Forex Trading Tips: Pawn Star

Pawn Star

As a quintessential Upper West side New Yorker living my blue state limousine liberal existence, I’ve never been in a pawn shop in my life. In fact I did not know that pawn shops even existed until I took trip to Houston several years and was assaulted by billboard ads for their services at every intersection of the road of that city.I drove through Houston astonished that this was such a popular business enterprise and quickly forgot about them the moment I returned to New York.

I never gave Pawn shops another thought until a few days ago when I was flipping through Hulu and came across History channels new reality series called Pawn Star. Having already seen the finale of Lost and all the latest episodes of Burn Notice and Royal Pains, and having an hour to kill, I push the play button out of nothing better to do.

Pawn Star is a show is about three generations of pawn shop owners based in Las Vegas. With their Ed Hardy clothes, Harley Davidson motorcycles and black on black shirts and ties they look like a typical bunch of good ole boy goobers. But the Joe Sixpack appearance believes a surprising sense of sophistication and a very shrewd business acumen. The heart of the show is the father Rick Harrison who runs the business with his Dad “the Old Man” and his son. Rick has an almost encyclopedic knowledge of history and art and can just as easily discuss the provenance of an early Civil war pistol as he can quickly and accurately appraise a Miro lithograph. In fact, although he would be last to admit it, Rick is an American version of a Renaissance man.

————--Top 5 Stories in FX This Week—————-

Soros Says ‘We Have Just Entered Act II’ of Crisis

Questioning Keynes

10 Cash-Rich Companies With No Debt

The Beginning of the End for Wall Street

The Beginning of the End for Wall Street

However, what impressed me most about the show (I managed to watch all 6 episodes in one sitting) was Rick’s unbelievable business discipline which he displays numerous times throuout the day. When you think about it pawn brokering and speculation are very similar. A pawn broker stands between a seller who requires instant liquidity and a buyer who may not materialize until some time in the distant future. In order to succeed, the pawn broker must buy at a price that will allow him ample margin of error so that he does not burn his capital.

One the best lessons that Pawn Star can teach us as traders is to walk away unless the price is right. Throughout the course the day Rick is presented with many alluring opportunities to purchase a wide variety of objects but he frequently passes up on the deal if he cannot get the right price for the item. Rick will let the opportunity walk out the door rather than pay too much for the deal.

This an incredibly important point to remember. After all as speculators we don’t have control over the spread or the news flow or the order flow in the market. Our only power is to stand down when the setup does not line up. One of the reasons why Rick can be so sanguine about letting business walk out the door is because he knows that there will be another customer along in a minute. As short term traders we often forget that fact when we get wrapped up in our battle with the market. No one is more guilty of that sin than me, but after watching Pawn star I’ve become a lot more conscious of the idea that not every deal is a trade to be taken.

Boris Schlossberg

One comment

  1. Sri says:


    Great observation on correlating Rick and what traders do. However, I wish you had alluded to discipline (especially for those of us who are either trading novices or not seasoned enough like you), when one has to close a position too. Case in point, is me. I had two Aug expiring options positions in which I was making a good ROI. For me, the line in the sand was 1055 on the SPX few weeks ago. When it did go that level that morning, I knew I had to get out and lock in my profits. I also knew that I had to get out in the first five minutes of trading because there was a gap-down that morning (I had puts). I do not know what bogeyman took over me and I decided to stretch my line in the sand to the 1040 level. Ever since then, I refused to close my positions and am still waiting for the market to tank….. my point is, in theory, I was telling myself I knew what the set-up was. However, when that moment arrived, I did not close my positions and lock in my gains. You make a very important point in this update — one has to determine the template of one’s strategy but most importantly, one has to stick to it, esp for someone like me who has very limited funds in the markets. There is no room for flexibility, not to mention all the frustration, emotional what-if scenarios, etc. I have seen that show and I do admire Rick for his acumen. I just did not have the brains to correlate his discipline to trading. Great post!

Leave a Comment

Your email address will not be published. Required fields are marked *