Why do 7 out of 10 watch traders lose their money and even quit trading altogether?
Simple…
They all make the same 5 mistakes!
The worst part is, they could have made over 6 figures a year in profits if they had just avoided these 5 issues that destroy even the most intelligent traders. I’ve helped over 10,000 people avoid these pitfalls when starting out during their most critical ramp-up period, which is the first 12 months.
Fortunately for you, you can avoid falling victim to these disastrous mistakes, and get an advantage over other traders if you follow these keys below which I’ve never shared until now!
1. Only Trade Rolexes
This is a doozy! Naturally, many people tend to flock to Rolex as a brand because it is the most popular watch in the world. Rookie traders have the cancerous mentality that they don’t think they can sell any other watch brand, or they think other brands are slow movers, so they want to stick with Rolex because it’s easy and fast money. While I agree that Rolex is the most in-demand luxury timepiece brand in the world, the margins to be made on them are terrible, unless you’re getting direct MSRP price from an authorized dealer all the time. Almost no one makes a sustainable income that’s worthwhile from getting allocations at MSRP from authorized dealers. While it is viable, and it does happen, dealers are cracking down on traders, and more and more scarcity is happening in the market. The other part of this issue when traders start out, is they have a bad mentality that if they can’t sell the watch, they’ll at least enjoy wearing it. This gets them in a comfort mindset instead of a growth mindset to learn the process. This is not to say that Rolex isn’t a brand worth trading. We layout when and where Rolex makes sense and what other brands are best for simple guidance in Watch Trading Academy. But it is to say that when that’s the only brand someone trades starting out, they usually get upside down after a while because they’re locking up way too much money for 5% profits. From an investment standpoint this is also just plain idiotic.
2. Get Emotional
Too many newbie traders buy with their feelings instead of their wallets. What do I mean by this!? It means they stumble upon a deal that is way too good to be real. They find, for example, a Rolex Hulk for $8K, or a Hublot Big Bang 44mm for $5,500 and think they’re getting a deal no one else can find or touch. 99% of the time, this turns out to be a scam and the trader loses enough money to quit. I can’t tell you how many times this has happened, where it could have been easily avoided. In the Watch Trading Academy insider group, which has an ongoing support network of people that can protect each other, we always comment if we think someone is buying emotionally and being blinded by a deal. Another part of this mistake is people buying pieces too high, or selling too low because they get emotional about the deal. They’ll get tricked into thinking a price is good by someone due to how much they like the watch. Just because you like a watch, doesn’t mean the market or other retail buyers like the watch. When starting, it’s best to focus on deals that make sense financially to boost your profit. It also is easier to sell watches that have demand and liquidity. By doing some research, and learning what we teach in WTA, people make decisions that are unbiased and profitable because they aren’t solely basing the decision on their emotions. I’ve seen people also sell too soon and lose money, because they got excited about any sort of deal instead of knowing they could get full ask price and make way more by being disciplined.
3. Buy Watches from Wholesalers
I always say wholesalers have a place in the ecosystem, and it can work to buy from them here and there. That said, new traders get lazy and they think wholesalers are giving them a strong deal. So they start buying from them, not realizing it’s very easy to get the prices they’re buying at. So, they end up paying a fisherman to buy the fish and in-turn, when they go to resell the watch, they make barely anything on it. Most of the time, they’re lucky to break even, and sometimes they can make 2-5% or approximately ($200-$500). This isn’t a good business practice, and something I always encourage and teach traders to avoid until they’re much more skilled at how to navigate this type of trade. They also fall victim to thinking wholesalers are their friends, when really most are only cordial to you as long as your wallet is open. Then, when you try to make a strong buy offer, or don’t want to buy from them, they could care less about what happens.
4. Think They Need to Trade X Before Learning Y
“I want to do 10 trades before I learn how to broker or trade like an investor”. This is just 1 of several excuses I hear come out of people’s mouths when they’re starting out. For some reason they have pride issues, and think they need to reinvent an entirely new process, or do things all on their own before understanding how to make the most of each deal they invest in. We live in a world of instant gratification these days, and so many have ego blocking their own best interests. So there’s this perception that they need to do watch deals on their own before learning the simple process that’s taken over 20 years to perfect from industry experts who have seen it all. This kind of attitude is how people fail not only in watch trading but in life. If someone who is exceptional at a skill offers to show you the way to boost your own, why wouldn’t you follow the system that works? There’s a plethora of free information on the internet these days, and programs like Watch Trading Academy that have made becoming a pro easy so there’s no need to bash your head against a wall figuring everything out and making hard mistakes like I did and many others before us. When traders take their education and learning process seriously, they make watch income faster than anyone who doesn’t, and usually join the 100K Club in less than a year when it used to take 5 years. To summarize this nicely I use one of Audemars Piguet’s mottos “to break the rules you must first master them”.
5. Buy Brands that Aren’t Liquid Assets
This one kills me, as it’s probably one of the easiest mistakes to avoid, yet rookie traders seem to blindly disregard this issue and always pay for it. There are so many watch brands out in the market that one can make money on. This doesn’t mean that all of them are worthy of holding value like assets, and able to give you sustainable returns over a period of time. So, what ends up happening is a trader will go and buy a Seiko, or a Tag Heuer, or a Rado, or a Chopard, and I will ask them where they found anywhere that that was a good idea? The answer is always that they either didn’t know, or it originated from their mind, and they now have to deal with sitting on the watch for a while without making much all said and done.
The brands that DO hold value and are liquid in the market to trade are usually high end timepieces (not watches) that there is demand for, and also have some intrinsic value and longevity. These brands have been proven to produce 20%+ profits over and over again for generations as traders have experienced them. If you have no idea or are curious about which brands fit this, they’re all laid out in the Academy for ease of learning. Yet for some reason, people still want to go rogue and do their own thing only to realize the brands they thought would work are usually a 1 trick pony.
Keep these 5 things in mind when you’re starting out, and before you know it you’ll be wearing some of the most badass pieces on Earth all while making a lucrative new income stream!