In this day and age, television shows that closely follow the trading lives of certain types of businesses, companies, and people are all the rage. Viewers are fascinated by the daily happenings at gunsmiths and gun-shops, auction houses and auctioneers, and the primary subjects of this article, pawnshops and their pawnbrokers.
In particular, we will be discussing a popular show called ‘Pawn Stars’. If you do not follow the series or if you have not even heard of the programme, I personally recommend to you that you check out a few episodes – great viewing aside, you can really learn a lot by watching how they, the proprietors, conduct themselves. ( Presently it is coming on HISTORY CHANNEL at 10:00pm IST )
Every Pawn Stars episode shows the viewer the various dealings and negotiations that take place at the Las Vegas pawnshop business, the Gold and Silver Pawn Shop. The show is incredibly popular because of the owners’ personalities and relationships, and because of the many strange and rarely found items that appear on their counters.
So, why exactly do I consider this show to be a useful resource and reference tool for traders? It is simple: when buying and selling, pawnbrokers take many of the same risks that stock traders do.
Here are fifteen valuable lessons that can apply to market traders and how they operate, all observed from a successful pawnbrokers’ operation.
Although there are a lot of “meet and greets” on a day-to-day basis, typically only a fifth of these end up as a sale – the pawnbroker has to spend many hours of his time and expend a lot of effort searching through dud deals.
For every hundred or so trades you look over, there are only going to be perhaps one or two that deserve your attention and money – and, like the pawnbroker, uncovering them is going to require a lot of your time and effort. At McxNiftyTips we keep close eye on all script / commodities and software informs clients which are best scripts or commodities to trade. Unlike most other software which informs daily 10-20 signals in each script, software at McxNiftyTips provides only 1 or 2 calls maximum in a day per script.
Profit, Taxes, Fees!
Remember that with every deal a pawnbroker makes, there is a transaction cost in addition to the time and labour of actually getting an item sold/resold. When looking at their profit margins, pawnbrokers must carefully take every angle in to account: this includes taxes, labour costs, fuel, item desirability, and etcetera.
With the same critical eye that a pawnbroker uses as he analyses his profit margins, so too must the opportunistic stock trader. After all, there are taxes, commission fees, and other variables to consider.
It is essential you know the bottom line and keep a close watch on it. Those who do not are doomed to fail.
Why do people bring their items to a pawnbrokers’ establishment, instead of just selling them on auction sites like eBay? The answer is simple: they need the cash – urgently!
This gives the pawnbroker a massive advantage because of the seller’s desperation for the money, allowing the pawnbroker to capitalise on the opportunity in many, many ways.
The same situation can sometimes be seen in the stock markets – on occasion, you will see situations where the seller is desperate to sell his stock, even at a drastically reduced price. Conversely, you will also see situations where buyers want to purchase the stock at any price, even if they have to pay excessively for it.
If you are smart enough and if you keep a cool head, you too can identify and capitalise on such excellent opportunities when they appear.
Assembling the ‘Crew…
When a potential customer brings in an unusual, a historic, or an exotic item, a member of staff or the pawnbroker himself wastes no time in summoning an expert to come to the store, to value its monetary worth.
You being an independent trader or not, this does not mean that you are capable of handling everything alone. As well as asking for friendly opinions and advice, a group of friends or technical analyst that are also fellow traders could greatly help you with certain skills that you normally have trouble with.
It might take many years to find such a solid support network and group of good friends / technical analyst, but it’s well worth it. At McxNiftyTips we have spent 12 years to develop our tech team and lots of years to develop highly accurate software.
Sometimes Lady Luck Smiles, Other Times…
Although it is not a frequent occurrence, there have been times where Rick and his staff have been conned or ripped-off, and have taken significant financial losses.
Even if you have years of experience and have conducted hours upon hours of research, there will still be some trades where you take a loss. Those technical analyst / companies / software who brag about never taking a loss are either liars or imposters. There are always trades where you lose a significant amount, but those are the risks of the trading game for you. Beaware of companies who claims 99% or 100% profit guarantee.
There is no point in getting angry or mad (remember, keep a cool head) – accept that this is just a consequence of doing business (a “tuition”), and move on.
This also emphasises the point that you should never trade with more money than you can afford to lose.
Understanding your Personal Interests:
In Pawn Stars, each member of the staff has their own personal interests in certain types of items.
For example, Rick himself loves historical items that draw in the crowds, while his father, Richard, prefers anything that’s vintage.
By watching them, you can see that when either Rick or Richard haggle over an item they have a keen interest in, they are much more eager to buy it from the customer – this usually means that the seller receives a better deal, compared to selling to a member of staff that would have no personal interest in the item.
Personal preferences will cloud your judgement when it comes to trading in sectors that you have an interest in – for example, if you like banks or chemicals, it is likely you will stick to and invest in those specific stock sectors.
What is important, however, is to recognise that this type of bias may interfere with your ability to trade in an impartial manner. Many traders do not trade or invest in such sectors, lest they develop attachments. They also tend to avoid learning about the in-depth history of the companies they are investing in, aside from what they learn from the normal financial analysis techniques.
Do Not Flog a Dead Horse:
Pawnbrokers know the various markets intricately, and keep an eye on popular fads and trends. If they do not think something will sell all that well, they will not buy it.
A sharp trader must keep their portfolio up-to-date with the times. Alongside keeping stocks in play that are healthy and growing, care should be taken to avoid dead money trades. Potential investments that require significant lengths of time to analyse, just to see if they would bring in a profit, should be avoided. If there is no news that would affect the value of the stock or if there is no other catalyst (such as a promising technical pattern) that would signal a future increase in its value, do not make the trade until there is one.
Personal Desires versus Business Sense:
Even when the pawnbroker sees an item they have a significant interest in, if the price is too high, they will not buy.
Through maintaining your focus on prices and noting the risks over your personal whims and desires, your trading ability will markedly improve. Always know the entry price and stick to it like glue.
Even if you have to observe certain stocks for many years before making a move, the timing of a trade is critical for success.
Those traders that can buy whenever they want to are very patient, very long-term, and have emotional calluses to shrug off the sting of a loss.
Worst Case, Best Case:
When the pawnbroker evaluates an item with the intent to purchase it, one of the first things they consider is how much they could lose in difference if they are unable to sell the item later on.
Good traders have a different mindset. They analyse and consider the worst-case scenarios of a trade at the start, and then accept it. This is what they always keep in mind: not how much they can gain from the trade, but what they could lose.
If you cannot work out the possible losses in a gambit, do not risk it. This simple piece of advice could have prevented most of the recent financial calamities that have afflicted the world.
Pawnbrokers always look for items that are quick and easy to sell – this keeps profits up and labour costs down.
Many traders make the mistake of over thinking – they have established complicated strategies which are hard to maintain, and which consume a lot of their trading time. Instead of going for easy, average trades, they try to go for the jackpots by attempting to get ahead of major reversals. Such a strategy requires exact timing to pull off, but since every trade has many different variables, the payoff is rare to happen.
Go for the easier, less-complex strategies and less-risky trades: the more complicated the trade or strategy, the greater the chance is of it failing. At McxNiftyTips we explains client easy to use strategy. All strategy informed are easy to implement and gives good profit.
Variety is the Spice of Life:
The pawnbroker always keeps a diverse inventory – if an item is not selling, he does not purchase more of the stagnant supply.
By expanding your view and operations to many different sectors and markets, you will have a lot more good openings for profitable trades. If you spread out your stocks, there is less of an impact on you if one type’s value, such as tech stocks, is low and unchanging.
If you want to invest significantly in one sector, mutual funds could be an idea to look into.
Staple, yet Profitable:
Almost all profit made comes from small, day-to-day transactions; not from found treasures.
Novice traders typically try and go for the big score trades, not understanding that the trades with a relatively low win percentage, over time, develop into a healthy source of income. Traders who are impatient and think too large, will often be forced out of the game rather quickly, due to their lack of a stable strategy.
Hands-on experience is the best tutor for a pawnbroker. Time and transactions, alongside accurate record keeping and routine evaluations of the market, lets the pawnbroker know what items sell, which avenues are profitable, and what pitfalls to avoid.
The more experience you gain over time, the more proficient you will become when evaluating future trades.
Part-time traders, those who only make a few dozen trades a year, are at a significant disadvantage compared to regular traders, and most often do not keep proper records. The lack of a proper record of their trade-history means that they cannot truly learn from their mistakes: they do not know where their profits and losses are coming from. This is a primary cause of why they often fail at trading.
Remember – always keep accurate records of your strategy. Different strategy applies to different traders !!!! . You can mail us and our team will help you in developing strategies on the basis of the lots you trade and your risk taking capacity.
Honesty is the Best Policy!
On occasion, there have been instances when a particular item has come into the pawnbrokers’ shop without the seller knowing its true monetary worth. Usually, value is worth more then what seller has expected. For the television programme’s benefit or not, the pawnbroker or a member of his staff will explicate its history and true value.
Buying and selling is complicated enough without you having to resort to any type of deception, regarding your bottom line performance. The only way to improve is to be honest with yourself, and to hold yourself accountable for every trade that you make – the good, the bad, and the ugly.
It is human nature to lie to yourself or to blame others for your misfortunes, even if a few of those misfortunes do stem from an incredibly embarrassing decision, but you have to resist the impulses to do so.
Stay calm and cool – be honest with yourself.
Worth Always Equates to Desirability:
Because they typically have significant emotional attachments to their items, most people who enter a pawnbrokers’ establishment have unrealistic estimates of how much their items are truly worth. They are usually dismayed when they receive the cold, hard truth.
Even if you believe that some of your stock is worth an absolute fortune, what only counts in reality is what you actually can sell it for today, right now. Prior prices from weeks and months before, have no impact on the stock’s current price.
Traders and investors who have made bum trades or investments often delude themselves into thinking that the market is wrong, and that they are right. Do not fall into this trap – the market is never wrong.
Don’t hold on to a losing trade or investment because you simply believe it to be both a bargain and undervalued – while there is a chance that you might recoup your losses if you hold onto it long enough, you’ll never make any real money on it.
This pattern of behaviour and poor inner-discipline will simply result in the loss of most of your finances, and devour much of your trading time. They are the portents of death for your trading activities.
I hope that you found these fifteen lessons a great help. Do remember to check out Pawn Stars – it really is an excellent show, and now you even have the perfect excuse for watching it of an evening: “It’ll help me with my trading, dear!”