Location Location Location

[Anonymous]

Fortunately a financial trader, those trading based on prices, doesn't have to rely on having a physical presence, like renting or buying office space. However, the old skill of choosing a suitable location can tell a lot about whether a business is profitable or not.

If you see that a particular building houses the same type of stores, that is, same merchandize or goods or products or service, you can deduce that the things sold there should be relatively cheap. If all the stores in one particular building are selling, say clothes, you know you can buy something cheaper from one store than from the next. Which means that if you open a store in that building selling the same things as the other stores you will have to sell something better or lower your prices. You will have a seriously hard time making a profit.

A particular product will reach saturation point because of supply and demand. If you walk along a stretch of road and see the shops there, see the number of people living in that area, analyze their buying power, see what product sells. You will see that that particular product will reach a particular maximum sales figure and is unlikely to go beyond. Demand would have met supply.

Few people think of alternative ways to sell. Most people think you have to have only one job for life, can't do anything else, instead of, say, selling a particular item to its maximum sales figure, and compound income using a workable method to maximize sales of many saleable products.

A location is as useless or as useful as a company. A company may be formed even if the paid up capital is, say, $2. What good is a company if it doesn't have a profitable business?

 

[Anonymous]

On making a long term investment whereby an investor has to choose between two locations, eg. between WC and W1.

Let's say the investor has XXX amount of money, should he put all that XXX on WC? Let's say he sees an investment as a Professional is good, but shouldn't he think: does Professional = Profitable?

Wouldn't someone with business sense think:

How likely is it to pass the exams?
How likely is it to get the licence?
How likely is it to retain the licence in a litigation-happy-or-not environment?
How likely is it to make big money with that licence?
How many rich people are there who require the services of that licence in the location he is in?
Shouldn't he also think: does the acquisition of a licence = acquisition of a skill?
How likely is it to fill his stomach if he loses that licence?

Taking all the circumstances into consideration, would a reasonable someone with business sense put all that XXX on WC or would he put X on WC and X on W1, leaving X amount more to spare?

Location, location, location. Very important in investment planning.

 

[Anonymous]

Let's say a store owner is considering during what hours he should open his store each day.

He observes the traffic, he sees how many people passes by, he sees how many come into his store to buy something.

If he knows that between 12 midnight and 6 a.m. there are no passers-by or hardly any passers-by, would he open his store during that period, fix sophisticated and very expensive alarm systems, employ highly skilled martial arts competent security guards to guard his cash register and his safe deposit boxes etc?

 

[Anonymous]

Some people are simply born to see things differently.

Some see things being sold cheaply at some places and go: "Wah! So cheap! Don't buy."

Some see things being sold expensively at other places and go: "Wah! High class! Spend! Spend! Spend!"

Not many will think about the differences between the 2 locations.

One goes to a cheap location and sees: you can buy here and you can sell here. He goes to an expensive location and sees: you can buy here and you can sell here. And he thinks about it: "Wah! Here cheap, there expensive! Buy here, sell there!"

When one sees money in terms of odds he is destined to be something different, since he is so odd.

 

[Anonymous]

A man is thinking of opening a store in location B. He analyzes the situation in 3 locations: Location A, location B and location C.

He sees that there is demand and supply for location A and C's products in location A, and he sees that there is demand and supply for location A and C's products in location C. He further analyzes that there is little or no demand or supply in location B of A and C's products. He lives in location B.

Would a reasonable man with business sense, under such circumstances, open a store in location B to buy A and C's products to sell in location B? And, petition for the Underground to be extended from location A to location B to location C, so that customers from A and C can get to location B by the Underground to buy from his location B store?

 

[Anonymous]

What does Business Sense include besides choosing location?

A man analyzes all the situations he can think of. He sees what he thinks is a profit opportunity. He gets the licenses, he gets the location, he dresses up in his best clothes to meet his perceived customers.

He pays the fees, he pays the rent, he opens shop, and continues paying the fees and the rent,

1) but there are no customers.

2) there are customers, there is cash coming in, but all that cash ends up being used to pay off the loan he got to open the shop.

 

[Anonymous]

A location can have so many physical customers there at any one time. A club by membership can accommodate so many members at any one time. If the number of members exceed that limit the membership loses its value, instead of sitting on chairs the members may have to sit on the floor, and complain about their losing face value. Whether or not that membership is really valuable is another matter, for all it's worth despite its high profile, despite its members being held in perceived high esteem, rightly or mistakenly, a society may actually be nothing more than a big joke, but that is another matter.

A factory produces products to meet its customers' orders. It has to use machines and raw material besides man-hour to produce those products. If the factory's maximum capacity of the machines is 12 hours per day but the factory increases it to 24 hours per day there may not be sufficient raw material to meet customers orders, the customers may not want that many more, the machines may end up in the repair shop more often, the machines may have to be written off sooner.

In short, if the factory produces beyond the saturation point it loses money.

The relevance of that in relation to trading: if someone can make 1000 pips a year with 1 trade a month, but someone else trades 10 times a day to make 100 pips a month, who is doing it correctly?

 

[Anonymous]

The nature of a trade varies from one trade to another, from one vocation to another, from one profession to another. Trading by price has a nature of its own which is similar but not the same as other trades or professions.

A store owner in a particular location observes the traffic and the number of customers coming into his store each day. He takes note of the time they come, what they buy, etc. If he knows that during a particular period of the day nobody passes-by, he may close his store or reduce the number of staff employed during that period of time.

A trader after years of trading knowing that during a particular period of time there is seldom any price movement may shut down his computer and go window shopping.

After enough observations he may know that say at 8 am when market opens till 9 am there is volatility so he may trade during that time. He may know that at 4 pm when the other side of the planet's markets open there may be volatility so he will be trading from 4 to 5 pm. Then he goes to Kentucky Fried Chicken for a munch, plays XBox, gets a big headache after doing so, and goes window shopping once again. As he does that the ignorant fools follow him around gossipping: "Very suspicious, unemployed, whole day not working!" etc.

If he knows that at 8 pm some wise guy will be giving a market moving announcement at some place on the planet he will rush to the screen or the trading desk to catch the volatility. It could last about 30 minutes then he gets lost from the screen for the next few hours, perhaps to watch TV.

If he knows that at 12 midnight something usually happens at the market on another part of the planet he will again be in front of the computer, perhaps for another 30 minutes, then he takes a break.

The period spent working with full concentration may be very short, but the full concentration during those period may be very intense.

When asked: "Not working today?" how does a trader explain "what is work"? Trading is like working 24 hours a day. Do non-traders know what is work?

 

[Anonymous]

The nature of trade of a specialty salesman on commission is similar although not the same as other trade, profession or vocation.

The salesman who makes his living by commission alone needs to know how to cut costs. If one closed deal can earn him say $1000 per sale, he still has to take into account his operating expenses.

On day 1 he may make cold calls throughout the day. His targeted prospects may actually be randomly picked from the phone book. He tries to talk them into an appointment, he fits those appointments into his diary. There may be many phones banging on him, but he perseveres and perseveres. Until he gets enough appointments laid out in his diary he begins the house or office visits, as an alternative to going door to door and have the doors slammed right on his face.

So the next day he begins his house calls. At 8 am he may make his sales presentation to a housewife at location 1. Could be a rejection but he thanks her for her time, leaves his name card and moves on to the next one. At 12 pm he may make his office call at location 2, say downtown, while the office worker is having his lunch break at the fast food restaurant. Could be another rejection but he thanks him for his time, leaves his name card and moves on to the next one in his diary. At 8 pm he may be making his sales pitch at a company director's house. Could be another rejection but he thanks him for his time, leaves his name card and moves on to the next one, probably he will call it a day and goes home to sleep.

Some prospects may not buy now but may return to buy later, if he tells them something like: "If you don't like it you can all leave!" he can forget about their business or any repeat business from them.

He may make many sales presentations over a week, a month or longer with no deal closed, but he perseveres and eventually someone buys, or a prospect he called on some time back may phone him up and order ten quantity at once. Jackpot!

That's the nature of that trade, many times there is no sale, other times there are many sales.
When the deal is finally struck all the hardwork will be worth it.