An auction draft is like going to a delicious, all-you-can-eat buffet, there are three distinct stages that you should go through. Before you get to the eating part of the buffet, you have to decide which kind of food you want to start out with. Personally, I'm a running back guy, so that is what I'm going to load up with to start my draft. I plan on spending more than 50% of my budget on running backs in my first few picks. No matter what your preference is, whether it be QBs, RBs, WRs, or TEs, you absolutely must grab one of the best at your position of choice. It is possible to mix and match at the beginning of the draft; you can get a large helping of both quarterback and running back, if you like, without bankrupting your team. I typically like to spend $50-65 ($40-50 with a $150 budget) on my first pick, which is always one of the top running backs. I have never taken Arian Foster, because there is nothing about any player that is worth $70+ to me. This means that my first pick changes from draft to draft, but I always try to take at least one of the top backs at a reasonable price. If I can afford to take two, I do it. Spending over $120 ($90 with $150) on two players is backbreaking, but anything less is manageable. This strategy gives you an extremely solid core of players to build your team around.
During the first rounds of the draft you should always nominate players that are of high value that you would not consider taking. For me, this means I am nominating high-level quarterbacks and wide receivers to deplete the overall money pool. Players who have spent heavily will often resist the urge to buy a second big player, especially if they reached for a guy they didn't like. Alternatively, you can toss out second-rate players of your desired position (Matt Forte, Marshawn Lynch, Demarco Murray, or Trent Richardson for RBs) to saturate the market with that position. If a player has already drafted a running back when they weren't expecting to, they are similarly less likely to bid against you for a second one. With quarterbacks, nominating players like Michael Vick, Eli Manning, and Peyton Manning can drive down the desire for that position. This is a more risky strategy, though, because players might get spooked about missing out on all of the position you are trying to devalue.
The second part of the meal is about filling up. By now you should have around $100, give or take $20 ($85, give or take $15 for $150), and your fantasy team has huge holes at most roster positions. Typically at this point in the draft I have two running backs and nothing else. Your goal is to wade through all of the mid-level players an find value, wherever you can find it. Do your best not to spend more than $20 ($15) on any one player. You should be able to pick out around 10 guys that you like ahead of time, since you know where your focus is going to be (my guys are usually Brandon Marshall, Marques Colston, Vincent Jackson, Dwayne Bowe, Steve Smith, Matt Ryan, Philip Rivers, Tony Romo, Aaron Hernandez, and Jermichael Finley). I am going to buy 3-4 of these players, and usually pick up a running back as my flex, leaving me with $20-30 to fill out my roster spots. This strategy suits me because it puts 80-90% of my budget on the field every week. It is fine to have a solid group of backup players, but I want my money to work for me, not sit around every week. Furthermore, if you have too much money entering this section of the draft you will have trouble setting your lineup each week. It doesn't do you much good to have Shonn Greene, Willis McGahee, Reggie Bush, Mark Ingram, and Roy Helu on your team if you can't decide who to play each week.
During the picking part, you should be nominating players of any position that you don't like. The goal is to reduce the amount of money that other players have left, without sacrificing anyone you like. Everyone else is going to be filling their lineup, too, so nominate players in your positions of weakness. It is unlikely that someone is going to fight over someone you like if that player will be heading to the bench for their team. I am usually nominating lots of WRs and TEs, with some scattered running backs like BenJarvus Green-Ellis who I don't want on my team. I tend not to nominate QBs, because I don't know who the other players like. I am trying to get the cheapest QB I can find, so I let other people nominate them and then pounce whenever a player is undervalued.
At this point I am still usually missing one important position (either TE or QB), Kicker, DST, and most of my bench. Again, you could have targeted players before the draft for bench spots, and this is the most boring part of the draft. You can stock up on a lot of great talent, here, but if you draft any starters you need to back them up heavily. Don't try to predict roster holes, just draft players where you find value. This is your chance to put those sleepers into action and get them on your team. Odds are, these are the guys you will be dropping to make waiver wire acquisitions throughout the season, so try not to get too attached to them. This is when you finally get to nominate players that you like, so enjoy it.
The final piece of advice I have is to NOT write a blog post while you are drafting in an auction draft. I missed out on a few great values (Aaron Hernandez being the most glaring) because I didn't know he was being drafted. The more attention you give to your draft, the better it will be. Here are the six drafts I've done over the last two days. Feel free to comment on them.