Would you rather be a second hand car dealer, or sell luxury cars? A lesson in Smart Casual Trading.

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It came as a shocker when Hong Seh sent out a letter to its Maserati customers regarding the tough conditions it has endured over the years. The letter revealed much about the struggles of selling luxury cars in Singapore.

I’ve always told my friends on my email list that I’m a second hand Nissan (no offense to Nissan) car dealer when it comes to trading. I take small profits over and over again, and try as fast as possible to clear inventory, as they cost money to hold.

Sure, selling luxury cars once or twice a year can cover or even profit, now that is a heck of a large reward:risk ratio there, but the demand is ridiculously low, and there is hardly any liquidity. Add to that the holding costs as stated in the letter by Hong Seh, they made the decision to sell their business to the bigger boys who can stomach the costs.

I sometimes refer to certain trades as “ferrari” trades. Expensive to hold, high spreads, and low RRR per margin used. Meaning, for me to make good profit from that trade, I need to put in alot of margin to make money. So even if the trade looks super sweet on the charts, I tend to pass on it. I would rather spend my margin on something cheaper to buy, hold, and sell it quickly.

Some traders gun for the Ferrari trade, putting everything in a single bet, and if luck is on their side, they can make more money, in that single instant. For me, I’m okay with just selling second hand, cheap cars that buyers don’t really care about, who drive it for maybe a while before scrapping it. I take lunch money, but it has value for money in terms of my use of margin. Because these cheap cars allow me to buy more of them. And thus sell more of them at a better price when demand comes back. The others who made tons during one-time events like Brexit or the Presidential Elections, sure, respect to them..but I’m not sure in between such major events, what do they do?

Little by little, the account grows, but over time it compounds, and I spend the profits to buy more cheap cars, and sell them at the same price, but make more profit since I am able to sell more of them.

And look at the roads. How many Ferraris do you see compared to Nissans and Hondas and Toyotas?

I’m the second hand car dealer of forex trading.. It’s the Smart, Casual way.

Contact me if you’d like!

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