Paper Trading Domain Names to Test Your Valuation Skills

New readers to the blog: Welcome! Please read What is this Blog About. It explains how I am an experienced ccTLD domainer, but completely new to .com domain investing. You may also like to read about My Domain Investing Journey So Far.


How Good Are Your Domain Name Valuation Skills?

This is a new strategy I have started to do as of today (22 Sep). I want to “Paper Trade”  domain auctions that are ending soon, and follow up to see if my guesses on sale prices were correct.

Paper trading is a term from stock market trading where an investor will ‘pretend’ they hold some stocks. Instead of spending real money on them, they will write down their dummy stock purchase on paper. They record the number of stocks and the price they “bought’ them at. They then track how the stocks perform over time.

I have taken this concept and applied it to domain auctions due to close soon. It is super simple:

Step 1: Go to the GoDaddy Auctions Homepage

Today I am using GoDaddy Auctions to do this paper trading test. GoDaddy Auctions is one of the key places to buy expired domains. You can also use this strategy on any high volume domain aftermarket venue such as NameJet and DropCatch.

It is free to view Domain Auctions on GoDaddy, however if you do wish to bid, you need to become a member. Annual membership is less than $10, so if you are a Domain Investor you need to join!

To start our Paper Trading test we need to visit the GoDaddy Auctions homepage.

domain-name-auction

Step 2: Sort ‘Most Active Auctions’ By Time Left (Max 24h)

Make sure the two default filters on the Auctions homepage are set to “Most Active” and “100 Results”. For the 3rd filter, we simply go to the ‘Time Left’ column on the far right and click on it. We want the auctions ending soon to show at the very top. That’s it!

The domains on the page are the Most Active auctions which means they have a lot of bids, or they have a lot of views or watchers. We look at Most Active for two reasons:

1. The Most Active auctions are ‘usually’ the highest quality domains. Here we let the crowd find the best domain names for us. (This technique is borrowed from Andrew Rosener’s tip on a recent Domain Sherpa show).

2. The Most Active auctions are very likely going to result in a sale, there is no point guessing the prices crappy domains might sell for, and then don’t even sell. We want to ‘paper trade’ with domain auctions most likely to sell.

Step 3: Copy 10 Domains You Like into a Spreadsheet

In my previous post I talked about a daily research process of picking your favourite domain name sales from the day before, using the NameBio Daily Market Report. We essentially do a similar process here with expiring auctions. Except this time we get to guess the prices BEFORE they sells This is a great exercise to start building your valuation muscle!

Scroll down the list on the GoDaddy Auctions homepage, and pick your favourite domains ending soon.

godaddy-auctions-paper-trading.png

When you find a domain you like:

1. Click the Watchlist Eye Button to save it
2. Copy the whole line into a spreadsheet.

As you scroll down the whole list, repeat these 2 steps for each domain you like. Keep going over to page 2 until you get to Time Left 1D (1 day).

On the day I am writing this post (Sep 22) there are about 150 domains ending in the next 24 hours. To keep this ‘paper trading’ process manageable, aim to collect a maximum of 10 domain names to your spreadsheet.

Today, these are my favourite domains:

mystemcell.com
fugq.com
ozido.com
hempshack.com
batteryzone.com
uniforex.com
shipmore.com
bluehue.com
thegroundwork.com
nodifference.com

Step 4: Enter the Price You Think Each Domain Will Sell For

Now for the fun part! In your spreadsheet you will enter a price you think each domain name will sell for. However, we need to understand that domains that sell on GoDaddy Auctions are ‘mostly’ bought by investors.

There are some exceptions, and sometimes an end user will end up buying a domain name on GoDaddy Auctions. But for the most part it is investors who are buying domains on this platform at wholesale prices.

Therefore, the price you think the domain will sell for shouldn’t be the highest end user price. A domain investor will pay much less for the domain than an end user would. A domainer would likely want to pay 5-20 times LESS than the end user price.

This does mean that if you want to actually buy a good domain name on GoDaddy Auctions, you will likely be bidding against other domain investors. But this is a good thing, as investors do not want to pay too high a price.

So when you are pricing each domain in your list, there is a bit of guess work needed. Think what a domainer might pay for the name in an auction, not an end user. We are guessing the highest price we think the name might go for in the auction to another domainer. What is the maximum price you, as a domain investor, would pay for this domain?

You could guess what an end user might pay, and work backwards, but this can get complicated. If the end user price is a guess, and then you work back 5 or 20 times less, this is quite a big range.

The point is that you won’t get any bids 100% correct, but you will start to learn the RANGES that certain domains you like, go for at auction. So go ahead, take a guess and enter in the prices you think each domain might end at.

There is 24 hours or less to run in each auction, you will likely also find the current bid of the auction helpful.

My list is here with my guesses in the far right column:

Sep-22 Bids Current Bid <24h Est Sell Price
mystemcell.com 29 $184 * 2000
fugq.com 8 $115 * 300
ozido.com 3 $22 * 400
hempshack.com 14 $305 * 1500
batteryzone.com 36 $519 * 2500
uniforex.com 15 $204 * 800
shipmore.com 29 $140 * 350
bluehue.com 5 $105 * 800
thegroundwork.com 27 $355 * 800
nodifference.com 7 $35 * 300

So that’s it. Let’s see how I fare tomorrow:

Step 5: Next Day: Enter Final Auction Price Into Your Spreadsheet (via NameBio)

UPDATE: It has been 24 hours and I have the auction results for each auction. How did I do?

NOTE: There is a roadblock here. As you put all of the auctions in your watchlist yesterday, you would think that you could go and look at what price the auctions ended at. But no, for some reason GoDaddy auctions removes auctions from your watchlist after they end. So there is no easy way to check how you did.

But luckily NameBio has a record of the daily domain sales, so we can go and check the auction results over there.

Please bear in mind that this is my first ever time paper trading .com domains. I am blogging this process, as I do it. Being a .com newbie, I actually have very little idea of .com valuations. So here goes my first attempt, and in public to add even more excitement (or potential for embarrassment).

Sep-22 Est Sell Price Final Auction Score
mystemcell.com 2000 261 WRONG
fugq.com 300
ozido.com 400
hempshack.com 1500 1226 CLOSE
batteryzone.com 2500 2577 SPOT ON
uniforex.com 800
shipmore.com 350 365 SPOT ON
bluehue.com 800 204 WRONG
thegroundwork.com 800 10,250 WRONG
nodifference.com 300

Step 6: Analyze How Good Your Guesses Were

So yeah I think I did pretty well for a first attempt! I could not find the results of 4 of the 10 auctions which was a shame. Reasons for this could be:

1. The auction did not surpass $100 therefore NameBio did not record it
2. The auction was removed
3. I’m not 100% sure of the .com expiring process but current owner may have renewed
4. Network or other retrieving error at GoDaddy or NameBio
5. I just plain missed finding it.

Of the 6 successful auctions I got 3 auction end prices completely wrong, and 3 good guesses.

My Best Guess:

ShipMore.com – I guessed sale price of $350. Sold for $365! Only $15 off the mark!

My Worst Guess:

TheGroundWork.com – I guessed sale price of $800. Sold for $10,250! $9,450 off the mark!

So I received a 50% mark on my first attempt. I’m happy with that. This is a very fun test of one’s valuation skills. I highly recommend you give this a go right now!

domain-valuation-test.png

Give it a Go (Can you beat 50%?)

Here are the steps:

1: Go to the  GoDaddy Auctions Homepage
2: Sort ‘Most Active Auctions’ By Time Left (Max 24h)
3: Copy 10 Domains You Like into a Spreadsheet
4: Enter the Price You Think Each Domain Will Sell For
5: Next Day: Enter Final Auction Price Into Your Spreadsheet (via NameBio Reports)
6: Analyze How Good Your Guesses Were

This entire paper trading process can be repeated on any high volume domain marketplace. I am especially keen to give it a go on NameJet!

Do you have any other ideas for testing one’s domain valuation skills? Feel free to comment them below!

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