I read this story on one of the forum and shared it here few months ago, thought it would be a good time to re post it and share it with fellow traders:


I wonder if any of you guys can help me?

I can't understand what I did wrong this year.

I had such a great idea for a business but it just fell apart.

The idea was simple : I know a supplier that I can get items from
really cheap and it was my intention to sell them on for a nice profit
in the expensive area I live in (people will pay extortionate prices!!)

I guess my misfortune was a combination of a terrible economic climate
and a good old dose of bad luck because my business failed right from
the start.

Let me tell you what happened.

Firstly, in April, I bought 300 pairs of Green Wellington Boots ready for the
statistically rainy month we have here in the UK! The idea was so good
that I put 50% of my net worth into it. Unfortunately, rather than
pouring with rain, it was the warmest April on record. I mean, who can
have predicted the weather???

I didn't sell a single pair. My friend at the successful store in the next town, told me to mark the
stock down drastically, sell it on as quick as possible, get whatever I
can and take a quick loss. Well, this sounded great in principle. But
what if I sold it all off on the cheap and then the weather turned???
Who wants to take a loss??

I decided to keep them on display and hope for some rain in May. Unfortunately, two things happened. Firstly,
while I had taken up half my shop with these boots, my friend made a
fortune when there was a run on those fancy new coats that all the Yuppies buy their dogs. I could have made a killing but I had
almost no space for them and had no money left over after buying up all
those boots.

Then, I got hit with a double whammy, there was no rain in May and by the time the heat wave rolled around in June, I
couldn't even get rid of the Wellingtons in a fire sale. I ended up
having to dump the lot at the local tip.

My friend said I was crazy to have risked 50%. He said even the best made plans can go wrong.
But the way I see it, you have to risk money to make money and it
sounds to me like he was simply scared.

Anyway, as you can imagine, I was very angry at this stage. So I was looking for a quick
opportunity to make my money back. My friend told me I was trying to get
revenge. He told me to sit on my hands and wait for the next craze to
develop and then have money ready and waiting to take advantage of it.
But who wants to wait??? I've got bills to pay!! There was no craze at
the current time and I didn't intend to wait around.

There was a slight problem in that the suppliers didn't have much that looked
good but still, if you look long enough you can usually find something.
That's what my best friend in school used to say. He now works as a
cleaner incidentally...anyway, I am digressing.

I browsed the catalogues looking for something - anything, that might sell. And then I found these fancy red raincoats. Now, I know what you are going to say...its June....but the thing is,
they were a beautiful deep red and it had been known to rain in June
sometimes. Maybe the odds were not great but they were the best on offer
and if I could pull it off...I could make that money back I lost on the
Wellingtons! So I bought 600. I guess I was being stubborn. But what
would you do in my situation???

Well, sadly this bet didn't pay off. I didn't sell a single rain coat and ended up taking a big loss on them.

Well of course, my friend rubbed my nose in it. That annoying &*^%
always thinks he is right. It's alright for him. His shop turns over
£1,000 each day on average. Mine turned over £85. I felt like I was
getting nowhere. He told me to stop worrying about what I was turning
over and concentrate on building a client base and a reputation for
quality products. Well that's all well and good but I'm not getting any
younger!! I need to make money today not in two years time!

Speaking of my friend. He is one of those people that really p*ss you
off. Always has meticulous records of his in comings and outgoings.
Knows exactly what sells and what doesn't. Knows the cheapest suppliers.
Always seems to strike at the optimum time. He always harps on about
patience and experience. You'd hate him if you met him. I don't even
know why we are friends.

Anyway, I digress. In September, something happened that really appeared to be a good opportunity. These
fancy new mobile phone covers came out for the iPhones. Popularity was
really building for these covers, especially among the younger
generation and Christmas was approaching.

The thing is, after losing 50% of my capital on the Wellingtons and then jumping into those raincoats so quick and losing my money there too, I didn't have much money left
and I was nervous. I just couldn't afford to lose again so I ended up
buying only 20.

My friend was waiting and prepared and he bought everything he could get his hands on. I think he bought over
2,000. Everytime I went to his shop he had sold out and was busy
re-stocking. He said it was a perfect storm ; the price was a good one,
the potential mark up (or risk reward as he kept saying it) was
excellent, there was proven demand and we were in a seasonally strong
period. He kept on harping on about conduence or confluence or some such
thing. I don't remember. But anyway, whatever he was on about, it's all
very good to talk. But money buys things. And the fact was that he had
the money to buy a huge amount. I didn't. It wasn't my fault. Just bad
luck. Anyway, I managed to turn mine over quick enough but I had bought
so little that I made almost no profit and when it came time for me to
re-stock, the suppliers had run out so that was the end of my trade.

I finally went into insolvency in December.

I guess this business is just not for me.

Funnily enough, over Christmas, another friend told me about trading
and how you can make huge amounts of money buying and selling
currencies. I'm actually very excited about it. He said you can do well
if you treat it like a business. I didn't like to say anything but of
course, I thought to myself that it didn't sound like any business I
know. In fact, it sounds as far removed from buying and selling clothes
as one can get. Wouldn't you agree?