Pivot Trades

futures trading system

Wow where to get started?

I’ve been investing for about 7 years. There’s a LOT to learn but don’t let that stop you, cos with this topic, the more you learn the more money you have in your pocket (or stashed away on your private yacht! lol).

Everyone should invest for one reason and one reason alone: Money loses value over time because of inflation.

The government prints money everyday, and because of that the value of the dollar in your pocket is always going down regardless of currency trade (Forex). If you put your dollar into a savings account, the interest they give you will almost always be on par with inflation or slightly higher (so even if you put money into a bank thinking its safe – its actually losing value due to inflation).

To beat inflation, you need to invest, and invest in assets which give you interest higher than inflation.

There are four main asset classes considered as the base of investing: equities (stocks), bonds, property and cash (savings, money market accounts). If I was to add to that I’d also put in “Business” as venture capital, because nowadays its becoming easier for the average person to invest directly in new startups through microfinance sites like kiva.org and others.

Ideally you should invest in EVERY asset class, because by doing this you protect against losses in any one class. For example, the current recession is causing Wall Street (equities) to lose value, therefore if i was also investing in commodities, property, bonds and cash, my losses in the stock market would be offset by gains or stability in the other classes.

So how to tell what is a good investment and what is not?
First step: get educated. Read read read. If you don’t like reading, learn to like it. Successful people do what unsuccessful people are too lazy or unmotivated to do, thats the only thing that separates them in my opinion. The reason rich republicans don’t give a damn about the common man is cos they know the only thing stopping you from becoming rich yourself is not walking into a library and reading a few books from the “investing” and “business” sections. Harsh but true, they don’t give a damn about you, democrats slightly more but still, not much.
To get your learning started, go to: … if you can read and understand 5% of that site you’re already in the top 90% of investors i reckon.

Second step: determine your goals in terms of investment classes, determine your “risk profile”, and determine your asset allocation.
For example, one of my goals is:
– Earn a minimum of 15% from property transactions within a year of investment.
(goals should have numbers, and a timeline whereever possible)

My “risk profile” is considered “moderate-aggressive”, meaning that because I’m young and therefore have more time to recoup losses, I’m willing to take on higher risk investments like venture capital and share investing.

Lastly my personal asset allocation is as follows at the moment: 25% equities, 40% property/commodities, 15% cash and bonds, 20% venture capital micro-lending.
How you allocate your funds is entirely up to you, my mix of assets changes every 5 years after review but you can do it more or less regularly if you want.

As for the costs, they can vary greatly among different asset classes. Best is to do your own research. Some funds charge less, some more. Some brokers charge every time you make a purchase, some don’t. When you’re ready to invest (after learning everything you need to learn) the cost will be part of our analysis.

And lastly and most importantly:

Its clear that you’re a novice investor so take the following little nuggets of investing advice to heart:

1. Investing is a PLAN, a plan to get you to your financial goals. No goals, no plan, no money. When you have a plan and goals, deciding whether to invest in something or not is remarkably simple. Does it meet your earnings goal…is it in a reasonable risk bracket…what is the term before return on investment…with a plan in hand investing is easy and unemotional. Plans also force you to think slow and longterm, which is the ONLY real way to invest.

2. Investing is completely void of emotion because its a plan. If your investing is driven by emotions (usually either fear or greed) trust me, you WILL get burned. The vast majority of people who invest are not real investors, but gamblers (speculators). You could find success doing it this way, but its rare and frought with tales of failure.

3. Take advice from people who know what they’re talking about. If you ever hear a “hot tip” from someone…ask them what the company they’re talking about does exactly, what their “EPS” is or their gearing ratio, or their average last-quarter profits were. Most wont be able to answer, be very careful who you take advise from. Investing on hot tips is stupid…leave it to the gamblers.

4. You can never learn everything. You have to keep learning, no matter what. Personally I read 2 books a week. You don’t even have to pay for them, use your local library, or go to a bookstore and ask to unwrap the book (usually you can read books for free instore). I only buy the books I read which have the most information from the most reputable sources.
Learn from online too, but be very careful because there are a lot of posers online who will make promise you high returns and push unrealistic expectations. Always know as much as you can about what you’re doing and you won’t get taken for a ride.

5. Never have more than 12-months worth of expenses saved in a bank. because money devalues over time, and banks barely cover inflation, you should put as much money as possible into investments while retaining an ‘emergency’ fund in cash. The 12-months of expenses will cover you if you lose your job or a stream of income.

6. Investing is either to provide capital growth, or income. I know of some people who live on the interest on the interest on the interest of their investments. Decide which is more important to you and allocate money accordingly.

7. Think of every dollar you have as a seed which can grow into a freikkin gigantic tree of money when placed in the right fertile soil. Money wasted on frivolous things is tragic because it can afford you the comfort and relaxation you need when you’re older. I’m not saying you should be cheap, or live like a pauper, just decide which things you can live without that aren’t important to your happiness and don’t spend on those.

I could probably keep writing for ages but this should be a good beginning for you.Go to and read! I’m happy to answer any questions you might have…

Cheers!

What is investing, why is it an efficient activity and what types of investments are there? – Investing is foregoing certain cash flows now in expectation of greater cash flows in the future. It is efficient because it allows people access to capital they otherwise would not be able to get. More access to capital = more business and economic activity = economic growth. Investments are classified into the ff basic asset classes: fixed income (you earn a fixed amount of interest), equities (you earn dividends if the company pays these out), and alternative investments (usually for speculation purposes). For tradeable instruments in any of these asset classes, you can acquire capital gains/losses from price movements.

What is the role of interest / interest rates in investing? – Principal factors determined by interest rates include the amount of fixed interest you can receive from fixed income investments and the price of said investments. Fixed income investment prices are negatively correlated with interest rates – as rates go down, FI prices go up.

What are the costs that must be factored into an investment – First would be friction costs – meaning commissions paid to brokers, various taxes, etc. Next would be opportunity cost – what you gave up if you had invested in another instrument vis-a-vis what you put in the current instrument.

In the end, investing is all about finding the best asset to put your money in vis-a-vis other assets. Trading, on the other hand, is different. That’s playing the market of whatever asset you’re focusing on.