How To Read Charts on The Grand Exchange

Newsflash: Runescape Introduces Charting

One of the most exciting features post Grand-Exchange has got to be the new price and charting database.

For the parents reading this article, Runescape is a multiplayer adventure game played by millions of children worldwide, with at least 100,000 online at any time of the day or night. A tiny part of that game is an automated item trading system started in January 2008, something like a hybrid of the stock market and Ebay. Runescape has recently introduced stock-market like graphs and this article explains how to use them.

Firstly to find an item on the exchange there are a few tips you need to know. Maybe this will change once it's out of Beta but let's go.

If you search on an item like Dragon Boots, every item with the word Dragon AND every item with the word boots
will be listed. The solution to narrow your search is to enclose your search query in quotes "Dragon Boots" - like that. Then your item will come up.

The charts dont show prices. They show averages. So if 10 items sold for 20k and 10 more sold for 21k then the average would be (10*20k + 10*21k) / 20. ie average 20.5k

Runescape has 3 ways of working out the average. First is the daily average. They take all the sales of the one day add them up and divide by the number of sales. This is the bright yellow line.

The second average is taken over 5 days. So all of the sales over the past 5 days are added together and divided by the number of sales. Each day, the previous days sales are dropped off and the new days sales added.

The final average is a 20 day average. All of the sales for the last 20 days are averaged out.

For some items I trade, I have noticed that the short term price follows my trading precicesly. This means that I am the biggest trader in the market and effectively I am setting the price. For other items, however, my trading does not appear to affect the price at all. These are the heavily traded items.

To explain the graphs further, let's assume that you are in a market with many players and your trades don't change the price too much, what should you be looking for? Let me use an analogy of two people who are runners. One is a sprinter and the other is a marathon runner. The two runners leave the starting blocks at the same time. The sprinter runs ahead and leads the way. After a while though, the sprinter starts running out of breath and slowing down.

Finally, the marathon runner catches up to the sprinter. One of two things then happens.
Either(1) the sprinter has had a rest and takes off again, leaving the marathon runner behind
or (2) the marathon runner passes the sprinter.
When the two come together, however, it is unlikely for them to stay together if they have not been staying together before.

In the Runescape charts, the yellow line is the sprinter and the dark yellow and orange lines are like the marathon runners. When the dark yellow or orange line catches the yellow line, there will be a change in direction. This is because the yellow line has run out of steam. It's going to change direction. That's what you should be looking for on these graphs.

On real world trading these trends are often referred to as Oscillators. The oscilators are good indicators for buy, sell, oversold and over bought. Learn it and it will help you make money in future!