewers.  How do you feel about monetizing the Prosper show?  Would you be okay with ads?  Syndication?  Patreon?  "F$#k you, everyone else produces for free"?  Leave comments here and I'll mull it over.  I won't be gating content or holding anything hostage, but I'd love to hear what the audience thinks.  I'd like to provide more services, and some amount of monetization would enable more... I'm just uneasy about taking the plunge.  

Friday, November 7, 2014

EVE Prosper Market Review - EP003

I know I missed the report from last week.  Cramming two shows into one week, plus a new project assignment at work made it hard to get enough time to get pieces out the door.  As always, check the show-notes if you're looking for reading material.  A common piece of feedback I received is how much people want an article style, so enjoy the wall-o-text.

This week's show had the very special guest +Diana Dial from EVEtimecode.com.  With Phoebe release, and the recent record high PLEX prices, and the recent 10-day resub drive, PLEX has been a hot topic.  Though I spoke at pretty decent length about PLEX analysis on the supplemental show with Ashterothi, and wrote a more dedicated blog on the topic, it continues to be a hot topic.

EP003 - Show Stuff

Phoebe Launched

Phoebe has come, and everything seems to be going well.  There was a bug v feature argument around jump clones clearing capital fatigue timers, which CCP quickly ruled: Bug.  Also, the 10-day trial offers should be expired, which is important (IMO) for those watching the PLEX market.  Lastly, as TitaniumTrout pointed out EMDR feeds don't seem to be working since launch, though as of posting, EVE-Central and EVE-marketdata both seem to be up to date with their data.  Also, be sure to check out the responses to Sugar Kyle's call for data visualization of cyno activity pre-Phoebe.

Source: @Fuzzysteve

developers.eveonline.com launched

I have another blog in the pipeline about this.  Great to see a communication channel dedicated to 3rd party devs.  Also the SSO EULA launched, and it's actually a lot better than expected.  

CSM Minutes Released

I haven't had time to read them.  I hesitate to work the CSM politics into a market show, since most of the nuggets worth using in speculation should be NDA'd out.  

o7 Rhea Announcements

Couldn't tune in live, and hearing a lot of the news second hand.  Biggest pieces being no more medclones (hooray for my 3x >100M SP chars), and a new WH hub called Thera.  The details are still a little sparse, but it will not allow capitals, and will have special static wormholes.  

I have some questions out to CCP FoxFour on whether there will be CREST feeds will be enabled for this special system.  Currently CREST doesn't report industry data for WH systems, and Thera is a bit of an odd point between known/wormhole space.  If I can get automated data feeds from Thera, I can guarantee you it will be part of the regular analysis in the Prosper show.  Though it may take up to 60 days of data to really get the current tools to work.

Special Guest: Diana Lynn of EVEtimecode.com

The show ended up a little bit more commercial than I was originally intending, but I think there is enough good content to leave it as is.  Also, keep tuned for the post show because we talk about some of the other retailer-side stuff behind PLEX.  It should be up on twitch by the weekend.

One of the bolder points brought up in the interview was "why should I support someone who doesn't play the game", and I did like her response in the end.  Diana is a huge support to the community at large, and is incredibly active among those who play the game.  And as she bluntly pointed out, a pretty large number of fanfest/eve vegas attendees are players who have been out of the game for years, but still feel at home among the community.  I can't even fault her about it at this point, as I watch my login time dwindle to zero, instead servicing this show.

The trend that keeps getting reinforced is "there is nothing outstanding happening with PLEX [other than the actual price]".  Sales outside of game continue to be on-trend with yearly swings.  Consumption seems to be also on-trend, not that I can get data to prove/disprove it.  The data flags say the current price is an unstable high, but it continues to chug upward.

I do expect some relief to ease the price back down to ~800M in the nearish future, but so far PLEX has been performing outside my models/expectations.  This may be because of the recent 10-day reactivation drive, or the lack of a decent holiday sale, or just mass hysteria.  I do expect to see a daily-average PLEX in Jita hit 1B ISK by Feb 1st, but that will probably be followed by a long flattening as player numbers wane into the spring.

Special Analysis

I didn't have time to really provide depth on the T3 impacts.  It was announced very close to release that the BOM was being boosted for Electronics/Engineering/Propulsion subsystems.  I included one chart to show the trend, but most every other subsystem followed the same trend:
A large crest right before the patch, and a quick crash.  There are a few parts that are probably still shaking out, but I didn't want to key through 12 extra graphs to show off the same trend over and over.  Be sure to check the chart dump if you want to know more.

The other charts I included this week were from the moon product sphere.  I am still on the fence if I trust my speculation in these markets yet.  The truth is material markets are going to be driven by demand, and I don't have a way to boil down net demand yet.  I've added it to the dev todo to use the blueprint stats to work back a "demand" stat for some of these charts, but it's a pretty low priority versus the other todos.  I included both because the MACD signals seem to indicate a price climb.

Regular Analysis

I usually wouldn't include this in the blog, but the fuel markets seem to be going a little weird right before the Phoebe patch.  If you check the segment in the presented slides, most every fuel spiked, and fuel blocks are lagging the recent spike.  

Again, this probably is temporary due to capital stockpiling.  But it is interesting to see such a drastic rise in such a widely used commodity.  I'd also expect fuel prices to wash out into the T2 moon material supply chain if the prices stay high for over a week.

Prediction Review

50/50 seems to be my prediction rate on outliers.  The one I feel worst about is the Imperial Navy ENAM plot:
I really expected this item to rebound hard after recent doldrums, but I may have underestimated the Amarr FW payout.

Also, I feel a little ill-at-ease about suggesting speculation on moon products, but I believe the partner indicators of increased T2 production and higher isotope prices make them worth watching.  I suggested Nanotransistors and Sylramic Fibers last week, and I'm looking at Hafnium and Caesium this week.

Tool Development Progress

Just some quick notes from behind the scenes.  A corp mate, Etienne Erquilenne, has chipped in some help on the tool development.  This week was helped by his recent change to thread the CREST scraper to get all the hub data in one pass.  He's also currently helping implement a plan we came up with for price flagging using deviation from the simple moving average trends.  His assistance is really catalyzing solutions in the back end.

I also started work on bringing zKillboard data into the report.  Though I think I need two more weeks to get the data localized and charted, it's very nearly over the horizon.  Between these two new feeds, I think we'll get a lot more interesting data as we go into the holidays.  

I still have several todos on the list, chief among them being indexes to help boil down the forced-analysis section.  I am also planning on charting some consumption trends as well, but I don't think those will be delivered until the new year.

Conclusions

I want to extend a huge thank you for all the support the show has had so far.  This week has really proven my previous feelings totally wrong, and I feel like feedback is back on track with expectations.  Also, the help from the community both inside and outside the show has been outstanding!  Continue tuning in, and continue sending your feedback so I can make a better show in the long run.

And shout out to Zero Gravity for the review.  Hope the blog dump is more to your liking ;)

Monday, November 3, 2014

CNBC for EVE?

I'm of two minds about the response/feedback I've received about the Prosper Market Show over the last month.  On the one hand, I'm floored with a lot of the successes.  Those that are vocally supporting the show really mean a lot.  And this week's show was the best stream I've had by far.

  • New peak live viewer count: >45 (EP002)
  • almost 200 youtube subscribers (thanks delonewolf)
  • almost 200 Twitch subscribers
On the other hand, I've been annoyed the traction hasn't been as high as I was expecting.  For years I've heard from a lot of friends things like "We get great war reports, and news reports... but where is the market reporting?"  The response from /r/eve was particularly anemic.

When I wrote for TMC, market/industrial analysis was my niche.  Unfortunately the truth behind that style of analysis is it's a metric butt-load of work try and roll that analysis for every investigation or report.  Every major article I wrote for TMC took weeks to fetch, crunch, build charts, and publish.  And despite all that work, I was always outclassed for pageviews/comments by editorial work, or ALOD content.  I never received a best-of-the-month bonus on any article I produced (though I always ranked in the top 5 articles for months I wrote for them).

Now, I'm sure the issue has to do with the reactionary nature this level of analysis requires.  It's a serious undertaking to try and strike while the iron is hot on news like Burn Jita when the goal is serious analysis.  People want to know about the future, and really don't care about the past, when it comes to market analysis (no matter how periodic EVE data tends to be).

The part that has me riled up is the "Why isn't there a Jim Cramer of EVE?" question.  I find this frustrating because I don't think the people asking it realize the true depth of analysis that is run on the IRL markets versus the EVE ones.  Though I'll gloss over the part about EVE != IRL because of things like lack of credit, and no derivatives/futures markets, and our trade is purely in commodities.  Instead, I don't think people understand the difference between the level of spreadsheet-jockeying that is commonplace in EVE versus what it really takes to run a show like Mad Money.  No one is doing indicator analysis, no one has rolled up machine learning algorithms to suss out interplay between items, no one is plugging RSS news feeds into a bot to automate predictions.  Instead, any serious analysis either requires painstaking time investment, or years of "gut tuning" to be able to play any truly speculative market game.

I know what the bulk of EVE actually wants out of a market show: Push-Button Receive-Bacon trading advice.  They want to be able to tune in, and within 15-30mins be told which secret item du juor will make them space rich.  The reality is that quality of tool does not remotely exist in EVE today.  And though developing tools for this Prosper Show will probably get us to a place like the high-frequency robot traders of IRL, the journey there is going to take quite a lot of development and time.

To those providing critical feedback, I do hear you.  I will be working to tighten up the show to add more value for the time frame I'm committed to (~40min/wk).  I will be adding and removing segments to better serve up the info that is most important, and try to dig into the gross trends so everyone can get what they want out of it.  But know that unless others join me in a market analysis arms race, the breadth and quality of information will never be able to deliver "CNBC for EVE".

Presented without context:

Sunday, October 26, 2014

OMG WTF PLEX - An introspection on PLEX

PLEX recently crested 800M and as is customary, everyone is losing their collective minds over the perceived significance of crossing some round-number boundary.

Current articles as of publishing:

I am sure I'm missing a bunch, but there is a common thread: what is the maximum price PLEX could reach?

In the short term, we are seeing prices come down off their rally to 800M.  I don't expect this respite to be long, and unless CCP announces a PLEX sale for Phoebe or the holidays, I can see PLEX at 1B shortly after the start of the year.

Demand Side: The Price of Gold

PLEX behaves a lot like gold does in the IRL markets.  Though it has a variety of actual uses, its value is more a barometer of fears of inflation than its actual value.  People trading in PLEX are doing so because they fear that if they don't, the purchasing power of their ISK will drop because of inflation elsewhere.  

This becomes a self-fulfilling-prophecy, because the trend has (to date) been correct... but mostly only in the PLEX market.  
The speculation that PLEX is an indicator of rampant inflation is really just laughable.  If we compare the price of PLEX against any other day-to-day consumable (Like the CFC Isktar) we see that general ISK inflation is basically 0.  Especially using the Ishtar as base, we can draw that the value of static resources (moons) has stayed flat.  Also, watching mineral prices starting to turn around since Crius shows that the general purchasing power of ISK is staying rather healthy.

Supply Side: People are Cheap

We only see PLEX dip in price when there is a sale or other big event pushing supply.  Otherwise, the demand between people upkeeping accounts and traders hoarding PLEX far outstrips the supply of those cashing-in.

I think the behavior of the PLEX market says a lot more about what people are willing to pay to play EVE, rather than anything about the macro market.  When PLEX prices drop near the 3-month subscription numbers, people tend to buy a lot more... but when they are equal or greater than regular account fees, then people would rather not buy PLEX directly.

Though I do expect a substantive shock when the price of PLEX crosses the 1B mark.  Though I still expect the price to climb, we may see a wave of people unsubscribing.  I hesitate to speculate about CCP's plans for PLEX in the long term, they may be okay with never having to deliver on the outstanding credit PLEX represents.

Conclusions

There's a reason I've put PLEX at the front of my analysis on the Prosper show: People want to know.  I've also only dedicated 2-5 minutes/wk to the "analysis" of PLEX because there isn't much to say.  At this point, PLEX is not so much a general market indicator as it is a player one.  It doesn't serve to track any macro market moves, instead it only works as a point to discuss "the cost of play" and "the value of loss".

My major take-home for PLEX is this: it's an orouboros.  People think it has value, so it trends up, people panic because it's up, and buy more.  Though I believe the real "value" of PLEX is grossly overvalued, though I hesitate to call it a true bubble, because I have a hard time imagining a "pop" dropping the price back more than 10%.  If you're looking for a place to park long-term value, PLEX is the tool to do it.  If you're actually using your ISK through investment or play, then I'd avoid speculating on PLEX because it lacks a decent periodicity to buy-in (outside of sales outside the game).  

The end outcome, at least in my eyes, is the only value you're having deflated is against PLEX... The same ISK buys the same PVP equipment, or operating budget.  The only value "lost" in this case is how many PLEX you could have bought with that cash.