Everyone wants to think that they have what it takes to play the auction house effectively, but few actually do. Many people also don't understand the role that auction house speculation plays in setting proper prices for trade items - even the speculators themselves, who are really only pursuing it to make extra gold. The first thing that you have to keep in mind before you start trying to speculate on auction house goods is that you will make mistakes. You will lose money. You will be more effective if you keep track of how much you are spending on deposits - it's not worth it to buy out someone if you're going to relist it for a price increase that's smaller than what you're paying out in the listing deposit.

The role that speculators play is that they prevent market shortages. Undercutters prevent the price from rising too high for the market to bear. Many beginning speculators make the mistake of choosing an exact price for a particular good. Instead, you want to target a range of prices, depending on the item.

Generally, you want to target items that are consumable - like ingredients - and in constant demand. Gear is difficult to speculate on, unless someone has listed an item for an absurdly low price, and you have seen it sell for much more in the recent past. Many target enchanting reagents because they don't have a deposit fee, but that's a difficult market to break into - other speculators hold on to vast stocks of it, and could easily blow you out in a price war by flooding the market.