So a scam can actually be useful (part 2)

Hello people!

Continuing from my previous post, where I encountered the scam master interesting Mr. Singh - it may be a surprise that I decided to enter this Forex market despite being presented what I felt was a scam of sorts by Knowledge to Action.

It turned out that beneath all the guarantees of endless riches, Mr Singh was actually right about something. There is money to be made in Forex trading, BUT it is definitely not easy, and requires serious training, as well as accepting some ideas that I had trouble getting my head around:

1. You will lose money. In fact there will be times where you will have consecutive losses. There is no way around this

2. Your pride, and other emotions will be tested.

3. Accepting both of these will assist you on to your road to success

In Forex trading, you make money through predicting future price movements in currency pairs. I'll try and explain this as simply as possible:

Lets say I wish to purchase £100,000 at the GBP/USD exchange rate of 1.6. This would cost me $160,000 dollars. Now lets say after a few weeks, the exchange rate rises to 1.7 - my £100,000 would now cost me $170,000. Simple enough right?

Okay, let's take it a step further. Let's say I was smart, and I anticipated this change - how could I use this to my advantage?

If I had seen this coming, then I could have bought the £100,000 when they were 1.6, and when the exchange rate rose to 1.7, converted them back to dollars. This would have netted me a healthy profit of $10,000. I've displayed this in a table below for simplicity.

Trader's Action	GBP	USD
You purchase 100,000 pounds at the GBP/USD exchange rate of 1.6	+100,000	-160,000
Two weeks later, you exchange your 100,000 pounds back into U.S. dollar at the exchange rate of 1.7	-100,000	+170,000
You earn a profit of $10,000	0	+10,000

This is a very simple explanation of how a trade works, but this essentially what happens. For the major currency pairs, price changes are measure in 'pips' - which is the increase in the 4th decimal place of a currency pair. So rather than waiting for the exchange rate to rise from 1.6 to 1.7, you'll be looking for small changes, such as 1.6500 to 1.6600 (which would earn you $1000).

In my next post I will discuss very basic risk management, how emotional control is important. I'll also display a trade that I made that was profitable for me.

In the meantime, enjoy one of my favourite songs of all time:

Thanks for reading,

Jr

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So a scam can actually be useful (part 1)

At the request of my beautiful cousin, I'm going to go through a basic run of how I got involved in trading, how trading works, and what you need to do to make money.

Early in the summer, the same person I mentioned in an earlier post also accompanied me to a 'free seminar on Forex trading', presented by a group called 'Knowledge to Action'. We arrived at a glamorous hotel, where the seminar was being held. It had an open plan lounge area, plush leather sofas and a fully stocked bar. I almost felt out of place in such a nice setting. Someone was trying to impress, and immediately my scepticism began to grow.

(I love this picture)

Once the seminar started, we were introduced to Gurdas Singh, and were told that we were actually incredibly fortunate to have him speak to us today because he never, EVER does seminars. Mr. Singh then delivered THE most rehearsed, mistake free presentation that I have ever seen, with a fully integrated powerpoint presentation and without ANY notes. It was about three hours long.

I'm going to go out on a limb and say that Mr Singh's claim that he never did presentations was a lie. In fact, it is confirmed by an article, where he is described as Knowledge to Actions 'most empowering speaker'. This guy!

Disappointed

Mr Singh then went on to tell us about his amazing success story. Trading brought him so much success that he left University as he was making more than his lecturers. How he could buy whatever he wanted, working just a few hours a day - and also that WE could also earn similar amounts by entering the Forex world. The seminar then described how the Forex Market worked, and how easy it was to earn money by eliminating the ability to make big losses (which is actually partially true).

However, the worst was to come. Having presented us with this seemingly easy way to make a fortune, Mr. Singh then said that the way to do this was to sign up to Knowledge to Action's trading University. The cost of this? £15,000. I nearly fell out of my chair.

I started to feel as though all this was a sham. Mr Singh had presented the false pretence that I could earn lots of money like him, just through attending this Traders' University. To make it worse, Mr Singh then said that we were very lucky, as this was actually the last time that he would giving the opportunity for people to sign onto the University, and there were only 6 places left, and because of this he was willing to offer the same package for £2000, and you could bring a friend to learn with you.

By now my Spider senses were going haywire. I felt as if my intelligence was being mocked.

Mr. Money-making, high-flying, car-buying, jet-setting Gurdas Singh (look at his scamming face here) was telling me he was willing to offer me a £15,000 course for £2000 - an 87% discount, which I could bring my friend along to (effectively making it 93% discount). This would guarantee me more money than I could dream of.

So I'm meant to part with £2000 of my hard-earned student loan money, which will probably go into your pocket and contribute to this jet-setting lifestyle that you are currently living??

Does it say 'mug' on my forehead?

This was a classic case of a pyramid scheme. Unfortunately, as I left, a few people did in fact sign up to the 'University', and I'd love to see if they had any return on their investment.

So - why would I, having been presented with what I felt was a scam, decide to actually enter the Forex Market? Find out this, and how the market ACTUALLY works, in part two.

Thanks for reading,

Jr

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So Switzerland did something interesting (part 2)

Continuing from the last post (for those interested in Forex)...I am going to present a method that can be utilized even by novice traders to gain profits.

'Scalping' is a method that describes Forex trades that are very quick. Usually a trader is in and out of the market in minutes, rather than days or weeks. The trader is looking to take small profits regularly, rather than long term trades to take advantage of an uptrend or downtrend.

As previously discussed, the Swiss Bank's Vice Chairman (Jean-Pierre Danthine) has said the 1.20 EUR:CHF floor would be maintained with the 'utmost determination'.

So if the lowest the exchange rate will be (whilst the floor is maintained) is 1.20 - how can traders make money from this?

Simple - When the market drops near to 1.20, this is a signal to go long. As the price is not going to go down further, the only way the price can go is up. Although the gains are small, some money is better than no money!

This is a graph showing the EUR:CHF 1.20 floor

EUR:CHF from 15/05/2012 to 19/09/2012

If you were able to set your stop loss (red) a bit below this 1.20 floor to protect yourself, and your take profit around 1.2012 (yellow). Shorting the market close to 1.20 would have generated small but quite regular profits. This is ideal for the novice trader who is looking to build up their account.

Recently the EUR:CHF has weakened to its lowest levels in over eight months. If it was to return to its lower levels, this situation would once again give the opportunity for scalping (as long as the Swiss Bank maintains its plans for the 1.20 floor). Look out for this!

Thanks for reading,

Jr

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So Switzerland did something interesting (part 1)

I went to a public lecture at LSE earlier this week. I didn't want to go initially, but thankfully I was convinced to go.  It was really informative and interesting and it's something I want now want to do more regularly, so thanks to the person that made me go! (You know who you are).

The Speaker was Heiner Flassbeck, who wikipedia tells me was once the State Secretary in Germany's Federal Ministry of Finance. Mr. Flassbeck is also the Chief Economist at the United Nations Organization for Trade and Development, so this guy knows his stuff!

The topic for the lecture was 'Policies for Inclusive and Balanced growth'. Having done a degree in Economics with Politics, I was happy I was able to understand pretty much all of what Mr Flassbeck discussed.

Without going into everything included in the 90 minute lecture, two things happened during the that stuck with me.

Firstly - during the question and answer section, one of the guests at the lecture burped into his microphone when he was asking a question, and then carried on as if nothing happened. This was in a room full of about 300 people. My companion and I were trying so hard not to laugh out loud that we both began to sweat.

Secondly - Mr. Flassbeck very briefly mentioned something quite brave that the Swiss Central Bank have done, which had relevance to my Forex trading. It's also the main focus of today's slightly longer blog entry.

About a year ago, the Swiss Central Bank announced plans to peg it's currency (CHF) to the Euro (EUR), as it was overvalued. Let's say a 'normal' exchange rate for Euro to Swiss Franc is 1 Euro to 1.2 Swiss Francs - which is  (EUR:CHF 1.20). If the Franc then strengthened with respect to the Euro, and became 1.1, then 1 Euro can now buy less Swiss Francs than before.

Conversely, this means that those exporting goods in Switzerland will now lose out, as those holding Euros will spend less on Swiss goods, as they have become more expensive. It also impacts the tourism industry as people will not want to go to Switzerland if the Franc is expensive.

The Swiss Bank's plan was to purchase a lot of Euros to bring EUR:CHF up to 1.2 again. Whenever the price threatened to fall below this, Euros would be purchased so that the exchange rate 'floor' was at 1.2.

The ramifications for this gave a unique opportunity for Forex traders to make consistent profits, with small risk. It involves a trading method known as 'scalping'. This will be explained in part 2 of this blog, which I have separated for those who have knowledge of the Forex trading.

Thanks for reading,

Jr

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So I got a 2.1 in my degree

If only you all knew what it took for me to get it. Forever thanking God almighty.

This was me when I found out my grade:

Onto the next step!

So today I got annoyed...

I was playing basketball at this regular session I've been going to over summer. Usual rules, full court, 5 v 5. It's good for conditioning and the level is okay, so I usually enjoy it.

This was not to be the case today. I realised after my team lost our first game that there may be a problem. I had picked a team with an incredibly idiotic, annoying, foolish, selfish team-mate.

Now, basketball is a game where you get often get praised for the things you do with a ball in your hands. People celebrate a dunk, a pretty pass, or a nice dribble move. So naturally, people focus on these things. I understand that. What I can't stand is a selfish player who has no end product. This guy would dribble for 35 seconds, by which point no one really cares what he does, then shoots a 3 pointer that would more often than not end up missing the rim completely. We lost. 5 times. In a row. It didn't take too long for me to feel like this...

...and some of this (don't ask where I got these from)

Needless to say I didn't enjoy basketball much today, but I did remember something...

If I want to be successful at trading, I'm going to have to learn to not get upset at losing. There will be times I will lose money, although the ultimate goal is to make a lot more than I lose. However if I am unable to control my emotions (especially negative ones) whilst I'm trading, I will make stupid choices based on feeling rather than thought, and that would be the key to wasting a lot of money on what is an investment in my future.

So the moral of the story is, I need to learn to control my emotions better...or pick better team-mates!

I should however say, that not all selfish players are bad...case in point:

                         (How you gonna pass to yourself and STILL score?!)


Thanks for reading,

Jr

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So I heard a song this morning

Got reminded how good this song is. Felt like sharing. Good morning!

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So I finished my degree...

FINALLY! 


I've spent this summer 'holiday' studying for my final exams, as I couldn't take them during the normal examination period in June (long story). I'm still waiting on my grade, but I'm trying not to think about it too much for now.

My Uni

Now that I have some free time, I've decided to start writing a blog. One of the first questions I asked myself was - "why would anyone want to read what I have to say?".

The truth is, you have no reason to...BUT you've read this far, so you might as well continue :)

I'm writing a blog to talk type about things that I've got an interest in. I've completed a degree in Economics with Politics, I love sport (mainly basketball) and I DJ, so I feel there are a few things that I can post here from time to time that will cater to a variety of people.

Over the summer whilst I was going through hell studying I also discovered my interest in Foreign Exchange (Forex) trading. For those that do not know, here is a very (very) basic explanation:

1. Exchange rates change very regularly (who remembers when £1 used to get you $2 dollars?? It will only get you about $1.6 now)

2. If you are able to take advantage of these changes, you can make a substantial amount of money

I'm about to deposit money into my trading account, and I've set myself a target of earning 100 Pips a Week (the title of this blog). A pip is a technical term to describe small changes in currency pairs. So I'll be posting updates on my progress and giving information for people who want to get involved!

I'm also open to suggestions so if there is anything you would like to see, or if you have an opinion, do comment, I enjoy conversation!

To finish up, here's a video one my of my favourite artists, Ryan Leslie making one of his many amazing songs.

Have a blessed day!

Jr

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