I'm a noob DM. In previous campaigns, I've only given out magic items as rewards for completing quests, but players complained that they didn't have enough control over what items they wanted to use, and often threw away or sold the magic items I did give them.
So in this campaign, I've made it so that magic items can be bought and sold like any other item. I check to see how rare the item is, roll a dice to see if the magic shop at the local town has it (much higher DC for out-of-the-way towns), and tell the player they can buy it for X gold.
The problem is, this has made my players absurdly overpowered, because they check for magic items that minmax their characters beyond belief, and if they are persistent enough, can find the items they want. My players will do things such as backtrack many days away from the main quest just to get to a large town which might have the magic armor/weapon/item they want. Then they hoard gold until they can find that specific item. I don't find this fun.
My question is: how do I properly balance the doling out of magic items in 4e?
Best Answer
Use wish lists.
Here's the thing, you've run into the bane of the 4e DM's existence. This is a problem I think everyone who has been a DM for 4e has run into, and there are precious few good solutions to it. Here's how I'd recommend doing it:
Have every player create a wish list, have it include 10 common magic items, 4 uncommon magic items, and 1 rare item.
Make a card for each one.
If you want to award a specific item in a treasure parcel, great! if not, then draw them randomly from the deck you made for the given rarity of the parcel. Use the parcel generation system from the RC and award 10 per level.
Stick to the item rarity rules for sales. They can only purchase common items except in certain instances (I know in our game, our DM allows us to purchase uncommon items, but they are often hard to find so there is a time constraint/delay).
If they want specific items badly (especially rare items), make them side quests! Whether it's just the player in question or the whole party is after a specific set of items or whatever, these can be important character developments and make your whole table more invested in the items they are receiving.
The other option here is to scrap the item rarity update, make all magic items the same rarity and enforce the original 4e rules on daily item powers (those are found in the PHB, the long story short is that you can only use 1 item daily power per milestone period).
I'd definitely recommend you go to a wish list and treasure parcel system over returning to the pre-rarity era though.
This can be a bit of a maintenance nightmare for the players (though it sounds like your players are pretty on top of things as far as item selection goes). If they can't be bothered to keep up wish lists, then I'd award coupons for magic items for them to pick out. (a Level X rare item, a Level Y uncommon neckslot item, etc). Let your players decide who gets the item each time one is awarded.
As far as balance goes, make sure you aren't awarding or making available for sale items of too high a level (+4 I believe is what the treasure parcels use). This should keep the math good for your characters. And let's be honest here, 4e characters, especially paragon and epic tier characters are hugely powerful. They are going to chew through a lot of encounters fairly easily, though hopefully not too many of them. Item rarity enforcement should help a bit with keeping the most powerful combos at bay though.