Case Study: My Adventures in Forex Trading (Update: 10/09)

Posted by 18 October, 2009 (2) Comment


My last Forex update was in April. I had recently transferred our account from a US based branch of FXCM to the UK office. The US government changed the laws and that basically took away a lot of the advantages of Forex. If you’d like a more detailed explanation, I please e-mail me and I can direct you to a more knowledgeable person.

Given the interruptions, we (my wife and I) have been actively Forex trading for a little under 5 months, but we’ve been very happy with the results.

Please take a look at past Forex updates to get an idea of the beginning of our journey.

· 1/15/09: Balance: 15,485.80 Equity: 13,530.00

· 2/16/09: Balance: 16,768.40 Equity: 13,981.30

· 3/16/09: Balance: 17,971.20 Equity: 15,116.20

· 4/16/09: Balance: 20,341.88 Equity: 18,171.08

When you look at the past articles, you will see that there is mention of a demo account. Unfortunately, the transfer of our account from the US to the UK resulted in the demo account evaporating so I will not be reporting on those results going forward.

My strategy – correction – my mentor’s strategy, is that I read the charts before I go to bed, when I wake up, and when I get home from work. I read the charts at those times and put trades in from what I see. I’m not an active trader, per se, because I simply choose entry and exit points based on the charts. Basically, I make my money when I’m asleep or when I’m at work. I put in as much as 10 minutes and as little as a few minutes into Forex trading each day. The key for me is to be consistent and not greedy. Instead of going for the home run trade, I go for lots of base hits.

In the last month, my wife and I started to become serious about Forex trading and decided to put more money into our account because of past performance success.


If you look at the beginning balance and deposit, you can see that we made a significant addition to our account. This addition is what enabled us to do as well as we started doing in terms of profit this month: $1,375.80 ($2,974.40 in total earnings).

Forex is a great market because you trade based on margin, however that same margin can also get you into trouble very quickly. It’s really important to have a good margin percentage. I know it’s difficult to get a perspective on what I’m talking about, but basically you want a really high margin percentage. My current margin percentage is at 98.85%. You want to make sure it’s above 90%. We were able to make more money this month than in any previous month because we have more money in our account. This gave us a higher margin percentage given our trading level, giving us the ability to trade more units. Yes, I know this may seem very confusing, but stay with me. The more money I have available to keep my margin percentage, the more units that I can trade which means I can essentially make more money and take on the same amount of or less risk if I choose.

Photo by: Kevin Dooley

Categories : Entrepreneur Tags : ,

5 Reasons Why You Should Have a Store Front

Posted by 23 March, 2009 (7) Comment


In my previous post, I wrote about why you should not have a store front. Of course with all ideas, there are pros and cons to everything. It’s up to you to decide what’s best for you in your particular situation and different business have different needs.

1. Store fronts provide the store owner with walk in traffic – This may be more beneficial for some store owners than others. For instance, if you are next to restaurants or other businesses that receive a lot of foot traffic, you may be able to receive a portion of that traffic because of the proximity they are to your business.

Personal Story

My father’s third store was next to a hair cut establishment that provided quick hair cuts with an emphasis on catering to men and kids. I’m not sure if my father intentionally placed the store next to the hair cut business, but it paid dividends. For instance, if a family of four (mom, dad, and two kids) went into the hair salon, while one of the kids or the father was getting their hair cut, a lot of times one or both of the kids would come next door to my father’s store. Many times the parents didn’t buy anything for the kids, or if they did it was usually a small purchase, but a lot of times that short initial visit spawned subsequent visits.

2. Customer Interaction – As “connected” as we are today, nothing beats a face to face chat. If you have a website, you can call customers, e-mail, chat over Gtalk, or even chat over video, but it’s difficult to pick up on the tone of the speaker or their body language.

3. Establish Relationship and Trust – When the customer is in front of you, you are able to establish a relationship with him or her. There is an instant bit of trust involved in this connection even if it is a small. You, the business owner, allow the potential customer to put a business name with a face. If they come back, and they had a positive experience with you, they will find you. You are their connection to your business. This relationship or bit of trust can also be enhanced through your ability to tell jokes. Jokes, most often times, are difficult to convey over a website to a potential customer. It’s interactions and jokes than allow the you to build a rapport and create “raving fans.”

4. Provides Ample Selling Opportunities – It’s easy to suggest other products on a website after a customer has already committed to purchasing the initial product. A website could have “Other Customer’s Also Bought” and other suggestive links before the purchase to create additional sales. A lot of times, for me at least, that doesn’t work. When I feel like I am being pressured to buy, I do the opposite. However, if the sales person can convince me that I need it, then I might consider.

Personal Story

My wife and I were at the wireless store. She needed a new cell phone because she had lost her phone. She went and picked out the phone she wanted. We were intent on not buying any other accessories since we tend not to use them. However, when we got to the cash register, the salesman suggested we get a screen protector. My wife and I adamantly said “no.” We were fixated on NOT buying any accessories. However, the sales person made a few valid points that the screen will dull over time when placed inside of a jean pocket and scratch through the use of the touch screen. So we ended up purchasing the screen protector, but this would not have happened if we were purchasing through a website because this conversation would not have occurred.

5. Ability to see and feel the product – For instance, a speciality wedding dress shop may have a difficult time selling dresses online. Brides are usually very particular and an in-person measurement is most often times needed. Being able to see a fabric up close and feel its texture, especially for something as specialized as a wedding dress, is essential to most brides. Providing customers in a specialized market a physical shopping experience is almost always vital to making a sale. For a business selling more mundane products, like a book store, a store front is less of a necessity since a book is a product that does not necessarily need to be touched to convey worth and value.

What do you think? Do you have a store? Have you always wanted a store?

Photo by: Striatic

Other Posts You May Enjoy

5 Reasons Why You Should NOT have a Store Front
Case Study: My Adventures in Forex Trading (Update: 3/16)
Book Review: Ready, Fire, Aim – Zero to $100 Million in No Time Flat
Carnival of Personal Finance 195th Edition

What Time Do You Wake Up?

Categories : Entrepreneur Tags :

5 Reasons Why You Should NOT have a Store Front

Posted by 19 March, 2009 (14) Comment


Opening a business is tough. A lot of great companies have started when the economy is down such as GE, Google, Microsoft, and Allstate. Whether times are tough or the economy is going strong, when it comes to a business, you’re only going to stay open as long as your sales exceed your expenses unless you happen to have a pile of cash to burn through. If the latter is the case, please e-mail me and I can help with that :).

Personal Story

My wife and I spoke having a store front the other day. She is interested in becoming a baker specializing in cakes and cupcakes. I hadn’t posted anything about her blog before, but you are welcome to take a look at it. If you take a look at her blog, you can see that she’s gotten pretty darn good at the art of baking and decorating cakes and cupcakes. If we were to make a pro/com list, there would surely be a good list for both, but this article will be focusing on the con portion of the list.

5 Reasons Why You Should NOT have a Store Front

1. Store Fronts are Expensive – This is a no-brainer, and the main reason why I don’t want a store front. Before you make any profit for the month, you have to make, in most cases, at least $1000 (I’m guessing on the rent) and up to $1000’s of dollars a month for nicer locations. This seems backwards to me. It seems silly that people should have to work really hard just to break even, not to mention how hard you have to work to make a few bucks on top of that. When I think of store fronts, I can’t help but think about being a sharecropper and that’s is not a positive image for me.

2. Vacations are gone – My dad had 3 different stores during his tenure as a business man. I always had a lot of fun in the last two stores (I was not born for the first store). The second store sold comics, costumes, and magic tricks. The third store sold sports cards, comics, magic the gathering cards, and Pokemon cards. Both stores were really cool as a little kid and teenager. If there was something I really wanted in there, I could talk to him about a way to work for that item. Looking back on my childhood though, there was one thing missing from our vacations: my father.

3. Time Away from Family – When you are getting a business off the ground, lots of time will be spent on the business. Most people value time with their family. If the business is located away from the home, this is more time spent away from your family. If you are able to keep your business at home, this inherently gives you more time with your family, although probably not much in terms of quality time. However, having the business at home may also allow you to avoid daycare partially or all together.

4. Less Flexibility – Here’s the deal. You have a store and it must be occupied by either yourself or an employee at all times. In the case of a bakery, hours during the week are typical and on Saturday at a minimum is required for potential customers. In addition to less flexibility in terms of time, there is also a lack of flexibility in terms of businesses’ finances. A lot of people are feeling the pain of America’s current financial state. If you have a store, and business goes down, that could certainly put your finances in a crunch. If you worked from home, you have less expenses overall and are more flexible if there is a dip in your business.

5. Added Expense – Rent is not the only cost associated with renting a space. In addition to the utilities such as electricity, cable, gas, there is also the expense of making the space as you see fit. Your landlord is more than likely not going to turn the space into what you desire. For example, my wife is interested in opening a bakery. If we were lucky enough to find a store front with a kitchen included, I think we should consider ourselves lucky. If we find a store front with a kitchen, we will need to make the kitchen to fit to the needs of a bakery. Some additional costs could be if there are repairs needed for the rented space and the cost of any potential employees.

I understand that some businesses have more of a need for a store front than others. For instance, a fast food place might rely on foot traffic for a lot of it’s revenue plus hunger is a pretty urgent need, but an online book retailer might be able to get away with not having a store front (i.e. Amazon).

What do you think about having a store front for your business?

Photo by: Any Jazz65

Other Posts You May Enjoy

Case Study: My Adventures in Forex Trading (Update: 3/16)
Interview: Pledgehammer
Book Review: Ready, Fire, Aim – Zero to $100 Million in No Time Flat
What Time Do You Wake Up?
What Did The New Obama Speech About His Budget Mean to You?

Categories : Entrepreneur Tags :

Case Study: My Adventures in Forex Trading (Update: 3/16)

Posted by 16 March, 2009 (17) Comment


Wow, already a month since my last update on my forex trading adventures. Here is a link to my previous two updates to note my progress:

· 1/15/09: Balance: 15,485.80 Equity: 13,530.00

· 2/16/09: Balance: 16,768.40 Equity: 13,981.30

Before I comment on current progress, let’s recap what the above numbers mean. This is a demo account which started at a value of $15,000. I am being mentored by a person who trades Forex full time. She has been trading for 8 years and full time for 6 years. I speak with her daily through Skype. Her trading style is such that she doesn’t take losses. She waits for the trading pair, EUR/USD in her case, to become profitable before trading. You’ll notice that my balance and equity are far apart. Basically, the balance is how much I’ve made from trading above the $15,000 mark. The equity portion is lower than $15,000 because I have trades that are currently not profitable giving me an equity position less than my original amount, $15,000. I currently have four trades that are not profitable. Three of the trades I’ve had since the first week that I began trading. The other position is from a trade I executed last Thursday or Friday.

What does all of this mean?

An equity position of less than $15,000 means that if I were to “cash in my chips”, I would actually lose money on the entire deal. However, that is not how I learned to trade. I will wait until the trade is positive.

New Balance and Equity Numbers

Account Summary 2/15/09-3/15/09

Beginning Balance 16,768.40
Comm Trading Commission 0.00
Rollover Rollover Fee 15.50
PnL Profit/Loss of Trade 1,187.30
Depos Deposit 0.00
Withd Withdrawal 0.00
Option Options Payout 0.00
Comm Options Commission 0.00
AdminFee Administrative fee 0.00
MngFee Management Fee 0.00
PerfFee Performance Fee 0.00
Void Deposit Rollback 0.00
ASPComm ASP Commission 0.00
MargInterest Interest on Usable Margin 0.00
Ending Balance 17,971.20
Floating P/L -2,855.00
Equity 15,116.20
Necessary Margin 300.00
Usable Margin 14,816.20

For the past month, I’ve profited $1,187.30. Again, if I were to close my account and put all of my trades in, I would be positive, but not by a whole lot. As a matter of fact, I would be positive $116.20 as of the night of 3/15/09. So, why is this significant? Well, for starters, this is the first time I’ve had a positive equity position. I am therefore more likely to have a positive position in the future and will look to even increase it by a larger amount. There are three possible scenarios for my account. If the market holds at the same relative position, give the past performance of the last three months (~$1000 per month in gain), my account would increase by $1000.00. The other scenarios are that my three negative trades would either become less negative and even positive leaving me with even more gains, or I will only be slightly positive next month (assuming I stay on the trend of making ~$1000.00 in trades every month). None of these scenarios are guarantees by any means. My mentor, nor anyone else knows what the market will do. The pundits are predicting an upward trend for this week for the EUR/USD pair, but none of the pundits predicted the market crash late last year either so we’ll see.

Be sure to subscribe to my FULL RSS Feed to stay tuned and see how good or bad I perform next month.

Other Posts

Book Review: Ready, Fire, Aim – Zero to $100 Million in No Time Flat
Interview: Pledgehammer
What Time Do You Wake Up?
What Did The New Obama Speech About His Budget Mean to You?
Are Real Estate Guru’s Worth the Money?

Categories : Entrepreneur Tags : ,

Book Review: Ready, Fire, Aim – Zero to $100 Million in No Time Flat

Posted by 12 March, 2009 (8) Comment


Ready, Fire, Aim is a book about taking your business to the next level by Michael Masterson (pen name). I had my doubts about this book prior to reading it. I have subscribed to and read many different articles from the same publisher who published this book and they usually provided carrots of information to entice you to subscribe to an newsletter or to buy some other product. I’m happy to report that this book in no way does this.

Through Michael’s writing, you can see how passionate he is about business. This is his criteria when considering whether to take a job, or in this case, whether to start a business.

Demanding the Best from Your Job

1. What you do

2. Where you do it

3. With whom you do it

4. When you work and when you don’t

There are five areas that a business must be very good at to achieve desirable results.

1. Coming up with new and useful product ideas

2. Selling those products profitably

3. Managing processes and procedures efficiently

4. Finding great employees to do work

5. Getting people, procedures, products, and promotions going

Four Stages of Business Development

Once you have a business up and going, according to Michael Masterson there are four stages of development that have their own problems, challenges, and opportunities:

Stage One: Infancy – zero to $1 million in revenue

Main Problem: You don’t really know what you are doing

Main Challenge: Making the first profitable sale

Main Opportunity: Continuing to sell until you have achieved a minimum critical mass of customers.

Stage Two: Childhood – $1 million to $10 million

Main Problem: You are only breaking even or may even be losing money.

Main Challenge: Creating additional, profitable products quickly.

Main Opportunity: Becoming a business of innovation, increasing cashflow, and becoming profitable.

Additional Skill Needed: Coming up with a constant stream of new and potentially tipping-point ideas.

Stage Three: Adolescense – $10 million to $50 million in Revenue

Main Problem: Your systems are strained, and customers are noticing.

Main Challenge: Turning the chaos into order.

Main Opportunity: Learning how to establish useful protocols and manage processes and procedures.

Additional Skill Needed: Running your business with just three or four simple management reports.

Stage Four: Adulthood – $50 million to $100 million in Revenue and Beyond

Main Problem: Sales slow down and may even stall.

Main Challenge: Becoming entrepreneurial again.

Main Opportunity: Getting the business to run itself.

One of the most important points from this book for you:

Without sales, it is very hard to sustain an ongoing business.

Although this is may seem like common sense to some, this is an important point to remember. There are a lot of important functions of a business such as product development, customer service, accounting, operations, and marketing, but nothing beats marketing. Ditch the idea of leasing an office space and purchasing furniture and focus on selling your product.

I really enjoyed this quote:

Don’t go out and sign a lease. Rental contracts are like marriage licenses. They feel good when you are heady in love, but after reality sets in they may feel expensive and restricting.

I think one of the most important features of the book is what Michael calls the Optimum Selling Strategy or OSS. While these may seem like common sense guidelines, I think you’d be surprised at how many people don’t ask themselves these questions:

1. Where are you going to find your customers?

– Michael suggests imitating the competition, initially.

2. What products will you sell them first?

3. How much will you charge for it?

4. How will you convince them to buy it?

Once you’ve determined your OSS and you’ve gotten the ball rolling, ask these questions to optimize your OSS:

1. What other products can we sell?

2. How can we make the offer more enticing?

3. How can we make the advertising copy more compelling?

4. What other media should we test?

Another nugget that Michael gives is that you should not play the cheap game. Cheap price means to the customer that the quality is also cheap. If you want to have a lower priced item to attract customers, surround it with more expensive items to give it perceived value.

In regards to other products that you may introduce in the future, Michael explains that you should make sure you remain only one step removed from your original product or something that you know well. The further away you get from your original product or what you are familiar with, the less likely you are to succeed. This makes perfect sense to me and will certainly help me narrow potential business ideas in the future. Michael isn’t saying that starting a new business in a market that you are unfamiliar with won’t work or succeed, but your chances for success are proportional to your experience in that market.

What is meant by “Ready, Fire, Aim”?

The title of the book, Ready, Fire, Aim is definitely a catchy title and is probably a big reason I picked the book up from the library. There’s a lot to be said with this technique in building a business and can be applied throughout your life. The “ready, fire, aim” approach comes from the premise that some planning is involved, but before you spend hours upon hours of work on a business plan, you should make sure someone actually wants to buy your product. You can have the coolest widget in the world, but if people aren’t willing to buy it, there isn’t much of a reason to pursue it, is there?

Ready, Fire, Aim gives you the ability to come up with a short plan (basically your OSS) and then try it out! If it works, great! If it doesn’t, move on and try something else. The aim of Ready, Fire, Aim is to accelerate failure to figure out what works. In shortening the amount of time spent on planning, you are able to try many ideas quickly and at a low cost. Both of these benefits are music to my ears! Once you do find an idea that works, Michael suggests that you work on and improve that product. Don’t fix something unless it isn’t broken!

Throughout the book, Michael mentions many of the luxuries that he has such as how much money he made from a job or client or how clients pay for him to fly around the world. This is mentioned early and late in the book, but not at length. This usually signals a red flag for me, but despite that, I really enjoyed this book and would recommend it to anyone with an entrepreneurial pulse. In fact, I’m definitely going to be adding his other books to my queue!

I give this book a 4.6 out of 5 stars.

Photo by: B. Sandman

Other Reviews of the Book You May Enjoy

Review Ready, Fire, Aim @ The Simple Dollar
Book Review: Michael Masterson’s “Ready, Fire, Aim” @ Today’s Financial News
Michael Masterson’s Blog

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Categories : Book Review,Entrepreneur Tags : , ,