Forex, The Art of Speculating and Trading by Ivan Cavric

Ivan Cavric

In order to become a successful speculator you must learn the art of speculation. This begins with discipline. It starts with the basics. Basics are boring but essential. If you do not master the basics you will not master the art of speculation.

Just like any other artist spends endless hours practicing and perfecting the basics you must do likewise. Before we go into some of the basics let me re-iterate the one essential ingredient – Discipline all others are secondary.

Let us begin with the basics. Treat Forex Trading and Currency Speculation as a business. That means you need a dedicated space to practice your art un-interrupted. Every day you need a place to go and work on being a successful speculator. Set regular hours of work for each day and keep them consistent. If you choose 8 – 12 or 7 -3, it’s not as important as it is sticking with the schedule. Five days per week whether you feel like it or not, go to your work area and stick with the schedule.

Avoid distractions. Pretend that you are working for someone else and at the end of the day you will have to report to him. This means that during your schedule you don’t decide to go shopping, do groceries, and mow the lawn or hundreds of other things that come up during the day. All non-business related phone calls are to be avoided including surfing the Internet and chatting.

You are working! You are becoming a successful speculator not a professional jack of all trades.

Yes, I realize that I spent a lot of time on one point. However if you can not commit to this one point than stop reading now and save yourself the time required to finish the remainder of the book. Do something productive with your time like gardening. Half hearted efforts will not make you a successful speculator any more than driving a car turns you into a competent mechanic.

By this point you should be able to answer the question: Do I have the desire to dedicate a portion of my time to the discipline of learning the art of successful speculation? Remember all you need is a minimum of 2 hours per day to get started, of course the more hours you dedicate the quicker progress you will make, but 2 hours per day is enough to get started.

You took the first step by purchasing this book. So get your money’s worth from it, let’s continue.

When you really think about, currency speculation is like no other job. You have a pleasant working environment, get to choose your own work hours and are surrounded by constant excitement. It’s not much of a sacrifice is it? And the potential rewards, let’s not lose sight of the rewards. Yes, money isn’t everything but it sure is a nice thing to have.

Another reason why it is important to emphasize the basics is daunting statistics. It is generally accepted that only 5% to 10% of all speculators make money, this statistic has held over several decades and there is no reason to believe that it will suddenly improve. Out of 100 people who are reading this book if they do not follow it 90 to 95 of them will lose some or all of their capital. That should be enough to motivate you—be disciplined and learn the basics.

Recently, I had an opportunity to watch and listen as my son learned to play guitar. He would spend hours learning the chords and notes, playing the same song, or parts of a song to be more accurate, over and over again. Barely recognizable, but this did not deter him. Then one day as I was reading I heard music, yes a song that I recognized played almost flawlessly as far as I was concerned. My son became an artist. He learned the art of playing music on the guitar.

Speculating is much like that, fortunately for us it’s easier to learn but still requires daily discipline. Artists aren’t born they are made, same with speculators. You aren’t born a speculator you have to become a speculator.

Another point that needs to be addressed is that speculation is a lot like gambling. In fact it could very easily turn into gambling which would explain why so many lose. In order to be a successful speculator you cannot afford yourself the luxury to depend on luck. You need to know all potential outcomes before you place and order and stick with it. If you don’t you will fall into gambling and in the long run lose your capital.

Not only have we seen this over and over again we have done it to ourselves. The strange thing about it, you don’t realize or admit to what you’re doing. It’s obvious to others and obvious to you when others are doing it but oblivious to you.

Then a strange phenomena occurs. You develop a form of selective amnesia. You can remember everything except how much money you lost. I haven’t heard a speculator yet admit to losing money. Miraculously they always manage to be even. This is quite startling when you consider the statistics. Either decades of data are wrong or our speculators turned gamblers are lying.

You probably have guessed the answer-most speculators are liars. They quickly recall all their profits while totally ignoring or acknowledging the overwhelming losses. Talking about not being able to see the forest from the trees. At all costs avoid this trap. “Don’t be a lying speculator, especially to yourself”. If you’re losing money it’s better to tell someone it’s not any of their business that it is to tell them you are even. They will know you’re lying and you now know that you’re lying.

Ivan Cavric

Excerpt Taken From

Forex Frontiers

A Little About Forex Leverage by Ivan Cavric

One of the most compelling reasons for trading Forex is leverage. Leverage gives you the ability to control large assets with little of your own cash.

Typically in Forex the leverage is 100 to 1. What that means is that with as little as $1,000 you have control of $100,000. A 1 % move will produce a 100% profit. As you can see by the tables provided a 1% is typically the average move per day. Yes that’s per day.

When you combine leverage with the magic of compounding - the results are astonishing. A $10,000 account that produces a mere 3% profit per day will be worth over $7 million in a year.

This is the allure of Forex: Leverage & Compounding. However, to make it work requires discipline, persistence and a plan. Profits such as these are not produced by treating Forex trading as a hobby. Actually quite opposite is true. Half hearted efforts will leave you disappointed and most likely without capital. Leverage is a double edged sword, it cuts both ways. It can work in your favor or against you. When it goes against you it usually is quick final.

The key is to master the use of this double edged sword and use it with skill. Fortunately this can be taught just like any other skill. It requires discipline and commitment, both of your time and money. However the end result is worth the exercise.

Ivan Cavric

Excerpt Taken From

Forex Frontiers

Bottom Fishing With The Bears (Ivan Cavric)

Bottom Fishing With The Bears (Ivan Cavric)

A famous quote attributed to Baron Rothchilds encourages us that “the time to buy is when there is blood in the streets.” It is somewhat dramatic but it does get your attention. Reading and listening to the latest financial news one would have to conclude that there is “blood in the streets”, at least figuratively speaking.

Certain market sectors have been pummeled, primarily the Financials and Auto industries. Each day brings more bad news and it seems that there is no light at the end of the tunnel. Foreclosures, bankruptcies and government bailouts dominate the financial headlines. You hear things like no one is too big to fail. Yet our system is such that periodically these events must occur and that the survivors end up much stronger and more competitive when it’s all over.
It’s in times like these that opportunities arise. For the brave souls who go against the tide they become beneficiaries of great rewards. Others may see them as reckless or in most cases simply “lucky”. However it’s more than that. It’s the ability to act when others remain paralyzed. The only question is how to prudently go against the tide? Problem with bottom fishing is that no one really knows with certainty where the bottom is and when will the turnaround occur.
The next few paragraphs will attempt to outline a strategy to us for bottom fishing. It has been my experience that having a plan gives you the courage to act when the majority remain on the sidelines. Is this strategy foolproof? Of course not! Nothing is, and if you are one of those who believe otherwise, save yourself some time and stop reading the rest. However what it will do is greatly increase the probability in your favor. It will give you a blueprint as to how to proceed through the everyday noise. I know you must have heard this saying hundreds of times before, so one more time won’t hurt. “People don’t plan to fail, they fail to plan.” Investing in the market isn’t any different, you need a plan. Especially in a bad market! The strategy that is outlined works on individual stocks as well as EFT’s (exchange traded funds). You choose your own investment vehicle. As a suggestion it would be wise to use quality stocks listed and or quoted on major markets such as NYSE and NASDAQ as an example. And preferably purchase stocks that compose the S&P 500 Index. Only you know your risk tolerance, this is merely a suggestion.
Enough with the prelude, lets get down to the Bottom Fishing Strategy or BFS for short. In the demonstration I will use a fictional automaker listed on the NYSE trading at $10 per share under the symbol DOG. That’s right DOG, and it’s fictional and for illustration purposes only, so don’t go out and try to buy it or worse say that I am recommending the stock. As with most of the auto sector DOG has been hit hard. The price of the stock is down 60% from its 52 week high. Could this be the bottom? Who knows? As you research the company you feel that it may be a good long term investment and this seems like a buying opportunity. You have $10,000 to invest, what would be the best way to proceed?
Well, let’s put the BFS (bottom fishing strategy-remember) to work. Follow the seven steps carefully. They will apply equally to any investment decision you make.

1. Divide your $10,000 allocated for investment into four groups of $2,500. The procedure is the same whether investing $1,000 or $1 million. If you have under $1,000 than it would be best to consider other options.

2. Immediately purchase 250 shares of DOG at the current market price of $10 per share using your first $2,500 allocation and keeping the remainder in cash hopefully earning interest. (NOTE: commissions are not included in our illustration because they vary greatly between firms).

3. If and when the stock drops by 7% or $.70 to $9.30 buy 268 shares of DOG using your second $2,500 allocation. Now you are holding 518 shares of DOG at an average cost of $9.68 per share and still have $5,000 to invest.

4. DOG drops another 7% to $8.65, buy 289 shares suing your third allotment. You are currently holding 807 shares of DOG at an average cost of $9.20 per share and still have $2,500 to invest.
5. Stock drops again by another 7% to $8.04, buy 311 shares of DOG. Your total holdings of DOG are 1,118 shares at an average cost of $8.94 per share and you are fully invested.

6. This step is VERY IMPORTANT. Place a stop loss order 15% below your last purchase price which in our fictional illustration was $8.04. Therefore an open stop loss to sell 1,118 shares of DOG would be entered at $6.84. DO NOT CHANGE THIS!

7. If stopped out of the trade, which would mean the stock traded at or below $6.84, DO NOT BUY THIS STOCK AGAIN! UNDERSTAND! Go elsewhere. You have lost $2,359.59 or approximately 23.5% of your investment but it could have been worse. This is your worst case scenario and you know it before you even place your first trade. Look elsewhere for opportunities.

Follow this procedure for every investment you are considering. BFS allows you to
plan out your purchases systematically before you execute your first trade. Always keep in mind, once you decide to use the BFS, stick with the plan.
Yes I know, I can hear some of you already saying, “well that sounds good but what if the price of the stock doesn’t drop after my initial purchase”? Or “I purchased a couple of times and it stopped going down”! Congratulations! You have managed to pick the bottom, now hold on for the ride up and enjoy your profits. And yes I do have a strategy to maximize your profits when your stock is rising. However that is being saved for another article, maybe even a book. Now that you have a tool the rest is up to you, put it into practice, plan wisely and trade with confidence.

Ivan Cavric

Art Collecting: For Profit and Pleasure by Ivan Cavric

Have you ever considered collecting art for investment purposes? If you are at home or in your office take a quick look around. Chances are that you have some sort of art hanging on your walls. You or some else selected it because you need something to put on your walls and you liked the how it looks. In some cases the price may have been a consideration. Since you will buying art, why not select works that have investment potential?

When it comes to collecting art most people feel inadequate or intimidated. We have been led to believe that you require specialized knowledge to be an art collector. The critics and most experts don’t offer any help either. Some are more interested in selling their particular showings rather than educating you how to become an art lover and a long term collector.

Collecting art can be very profitable and enjoyable. It is one of the few areas where you can have your proverbial cake and eat it too. Anyone can become a successful art collector. All it takes is to learn a few ground rules, most of which are common sense. Since you have read this far you have demonstrated that you possess common sense, now all you need to learn is a few basic rules.

However, before I get into the basics one point needs to be clarified. I am not writing about collecting the works of masters such as Dali, Monet, Van Gogh etc. For this type of collecting you do indeed need specialized knowledge that comes from years of study. Most of these works have proven their investment quality and serve as motivation for us to find the next great masters. And there will be new masters! The only question is which ones.

That’s where the fun in art collecting is! You just may be the one of the few who started buying the early works of an artist who suddenly becomes famous. It is possible! Imagine for a moment having purchased some early works of an unknown artist named Picasso. Early in his career his works were affordable and easily available to anyone. Now, look where the prices for originals have gone to - some sell for millions. And since we have already established that you will be buying art anyway, why not buy art as an investment? Who knows, in 5, 10 or 20 years the artist may be the next Dali.

Collecting art for investment purposes is much like treasure hunting. You have to dig through a lot of dirt to get a few gems, but they do exist. Collecting art is very affordable. Remember we only want to buy works of the yet undiscovered. There is a lot to choose from so be discriminate.

In order for you to build a collection, a valuable collection, lets go over a few basic rules. I call them basic because it is enough to get you started with confidence. Once you begin you will be able add to your knowledge from your own experiences. The great part about treasure hunting is that there is always something new to discover. So never stop learning!

Now to the basics.

Collecting Art for Profit and Pleasure

1. Have a fixed budget allocated for collecting. Know how much you are willing to spend on an acquisition and how often acquisitions will be made. This is the first step because it will keep you focused. If you are starting out with only a few hundred dollars it doesn’t make any sense looking at works in the thousands. Remember you are just starting out, stay focused.
2. Buy art that you like! Since you are collecting for pleasure as much as for profit you have to like the work. Never mind what anyone tells you about the investment potential, it’s going on your wall and you have to like it!
3. Step 2 doesn’t always work and there is a good chance that you may miss out on some extraordinary artists. Art is subjective and what one person considers as art others may think its junk. To avoid this, for every 3 pieces you purchase that you like, buy one that you particularly don’t like, yet it fits your criteria as a possible investment grade collectible.
4. BUY ONLY ORIGINALS! Originals are one of a kind. Once an artist becomes well known there will be many collectors bidding but only one original will be available.
5. Limited Edition Prints are glorified POSTERS. In most cases the framing is worth more than the print. Serious collectors should avoid prints of any kind, even the prints of well known famous artists. In all probability the prices have been inflated. They should not be purchased or considered for investment purposes. For now don’t waste your time.
6. Get a biography of the artist. Get as much documented information about the artist as possible. Most artists will provide you with information about themselves, where they studied and where their works have been shown. THIS IS A MUST, and it should be accompanied with the art. If they don’t have a biography or basic information about themselves go to another artist. Move on!
7. Talk to the seller of the art. Try to verify that the work is an original and not a copy of an original. There are many talented artists who are able to duplicate the works of well known painters. The obvious copies you will be able to identify yourself (such as an oil of the Mona Lisa), others are more difficult. Ask questions and purchase only when you are satisfied with the answers.
8. YOU DON’T HAVE TO PAY THE ASKING PRICE! This is the fun part. Bargain, haggle and try to get it below the asking price. Prices are not set in stone. You just may be able to get it 50% or more below the asking price. You never know, some artists are truly starving artists. There is always room for negotiation.
9. Keep your receipts, cancelled checks and any other written information that accompanies the purchase. This is often overlooked yet it is a key part of serious collecting, regardless of the value of the piece. It is a good idea to write down where you purchased the art and the reasons why chose that particular piece. These records become part of the history of the art. Keep them in a safe place, I cannot stress enough how important this is for future valuation.
10. Take care of your collection. Keep the art out of direct sunlight, damp places and out of reach from unruly children and pets. Use common sense. Have proper insurance on valuable pieces and frequently update your records on various artists you are collecting.

Now you have the ten basic tools of collecting art for profit and pleasure. The Internet is a phenomenal resource. All kinds of information is available at the click of the mouse. It is also a good tool to share and promote your newly discovered artist. Keep in mind that the reason artists are famous is that they are well known. The more people you tell about the works you acquired the more they will get to know the artist. Don’t be shy, share your discovery with others. Everyone will benefit.

Finally, don’t procrastinate, go out and start collecting. There is only one way I know of to become an experienced collector and that is to start as a novice. Everyone has to start somewhere. Don’t get discouraged. It’s true that everyone is a critic, but the only critic that matters is YOU!