Question: The Maths Behind Trading: cr/t/hr

Chaodiurn

Chaodiurn
Greetings fellow commanders and/or CEOs/MDs (to go along with the anti-AE thread),

As of lately, one hears high tier traders talk about calculating profits in credits made per ton per hour, or short: cr/t/hr. Now, at first I didn't gave anything about it. Until pretty much now, better cr/h means better everything in my eyes. However, with a sleep deprivation of around 36 hours, my mind is mud enough to throw equations around.

The first (silly and hopefully only) way I came up with is to calculate cr/t/hr by dividing cr/h by cr/t. Obviously, the term cr/hr / cr/t then can be written as cr/hr * t/cr, what resolves in cr t/cr hr, or ultimately in t/hr.

cr/hr / cr/t
= cr/hr * t/cr
=cr*t/hr*cr
=t/hr

That's as far from the mysterious cr/t/hr as one can get. Divide the one-way profit through your shipped tons per hour? What explanation would that resulting number give you anyway?

From no point of view it makes sense to me at all-- not even from under my bed. While cr/t allows you to optimize the usage of your cargo bay, cr/h ultimately is what will end on your bank account. The only very vague explanation for cr/t/hr that I can come up with is that it is some median of the decay the price experiences while continuously grinding the same route. There, a cr/t/hr could, although starting with lower profit, outrun a high cr/h on the long run. An idea behind this could be that less pricey goods are traded less often for exactly that reason, and simultaneously are produced in higher numbers, making the price less elastic. This, then, would either need some constants per good to be set, or, what I think unlikely, there really exists a proper mathematical way to calculate such a thing. And as I deny the existence of a unit as ridiculous as cr/t/hr, I also deny the existence a mathematical way until proven wrong.

Hearing my bed call,
~Chao
 

drhay53

D
cr/t/hr = (cr/hr) / t

I.e., let's say you make 2 million cr/hr in a python with 284 tons of cargo space. Your cr/t/hr is (2 million) / 284 = 7042 cr/t/hr

Maximizing your cr/t/hr is maximizing the value of every ton of cargo space on your ship.
 
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drhay53

D
You were on the right track. I remember the first time I saw a unit written as x/y/z. I hated it. I still don't like the notation. But it's easy to say verbally and easy to write down with a keyboard, which doesn't allow you to write proper fractions without extensive parentheses.
 

Ozmodion

Ozmodion
i started trading to get out of the sidey and into a cobra then into an asp, but haven't been back to trading since. when i was trading i didn't think there was a math so didn't think about it. still don't think there's a math in it. buy move sell, simples.
 

drhay53

D
The way this comes into play is all about efficiency.

Just because you're making 4 million/hour in an anaconda doesn't mean you're being the most efficient. You might be able to find a route with your python landing at medium pads that increases your cr/t/hr, but slightly decreases your credits/hour.

You can think of it like maximizing the profit/insurance cost, in some sense; the more money you make per ton, the more efficient you're being with the risk of losing the ship and needing to rebuy. Since roughly speaking the tons available increases steadily with ship cost, you're looking for that best balance between risk and profit.

Until recently, you could just trade in solo and never face any risk. Now, there appears to be some NPC wings that will take you out. So the risk seems to have increased, even in solo (as it should be, IMO).
 
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drhay53

D
EUS said:
100 sale, 10 cost: 900% markup, and 90% profit.
Click to expand...

Right, sorry; 1000% sale price, but 900% profit.

It's more than 90% profit though, because you've made 9 times more profit than you invested. So 9x100 = 900% profit, right? Not an economist, maybe I'm just using the wrong words.
 

EUS

EUS
drhay53 said:
Right, sorry; 1000% sale price, but 900% profit.

It's more than 90% profit though, because you've made 9 times more profit than you invested. So 9x100 = 900% profit, right? Not an economist, maybe I'm just using the wrong words.
Click to expand...
sales-cost = gross profit in units
gross profit / sales = gross profit %

(sales / cost) -1 = markup %
or
gross profit / cost = markup %
 
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GJ51

GJ51
t does not = ton

t = trip

Most traders run a A->B->A route so that what you really want to look at is the profit (cr) made for one round trip.

A fairly nice route should get you around 2500 credits per ton for one round trip. This is cr/t or 2500 credits per round trip.

So then you look at the route and what you want is a one jump route, and you time yourself for making one round trip. If you can average 12 mins. per round trip, then you can do 60/12 or 5 trips per hour.

So - if you earn 2500 credits per ton (the other t) you need to multiply that by your cargo capacity to calculate your profit per round trip.

eg.

2500 cr/ton X 452T cargo space = 1.13 Million credits per round trip X 5 trips per hour = 5.65 Mil credits per hour.

The confusion is always interchanging "t" without defining it properly as being used as ton or trip.

CR per ton X # of tons X trips per hour = profit per hour.

Obviously?? The higher the cr/ton and the larger the cargo space the more profit under any circumstance.

HTH
 
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Andromalius

Andromalius
Profit % is irrelevant because a lot of % of not a lot still isn't much. You're not going to get rich carrying biowaste even if you get a 300% benefit because of your cargo capacity cap.
 
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GJ51

GJ51
Andromalius said:
Profit % is irrelevant because a lot of % of not a lot still isn't much. You're not going to get rich carrying biowaste even if you get a 300% benefit because of your cargo capacity cap.
Click to expand...


True! Buying Food cartridges for 45 and selling them for 90 is a 100% profit but only 45 cr per ton. Gold bought at 8804 and sold for 10k wil get you 1200 cr per ton profit even though it's only about 13.6% profit.
 

Chaodiurn

Chaodiurn
GJ51 said:
t does not = ton

t = trip
HTH
Click to expand...

SI disagrees! Unacceptable! Hail to the SI! I mean, if you take the sum of your whole profit and divide it by the available tonnage, e.g., for a 2-stations trip with 200 cargo space, where good A gives you 1200 credits profit, and good B 1300: 240000cr/200t + 260000/200t = 2500cr/t
Or with variables: Profit x1 + profit x2 + ... + profit xn / tonnage available = overall profit per ton = credits earned per run.

Then of course this is per trip, but in the maths you still calculate credits per ton. I at least calculate the overall profit as above, by adding the profits at every station together. And since the available cargo doesn't change, the denominator doesn't change in the equation. So, literally, credits/ton = credits/trip, as long as you don't alter cargo space. Because the calculation doesn't take account of time, there is no difference for it whether you split the goods up or carry them in one go!

So, how do we get the benefits of knowing the efficiency of the route and the knowledge of the profitability?

Example: I make overall 2500 per ton and ship that ton 3 times an hour (empiric example: one round trip takes 20 minutes). To do that: 2500 cr / 1 t * 3h / 1 = 7500 cr*h / t However: credits times hour is no valid unit. Rather, you'd say 'I make 7500 on a ton per hour', ooor: 'I make 7500 credits an hour with every available ton', getting eerily close to the mysterious cr/h/t. (Yes, most of this paragraph is rubbish, but it helped my train of thoughts to catch on speed, so I let it in.)

Let's see if that's right: In our example, the profit of one trip is 500000 cr (/ 20 min). Times three that's 1500000 cr(/h). Now, 1500000 credits/hours / 200 tons are: 7500 cr(/h)/t. Aha! Aha!

The whole thing works because we subconsciously add the units.

Aha!

The mystery is solved. Thanks all!

(And yes, yes, the profits used of course all are gross profits. The target is ultimately to maximize the bottom line, by maximizing in the end the credits earned per distance. Why? Because you find the best bargain between distance travelled (influences directly the time your round trip takes) and the size of your ship (by cargo: the size of your ship dictates the running costs: wear & tear, risks of getting damaged, etc.), that after everything will lower your gross profit to the bottom line.

Or easier: credits per hour [cr/h] maximizes gross profit, while credits per hour per ton [cr/h/t] maximizes the bottom line.)

(No GJ51, I don't think you haven't understand trading. This merely is for all others coming to this thread to understand.)
 
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