If you’ve always been interested in gemstones, or if you’re just looking for a potentially lucrative business opportunity, you might consider becoming a diamond trader. Just as the name suggests, this role will have you buying and selling diamonds on a regular basis in pursuit of a handsome profit.
But what does it take to be a successful diamond trader? And how can you get started?
What Is Diamond Trading?
It is a business that relies on buying, managing, and selling diamonds. It’s similar to trading commodities, but it has unique features of its own. Diamond traders are sometimes called diamond brokers, but the function of these roles are practically identical.
As a diamond trader, you’ll work with a variety of individual and business partners, including diamond miners, manufacturers, and distributors. The goal is to buy diamonds for a low price, improve them (when possible), and sell them for more than you initially paid, resulting in a profit.
How to Be a Successful Diamond Trader
These are some of the most important strategies you can use to be a successful trader:
- Acknowledge the risks. Before you get involved in this industry, it’s important to acknowledge the risks. Many people have gotten wealthy by trading diamonds, but this outcome is far from guaranteed. The prices of diamonds, like with most commodities, fluctuate in somewhat unpredictable ways. If the price plummets and you’re holding a large volume, it could result in a significant financial loss. Additionally, while the majority of diamond-related companies and individuals strive to operate ethically, there are some unscrupulous players; if you choose a bad supplier or if you fall for a scam, it could seriously hurt you.
- Specialize in a niche. According to CleanOrigin.com, engagement rings remain one of the most popular applications for diamonds. But there are many different applications for diamonds and many different types of diamonds for you to consider as a trader. If you want to make the most of this business opportunity, it’s a good idea to specialize in a niche. Rather than learning about and trading all kinds of diamonds, you can focus on one specific variety or one specific application. This way, you won’t have to learn as much; you can focus all your efforts on one topic. You’ll limit competition, because there won’t be as many traders in your space. And you’ll also improve your marketability, since you’ll be seen as an expert in this field.
- Understand how to evaluate diamonds. One of your most important skills as a trader is going to be evaluation. If you don’t know what distinguishes a great diamond from a mediocre one, you’re not going to make smart buys. A great place to start is with the “Four Cs” of diamond evaluation: cut, clarity, color, and carat. You can learn the fundamentals relatively quickly, but properly identifying and evaluating these traits will take significant time and effort.
- Create a thorough business plan. Writing a business plan is an important step for any type of business, and diamond trading is no exception. Before you invest a single dollar or spend too much time, research the market and put together a plan for how you’re going to make money. Be sure to conduct market research, competitive research, and a financial analysis before you move forward.
- Gather startup capital. Part of being a diamond trader means buying large volumes of diamonds, which means you’ll need startup capital before you can really begin. If you already have plenty of savings, you can apply them to this endeavor. Otherwise, you’ll need to come up with a plan for how to generate this money; attracting angel investors and venture capitalists is one option. You can also take out a loan or try crowdfunding.
- Learn how to network. One of the most important skills for a diamond trader is networking. You’ll need to be in contact with diamond miners, distributors, and other professionals in this industry on a near constant basis. If you have a network of reliable people you can trust, your work is going to be much easier – and you’ll be able to find much better deals. Network early and often if you want to make it big.
- Choose the right area. Certain areas are more lucrative for diamond traders than others. For example, it might benefit you to operate in an area with a thriving mine. Do your research and consider moving to a hotspot.
- Be on the lookout for misleading information. Most people in businesses in the diamond industry won’t actively try to take advantage of you, but you also need to acknowledge the possibility of misleading or deceitful information. Fake lab reports and other paperwork could cause you devastating losses, so always be on the lookout for them. Verify authenticity whenever possible and terminate communications with suppliers or partners who prove themselves to be unreliable.
- Master the art of negotiation. Perfecting your negotiation skills will allow you to secure much more favorable deals. Starting with a strong, informed offer, remaining stoic and confident, and being prepared to walk away are great places to start. The rest will come with experience and active practice – so make sure to hone your negotiation skills before trying them in a live environment.
- Work with mentors. You don’t have to learn everything from scratch. Consider finding a mentor you can shadow so you can learn all the fundamentals from an expert.
- Be ready to adapt. Diamond trading is a tough business, and it can be unrelenting. The best way to maximize your chances of survival is to improve your adaptability; keep learning, growing, and changing your business when necessary.
Trading diamonds does have the potential to provide you with lavish rewards, but it also has the potential to bankrupt you. This is a risky and volatile market, and one that’s not especially friendly to newcomers. Make sure you understand what you’re getting into before you make any investments and proceed with caution if you decide to start a diamond trading operation of your own.