I'm heavily into the market in Eve (the auction house).
The way the market works there is by a kind of poll position system (to use a Formula One analogy).
Suppose I see that Shield Booster type Zs are being sold at 50k and bought for 10K. I put in a Sell Order for 49 999.99 and a Buy Order for 10 000.01.
I now have the dominant market position for this commodity.
It's perfectly possible and reasonable to take the dominant position in sales without worrying about purchases or vice versa.
Most people sort the listings by price. They will now find my order at the top if they want to sell and my other order at the top if they want to buy.
Until some other undercutter undercuts me all trade in Shield Booster Type Zs is mine and I make 40K per pair of buy and sell.
Eventually the margin will compress so that shields are being sold for 25k and bought for 24 900.
Before this happens I'll have jumped over to some other commodity with a nice wide margin and start trading in that.
I trade in a wide number of different commodities and don't always pair buy orders with sell orders on a given day. So one day I might be buying Shield Booster Type Z but I don't have any in stock to sell. Next day I'll be selling the ones that came in but may not necessarily buy them.
I also aim to review my orders daily. Twice daily would be more lucrative but that's increasing profit per month at the expense of profit per minute spent doing this. I don't want to spend a lot of time babysitting orders because I have better things to do with my life, both in Eve and out of it. Once a day is fine and it doesn't matter if you miss a day every now and then.
I generally undercut small. Deep undercutting is a strategy aimed at discouraging competitors by reducing or eliminating their profit (and my profit). It's always to some extent pyrrhic. In Eve you won't discourage anyone by trashing a market (unless they're idiots) since they can just hop over and trade in something else. The only people you may discourage are manufacturers and since I'm in the role of margin trading stuff that other players make or loot it's really not good policy to screw over my suppliers. I'd prefer they keep filling my orders with their hard work for me to make easy profits on!
Occasionally I'll vary my method from the small undercut.
If I see most people are selling at 50K but one guy is selling 1 of the item for 25k I'll assume it's exceptional and buy it, then list at 49 999.
If a market looks sold out I'll check the average price and if it normally sells for 50K but the only one listed is some outlier at 50 million I'll list my stuff based on some hefty proportion of the average. Say double or triple, so 100k-150k for something that normally sells at 50k but is currently sold out. There's no point undercutting the guy who has it up at a joke price, it's a listing that's only there to poison the data and won't sell.
I don't hold any sentimental attachments. If something has consistently been a good seller for me at 50K and I find lots of people listing it around 25k I'll get rid of my stock for 24 999 and find a new commodity to deal in. I don't think it's a good idea to hang on to stock because you hope it'll go up eventually unless you are very sure what you're doing (based on extensive data collection). So if you know there's a weekly cycle in missile prices maybe you buy in the week and sell at the weekend but that involves more work and more risk than just searching out things with huge margins.
I'm not worried about volumes. I'm quite happy to buy 200 of an obscure module because stuff at Jita always sells. I have never been stuck not even when I bought large quantities of items that seemed very obscure to me.
I think volumes will be more of an issue for traders who will use the upcoming iphone app. If you are checking your Eve sales from work twice an hour then you can trade in some huge volume commodity like Trit which will sell or get undercut within 15 minutes every time.
I don't think I'd ever want to go that route personally - I don't like playing games from work, puts me in the wrong headspace. I'm not really focussed on professional things if my mind is full of some game.
Still I think the app will encourage a lot of people to play while working and the only thing you can really do in Eve from your phone is day-trade or update skills.