The 10 golden rules of trading
“Negotiation is the resolution of a conflict by mutual compromise.“
Negotiation is cooperation, not competition!
It is not selling and it is not buying, because buying and selling are highly competitive and negotiation is not.
If you find yourself using the techniques in this course competitively, you are not negotiating; you may feel like you are doing it, but in reality you are not.
We are now going to give an overview of the ’10 Rules’ of Trading. These are the 10 golden rules that will help you become an expert negotiator.
Like all things, these rules can be used defensively or aggressively, however, if you find that you are using them defensively or aggressively, you are probably not trading.
If you can stick to all of these 10 rules, you’ll be unstoppable as a negotiator. You will win every time, but not only will you win every time, but also the other party: it will be a true win-win.
This is how we build relationships and maintain the integrity of the deal.
The 10 Trading Rules are:
- No (unless necessary)
- never trade with yourself
- Never accept their first offer.
- Never make the first offer (if you can avoid it)
- listen more and talk less
- never give free gifts
- Always be careful with salami
- Don’t fall for rookie regret
- Always avoid the quick deal
- Never reveal what your end result is (or was)
Rule 1 – No (unless necessary)
This is our definition of negotiations: “Negotiation is the resolution of a conflict by mutual compromise.“
Of the nine words in our definition, there are really only four that are important:
one. conflict – If there is no conflict, do not negotiate. If you are a seller, sell high. If you are a buyer then buy by price. If you don’t need an ongoing relationship with the other party, buy hard or sell hard.
two. Resolution – If you do not need a resolution or an immediate resolution of the conflict, do not negotiate. When looking for a resolution, most people will think of price. Good negotiators will think value, and value will give you a broader spectrum of activity than the narrow price. If you only stick to the price, then you will only get into a haggle.
3. committed – The important point for the commitment is that it does not have to be the price. In a good planned negotiation, you can get the price you want and commit to the things you can give away while keeping the price right.
Four. Mutual – The only caveat to the above is that the other party has to mutually commit to their own need to resolve the conflict today.
Rule 2 – Never negotiate with yourself
If you decide that you are going to break Rule 1 and enter into a negotiation, then Rule 2 is never to negotiate with yourself.
Always get the other party to do it first. Negotiating with yourself means that you will never get what you are trying to achieve.
Rule 3 – Never accept their first offer
This one is short and simple: never, never, never, never, never accept the first offer.
Why? Because there is always a better offer behind!
Not necessarily a lower price but a better offer.
Rule 4 – Never make the first offer (if you can avoid it)
Sellers often think that making the first offer is inevitable (sometimes it is!). However, there may be a time when you can gain an advantage in a win-win negotiation without making the first offer.
Rule number four may seem counterintuitive and like a deadlock, like you’re not making the first offer or accepting the first offer, so how do you move forward?
If you’re selling, always ask important questions early and quickly, and you’ll be able to find out what the potential deal is without making an offer.
If you understand the customer’s position, budget, where they are in pain, and why they want to buy your product or service, then you are effectively making the offer without knowing it. You will know what they want to buy and how much they are willing to pay for it. So always ask the important questions like:
- What is the budget
- what have they set aside?
- what are they currently paying?
- What is the position of the competitors?
Remember who, what, where, when and, most importantly, why.
Rule 5 – Listen more and talk less
You have two ears, two eyes and a mouth: use them in that proportion in the negotiation.
This is what we refer to as the 80/20 rule: 80% listening, 20% talking.
While your client is talking, he will reveal his bottom line, give you cues and information that you can use.
While you’re talking, all you can do is reaffirm what they already knew or leak new information that you don’t want them to have and that could be harmful to you.
Rule 6- Never give free gifts
Free gifts can seriously weaken your position in the negotiation, since today’s gift becomes tomorrow’s starting point. It will always start further back after giving a free gift.
If you give something away for free, you get nothing in return, so not only have you set your starting point for the next negotiation, but you’ve also missed an opportunity to strengthen your position and ask for something in return.
If you give in easily and the customer knows that you will give them a gift if they ask, not only is there now a drop in price because part of the deal is free, but then you establish a prior that They ask and You give, what makes it very difficult to negotiate effectively.
Rule 7 – Always be careful with salami
This Rule relates to the ‘repentant newbie’: we have all felt this way no matter how long we have been buying or selling. What happens is that we leave after closing a deal thinking about two things:
- Did I really get a good deal?
- What could I have done better/is there a better offer?
This is where the 3TQs, the Three Business Questions, come in and they are:
- Cost – How much is this exchange going to cost me?
- Price – What price do I want for it?
- Value – How much is it worth to them?
These questions help us see the value of something to the other party and the cost of the item to us.
This is essential information in negotiation as it helps us determine if we have a good deal and if there is a trade then there should be something of equal value to us as the concession we have given. This does not mean equal cost to us but equal value to the other party.
Rule 8 – Don’t fall for rookie regret
The ‘Salami’ is almost like Rule 2 (Don’t negotiate with yourself) but it’s a bit more detailed. The client will look at your proposal and if you have ‘salamida’ you will be able to see how it decomposes (or slices) that’s where our analogy comes from since it is like slicing a salami.
They are then free to choose the portions of their proposal that they like, they can choose the portions that they like but want a better price, and they can discard some portions altogether. This can greatly shorten your deal and make the process much longer.
When looking at Salami it is important to treat not the other party’s salami as ‘behavior begets behaviour’. If salami, then this makes the behavior correct and then they are free to return this behavior.
Rule 9: Always avoid the quick deal
Experience has taught us that any time you make a quick deal by allowing the other party to control the speed of the deal, you will end up regretting it.
The reason the other negotiator will speed things up and go for a quick deal is usually because they’ve seen a mistake you’ve made and want you to make sure you sign your name on this mistake. This could give them an advantage in many ways, such as a better price, delivery times, etc.
They may not even want you to honor the terms you agreed to as they understand that it is a mistake, however in this case they may use your agreement to push for more concessions and you may have to give something up to back down. . this bug.
There is rarely a time in the negotiation when you can’t take some time to think things through and look for your mistakes without blowing the deal, so never go for a quick deal.
Rule 10: never reveal your final result
This rule may sound obvious and even a bit like a rookie mistake, but at some point you might get caught doing it. So when you’re negotiating, remember:
- Don’t tell anyone what your bottom line is before you start.
- Do not tell anyone what your bottom line is during the discussion. (Unless he’s at the end of his concession, then he’ll switch from a negotiation to an ultimatum.)
- Finally, never tell someone after the denial is over, even if it’s a close friend or relative.
If you reveal your end result after the negotiation is over, it will cause one of two things to happen:
- If you tell them, they may open the negotiation again or they may think that you have deliberately done something to hurt them and they will remember it in the next negotiation.
- This goes from win-win to win-lose and could destroy your relationship in the future, meaning all future negotiations could result in a lose-lose.
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