Bidding Near Round Numbers

Humans are funny. A number like 1 million, or 500,000 feels really right and comfortable, whereas a number like 947,602 doesn't. A mathematician will tell you that a number is just number. But when bidding, we need to remember that psychology plays a major role. Learn how to use this psychology to get an unfair advantage in Japan's car auctions.

Stock Brokers, Forex Traders and Round Numbers

What I am about to tell you has been common knowledge in trading circles for a long time, but it is less widely known among auction buyers. Talk to a stockbroker, or a forex trader, and they will immediately be able to tell you all about round numbers.

Here's the thing. Humans just love round numbers. So, when you are bidding, you need to think about how this kind of thinking is going to affect people bidding against you - and how you can use this against them.

Let's say you are looking at a particular car. You look at the prices that cars like this have sold for in the past. You look at the market demand in your country. Finally, you consider your budget. And you come up with a maximum bid of 990,000 JPY.

Let's think about this. Your bid of 990,000 JPY is just 10,000 JPY below the nice round number of 1 million JPY. Now, you can place your bid at 990,000 JPY, but before you go ahead and do that, let's think what a lot of your competition for this car are going to do.

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That nice, round 1 million is going to be too tempting for many of those competing bidders. They will be drawn to it like a magnet. That's just human psychology. So, you could well find that your 990,000 JPY bid ends up just a little too short as they decide to go up to 1 million Yen.

So where should you place your bid?

Well, when it comes to round numbers, it is always best to place your max bid slightly above the round number. A lot of your competition will drop away as soon as that round number is passed, leaving you a good chance of getting the car.

So, in this example, you would place your maximum bid at 1,020,000 JPY and give yourself a much better chance of success than if you had put it at 990,000 JPY.

Of course, you will want to make sure you can afford that extra. But if you can, always follow the round number rule:

Place your bids just above the round number to dramatically increase your chances of success.

(Ironically, as I have been writing this, I noticed a customer who just missed out on a car by not following this rule. His max bid was 1.1 million. The car was sold for 1.13 million. So near, yet so far. Don't be caught out like he was!)