THE TRADING BUSINESS

In trading business, the businessman first will start by researching of goods that has already captive market, because where there is no demand, there is no use to supply. It is a good thing to create demand, but it is something when the demand is already there. That way, to make the business profitable he can focus on the pricing of the goods and make a marketing program that in a way will be superior to his competitor.

When he already found the goods that have already captive market, then he’ll do the following:
- Calculate the investment to set-up the business;
o To buy the stocks (supplies).
o Form the company.
o To rent or buy the location.
o Justify the employment issue.
- To simulate the operational of the business;
o To plan the advertisement.
o To scheme pricing.
o To enhance the human resource.
- Foresee the management;
o Administration, accounting and taxation.

Finally, having done with the preliminary thought, he will begin opening the business. In the process when the business is running the best possible way for him to gain more profit from the trading business, he will have two options to consider:
1. Expand the business in the meaning of opening branches. With the additional research, capital, and etc.
2. Maximizing the profit by minimizing the prices of the goods he stocks and/or minimizing expenses.

“You don’t profit when you sell the goods,
You make them when you buy the goods.”
- Anonymous –

With that in mind, of course it is wiser to maximize profit by the second option, to find better source of goods that will lead to cheaper stocks to hold. To do that the businessman will have to be willing to understand about price.

Let’s talk about corn, and let’s assume that corn is an essential commodity. When the commodity we are talking about is corn, then the people who are interested in this topic are those who plant corn, process corn into other goods based on it, seller (distributors and retailers), and of course the consumers. To make it simple, let’s say that they are buyers and sellers. When there are many demands for corn and the supply is just normal, the price will raise. When there is shortage of supply, the price will skyrocket. Now, what will happen when the price of corn drop to almost lowest of the price that those people remember (or even note of)? The answer is just simple: They buy as much as they afford and can. Where there are rush demand with shortage of supply, the next thing happens is raise of price that will make the price go back to the new normal price. In the contrast, when the price soars high to almost the highest price people can remember, most buyers will not want to buy, so the sellers will try to settle at BEP (Break Even Point) or even at loss just to make their money back as cash, since cash is the most liquid asset of all.

I believe that systems tend to be more useful or successful for the originator that for someone else. It’s important that an approach be personalized; otherwise, you won’t have the confidence to follow it.
- Gil Blake -

So what is the good or commodity that is most essential, has the enormous market of all? The answer is MONEY…

Yes, we can say that money or currency is a kind of commodity or goods, since money can always be converted to any goods and/or services available, then we can say that there are people who remembers about the price fluctuation of this good (money). These people who remember prices concern about the price fluctuation since they expect to make gains from the price differences.

(Soros taught me) it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.
- Stanley Druckenmiller -