He or she, who is known to gamble on horses, or dogs, or other sporting events etc., is often branded a persona non grata in certain circles.
However, if a person speculates on buying and selling securities, foreign currency, or property, their classification would point to a persona grata.
Both cases are of course a form of gambling dressed in different clothing. In both cases, there is a possibility of risk loss or the possibility of bigger gain. The need to arrive at an opinion without having positive evidence to back it up is equally there. So is the problem that complete facts are hardly ever disclosed, to enable the finding of a certainty.
In spite of these hurdles, in the case of property and foreign currency buying or selling, the chances of getting it right are better as opposed to finding the outcome of a horse or a dog race, or a football game. Getting involved is also less of a worry, because even if you get it wrong, you still have that house or that other currency you bought. The result is over only when you say, since these investments can eventually regain value, and actually show a profit. Backing losers in racing and other forms of gambling can mean that for the serious or occasional gambler, the money is dead and buried.
Of course, some gamblers attach a lot of importance to the thrill effect of their bets. There is no doubt that betting on sport events, cards, or many casino games can be thrilling, but so is the constant movement of the value of currencies. That wheel goes round and round nonstop, but you can get on and off whenever you like. There are many foreign currency exchange companies ready to let you operate, offering very good rates.
Never think of a bookmaker as an enemy whom you have to beat, your selection may be the one he also wants to win. Also, remember your foreign currency exchange office as a friend that makes it possible for you to play at good currency rates. You are putting your wits against a market that has no financial interest in your winnings or losses.
A realtor has equally no interest to see you lose any money. On the contrary, he likes you to be happy with the purchase of your property. Even if the prices should go against you, he knows that in due course things will change.
A speculator in the foreign currency game increases the chances of success by keeping in touch with as much relevant data as possible, which means that there is never a dull moment. The same applies to a property speculator. By having to constantly study the market and world affairs, the person becomes necessarily rather well read and interesting to talk to. Amongst other things, that gambler is a persona grata.
These days, more and more gamblers turn to the forex game. It keeps them amused as well as thrilled. Instead of a horse or a tennis star etc., they are the actual performer. There is little doubt that the well prepared person has the chance to prevail.
The currency market is not a geared slot machine. It has inexhaustible money to hand out if you get things right, and does not care if you keep winning, should you be clever enough.
Who knows, you might be champion material.
Sunday, June 26, 2011
Saturday, June 25, 2011
The Art of Calculated Risk
To many people, the number and variety of businesses that the Virgin Group operates is unusual: We're involved in everything from music to railways to alternative-fuel development. People often ask me to explain the rationale for our group's approach, especially how we decide which sectors and countries to invest in. It comes down to our distinct approach to risk.
In life, it's better to stick to a few simple values and aims; the same holds true for business. One guideline that we rely on is that if a new business has the potential to damage your brand in any way, you should not invest in it.
At Virgin, when we assess new businesses, our first step is to submit every business idea to our "brand test." We are constantly presented with new and exciting opportunities that might make a lot of money, but if they fail the brand test, we always politely decline and move on. For example, we wouldn't start a cigarette company or a defense contracting business. After all, life is short -- we want to enjoy the experience.
Two related guidelines are deeply linked. We think that there is little point in entering a new market unless it provides the opportunity to really shake up an industry. Almost all our new ventures come about from our thinking up a product or service that we believe people really want. Then, if our entry has the potential to make waves, we're going to look at it very closely.
You'll notice that making a profit hasn't entered the picture yet. It's rare for me or the team to consider only the money that can be made. I feel it's pointless to approach investing with the question, "How can I make lots of money? We must bring in the numbers guys and work out some business plans." No one will ever agree on exactly how to make money. The consultants will say your idea will work, while the accountants will prove that it cannot.
When it's time to decide whether or not to go ahead, the decision must come from your heart. If you must pursue your passions, your ideas will be more likely to succeed.
I learned to follow my passions at the beginning of my career, when some friends and I created Student magazine to give a voice to young people who were campaigning to stop the Vietnam War. As for the actual business aspects, such as paying the bills, well, we had to sort that out later. We just hoped that we would sell enough copies to stay afloat and learn the business side as we went along.
With almost every venture we've gone into since then, we made the move because we saw a gap in the market. Our airline business is a classic case in point: Before we entered that industry, I had been traveling a lot because of Virgin Music and often found the whole experience to be annoying, if not distressing. I felt we could improve it by focusing on service, on the quality of the flight experience and by adding some fun touches. It worked.
Over the years, my colleagues and I have developed quite a reputation for risk-taking. It's true that we have been fearless about taking on new businesses, sectors and challenges even when the so-called experts told us that we did not know what we were doing.
But while, to all appearances, we do have an unusually high tolerance for risk, our actions always spring from another principle: Always protect the downside. I think it should be a guideline for every entrepreneur -- or anyone involved in business ventures. For example, when we made the bold move of expanding from the music industry to the airline business, I set myself one condition: in our negotiations with Boeing, I stipulated that we could hand the plane back at the end of the first 12 months if people didn't like our business. That meant that I could see whether people liked the airline, but if it didn't work out, it wasn't going to bring everything else crashing down. My colleagues at Virgin Records would still have their jobs and a company to run!
We've made other bold moves -- into mobile telecommunications, financial services and health clubs, in countries all over the world. We just make sure we always have a way out if things go wrong. You have to protect your people. It's people who make a company exceptional or average.
So, if things don't work out, don't hesitate: take that escape hatch. That way, when all's said and done, you will be able to gather your team, discuss what happened and then embark on your next venture together.
In life, it's better to stick to a few simple values and aims; the same holds true for business. One guideline that we rely on is that if a new business has the potential to damage your brand in any way, you should not invest in it.
At Virgin, when we assess new businesses, our first step is to submit every business idea to our "brand test." We are constantly presented with new and exciting opportunities that might make a lot of money, but if they fail the brand test, we always politely decline and move on. For example, we wouldn't start a cigarette company or a defense contracting business. After all, life is short -- we want to enjoy the experience.
Two related guidelines are deeply linked. We think that there is little point in entering a new market unless it provides the opportunity to really shake up an industry. Almost all our new ventures come about from our thinking up a product or service that we believe people really want. Then, if our entry has the potential to make waves, we're going to look at it very closely.
You'll notice that making a profit hasn't entered the picture yet. It's rare for me or the team to consider only the money that can be made. I feel it's pointless to approach investing with the question, "How can I make lots of money? We must bring in the numbers guys and work out some business plans." No one will ever agree on exactly how to make money. The consultants will say your idea will work, while the accountants will prove that it cannot.
When it's time to decide whether or not to go ahead, the decision must come from your heart. If you must pursue your passions, your ideas will be more likely to succeed.
I learned to follow my passions at the beginning of my career, when some friends and I created Student magazine to give a voice to young people who were campaigning to stop the Vietnam War. As for the actual business aspects, such as paying the bills, well, we had to sort that out later. We just hoped that we would sell enough copies to stay afloat and learn the business side as we went along.
With almost every venture we've gone into since then, we made the move because we saw a gap in the market. Our airline business is a classic case in point: Before we entered that industry, I had been traveling a lot because of Virgin Music and often found the whole experience to be annoying, if not distressing. I felt we could improve it by focusing on service, on the quality of the flight experience and by adding some fun touches. It worked.
Over the years, my colleagues and I have developed quite a reputation for risk-taking. It's true that we have been fearless about taking on new businesses, sectors and challenges even when the so-called experts told us that we did not know what we were doing.
But while, to all appearances, we do have an unusually high tolerance for risk, our actions always spring from another principle: Always protect the downside. I think it should be a guideline for every entrepreneur -- or anyone involved in business ventures. For example, when we made the bold move of expanding from the music industry to the airline business, I set myself one condition: in our negotiations with Boeing, I stipulated that we could hand the plane back at the end of the first 12 months if people didn't like our business. That meant that I could see whether people liked the airline, but if it didn't work out, it wasn't going to bring everything else crashing down. My colleagues at Virgin Records would still have their jobs and a company to run!
We've made other bold moves -- into mobile telecommunications, financial services and health clubs, in countries all over the world. We just make sure we always have a way out if things go wrong. You have to protect your people. It's people who make a company exceptional or average.
So, if things don't work out, don't hesitate: take that escape hatch. That way, when all's said and done, you will be able to gather your team, discuss what happened and then embark on your next venture together.
Friday, June 24, 2011
ATM free-for-all: bank took calculated risk
The Commonwealth Bank took a calculated risk and placed its ATMs into "stand-in" mode yesterday knowing that it would mean customers could overdraw their accounts.
The bank confirmed it encountered an issue "when conducting routine database maintenance" but rather than shutting down its network of ATMs while the problem was being fixed, it placed them into stand-in mode to allow people to continue to have access to funds.
But this meant the ATMs could not check account balances of those making withdrawals, allowing people to withdraw more money than their accounts held.
A spokeswoman for the bank said it was still assessing the cause of the glitch. It did not know how much money was overdrawn from accounts yesterday.
The glitch also impacted on CBA's internet banking, Bpay, phone banking systems and point of sale eftpos terminals.
"We're still assessing the cause of the problem but it has been resolved and all systems are back up and fully operational," the CBA spokeswoman said.
CBA said it would have "full visibility" of those who had overdrawn their accounts but would not be taking this information to police in the first instance. Instead, the bank would be "making contact with them and asking them to return the funds".
Detective Superintendent Col Dyson, head of the NSW Police fraud squad, said police would wait for the bank to provide evidence of any alleged frauds.
"We don't act until the bank reports to us and I think we'll have to wait for the dust to settle," he said.
"Each incident would have to be taken on its own merits and from what I understand so far we have some people innocently trying to get sums of money out and being given more, through to people pushing security guards out of the way to go and get to it."
Detective Superintendent Dyson said he did not know what specifically caused the technical glitch. Other police officers spoken to by this website said they didn't know any more than what was in the media and that it was CBA's decision whether or not to release further information.
Mike Epstein, a consultant on payment systems who has previously looked after credit cards and ATMs at ANZ, said CBA made a good move by taking the ATMs offline, even if it exposed it to fraud issues.
"In defence of the bank the alternative is that they shut the system down completely and that would potentially cause greater consumer disruption," he said.
"I would say that the action they took was to some extent the lesser of two evils."
A security consultant who did not wish to be named because he has done work for CBA in the past said the issue related to CBA's "core banking modernisation project". He said reports that ATMs were spewing out cash were disingenuous.
"Because the ATM network couldn't verify how much was in people's accounts it just let them take the max amounts from the ATM," the consultant said.
"All those people who thought they were getting free cash were actually just going into overdraft."
The bank confirmed it encountered an issue "when conducting routine database maintenance" but rather than shutting down its network of ATMs while the problem was being fixed, it placed them into stand-in mode to allow people to continue to have access to funds.
But this meant the ATMs could not check account balances of those making withdrawals, allowing people to withdraw more money than their accounts held.
A spokeswoman for the bank said it was still assessing the cause of the glitch. It did not know how much money was overdrawn from accounts yesterday.
The glitch also impacted on CBA's internet banking, Bpay, phone banking systems and point of sale eftpos terminals.
"We're still assessing the cause of the problem but it has been resolved and all systems are back up and fully operational," the CBA spokeswoman said.
CBA said it would have "full visibility" of those who had overdrawn their accounts but would not be taking this information to police in the first instance. Instead, the bank would be "making contact with them and asking them to return the funds".
Detective Superintendent Col Dyson, head of the NSW Police fraud squad, said police would wait for the bank to provide evidence of any alleged frauds.
"We don't act until the bank reports to us and I think we'll have to wait for the dust to settle," he said.
"Each incident would have to be taken on its own merits and from what I understand so far we have some people innocently trying to get sums of money out and being given more, through to people pushing security guards out of the way to go and get to it."
Detective Superintendent Dyson said he did not know what specifically caused the technical glitch. Other police officers spoken to by this website said they didn't know any more than what was in the media and that it was CBA's decision whether or not to release further information.
Mike Epstein, a consultant on payment systems who has previously looked after credit cards and ATMs at ANZ, said CBA made a good move by taking the ATMs offline, even if it exposed it to fraud issues.
"In defence of the bank the alternative is that they shut the system down completely and that would potentially cause greater consumer disruption," he said.
"I would say that the action they took was to some extent the lesser of two evils."
A security consultant who did not wish to be named because he has done work for CBA in the past said the issue related to CBA's "core banking modernisation project". He said reports that ATMs were spewing out cash were disingenuous.
"Because the ATM network couldn't verify how much was in people's accounts it just let them take the max amounts from the ATM," the consultant said.
"All those people who thought they were getting free cash were actually just going into overdraft."
Thursday, June 23, 2011
Taking Risks: How to Take Calculated Risks to Get Ahead in Anything
Taking risks can be both the smartest and dumbest thing you can do with your life. A smart risk -- one that may put you a rung higher on the corporate ladder, or saying "I do" to the love of your life -- is, in fact, just about the only way to get ahead in life, whether that be financially, career-wise, in relationships, you name it.
Meanwhile, a not-so-smart risk -- like popping wheelies down the highway on your new motorcycle or leaking that confidential memo to your company's competitor -- can easily spell disaster.
With some risks, the "smartness factor" is inherent and obvious. But for all those other risks, from the tiny 'risking a new route to work,' to the major 'changing careers,' knowing whether or not the risk is a good one can be confusing. Knowing how to take a calculated risk to get ahead is a skill we all need to have, and it starts, first and foremost, with knowing what you want.
The Key to Taking Smart Risks: Know What You Want
"What I encourage people to do is picture themselves 20 years from now in the same job at the same desk and with the same people, simply to show them what will happen if they don't take any risks. The color just drains out of their faces. But if you don't make an effort to change and get what you want, then life probably won't turn out how you want it to," says psychologist Gary Leboff.
A major part of the problem, according to Leboff, is that most people are living their lives to please other people, or they are living the life they think they should (rather than the life they really want).
"The reason most people are unhappy is that they are attempting to live the lives they have been persuaded are right for them," Leboff says. "If you don't know yourself in the first place, then it is impossible to find happiness in life -- most people are lost in a fog that blinds them to seeing who they have the ability to be, rather than who they think they should be."
Your first step, then, should be to identify what it is you want … then start taking the risks to get you there. If you want more fulfillment in your social life, perhaps you would consider "risking" signing up for a class that interests you, in order to meet some like-minded people. Or, if you want to make more money, you might consider taking the risk to ask for a raise.
"The idea that it is about making these huge, sweeping adjustments such as leaving your partner or changing jobs, is not what this is all about -- yes, perhaps in the future, but such big changes always frighten people to begin with … your initial risks don't need to be life-changing. It's all about taking baby steps because you need to find the confidence to try out bigger things later on -- and you could start with absolutely anything," Leboff explains.
Ready to Take Some Risks? Here's How to do it WELL
1.
Don't risk everything. You should only risk something that, in the event it doesn't go your way, won't ruin you financially, emotionally or physically.
2.
Ask for what you want. More often than not, you will get it.
3.
Avoid unhealthy risks. The risks you take should be positive. They should not put you, or others, at risk of physical or emotional harm.
4.
Learn from failures. Inevitably, some of your risks won't pan out. Turn these failures into a positive by figuring out where you went wrong, then applying what you learned to your next risk.
5.
Start right away. The more risks you take, the easier it will become. Remember, it doesn't need to be a huge risk to make a meaningful impact on your life. Some small risks to get you started include trying a new type of food, wearing a different style of clothing, changing your hairstyle or taking a weekend trip to someplace you've never been before.
6.
Don't worry about what others think. Remember, this is your life, your desire, your risk. Keep moving ahead with what you want, even if those around you have different views.
7.
If there's nothing to lose, take the risk. Oftentimes a risk may seem scary, but when you really examine it you'll find you have nothing to lose. If this is the case, always take the risk.
Risk-Taking Faux Pas
According to Shari Peace, president of Peace Talks, a professional speaking firm, and author of "Crank It Out! How to Get More Done At Work & In Your Life," there are six signs that tell you when a risk is NOT a good idea. If any of the following apply, you should skip the risk.
1. There's a good chance you could lose everything.
2. You have to put a lot on the line to get only a little.
3. There are too many factors you can't control.
4. You feel the odds are against you.
5. There is no way to fix the outcome if it doesn't turn out how you want.
6. You have to take the risk before having a chance to prepare and/or evaluate it.
Finally, if you are still wary of taking that first risk, remember that in order to get what you want, there is always some measure of risk involved.
"Every day, ask yourself what you've done today that is daring or that is a bit of a stretch. If at the end of each day you can find just one thing, then you are moving, but if not, then you are getting more and more limited and your horizons are getting smaller and smaller."
Meanwhile, a not-so-smart risk -- like popping wheelies down the highway on your new motorcycle or leaking that confidential memo to your company's competitor -- can easily spell disaster.
With some risks, the "smartness factor" is inherent and obvious. But for all those other risks, from the tiny 'risking a new route to work,' to the major 'changing careers,' knowing whether or not the risk is a good one can be confusing. Knowing how to take a calculated risk to get ahead is a skill we all need to have, and it starts, first and foremost, with knowing what you want.
The Key to Taking Smart Risks: Know What You Want
"What I encourage people to do is picture themselves 20 years from now in the same job at the same desk and with the same people, simply to show them what will happen if they don't take any risks. The color just drains out of their faces. But if you don't make an effort to change and get what you want, then life probably won't turn out how you want it to," says psychologist Gary Leboff.
A major part of the problem, according to Leboff, is that most people are living their lives to please other people, or they are living the life they think they should (rather than the life they really want).
"The reason most people are unhappy is that they are attempting to live the lives they have been persuaded are right for them," Leboff says. "If you don't know yourself in the first place, then it is impossible to find happiness in life -- most people are lost in a fog that blinds them to seeing who they have the ability to be, rather than who they think they should be."
Your first step, then, should be to identify what it is you want … then start taking the risks to get you there. If you want more fulfillment in your social life, perhaps you would consider "risking" signing up for a class that interests you, in order to meet some like-minded people. Or, if you want to make more money, you might consider taking the risk to ask for a raise.
"The idea that it is about making these huge, sweeping adjustments such as leaving your partner or changing jobs, is not what this is all about -- yes, perhaps in the future, but such big changes always frighten people to begin with … your initial risks don't need to be life-changing. It's all about taking baby steps because you need to find the confidence to try out bigger things later on -- and you could start with absolutely anything," Leboff explains.
Ready to Take Some Risks? Here's How to do it WELL
1.
Don't risk everything. You should only risk something that, in the event it doesn't go your way, won't ruin you financially, emotionally or physically.
2.
Ask for what you want. More often than not, you will get it.
3.
Avoid unhealthy risks. The risks you take should be positive. They should not put you, or others, at risk of physical or emotional harm.
4.
Learn from failures. Inevitably, some of your risks won't pan out. Turn these failures into a positive by figuring out where you went wrong, then applying what you learned to your next risk.
5.
Start right away. The more risks you take, the easier it will become. Remember, it doesn't need to be a huge risk to make a meaningful impact on your life. Some small risks to get you started include trying a new type of food, wearing a different style of clothing, changing your hairstyle or taking a weekend trip to someplace you've never been before.
6.
Don't worry about what others think. Remember, this is your life, your desire, your risk. Keep moving ahead with what you want, even if those around you have different views.
7.
If there's nothing to lose, take the risk. Oftentimes a risk may seem scary, but when you really examine it you'll find you have nothing to lose. If this is the case, always take the risk.
Risk-Taking Faux Pas
According to Shari Peace, president of Peace Talks, a professional speaking firm, and author of "Crank It Out! How to Get More Done At Work & In Your Life," there are six signs that tell you when a risk is NOT a good idea. If any of the following apply, you should skip the risk.
1. There's a good chance you could lose everything.
2. You have to put a lot on the line to get only a little.
3. There are too many factors you can't control.
4. You feel the odds are against you.
5. There is no way to fix the outcome if it doesn't turn out how you want.
6. You have to take the risk before having a chance to prepare and/or evaluate it.
Finally, if you are still wary of taking that first risk, remember that in order to get what you want, there is always some measure of risk involved.
"Every day, ask yourself what you've done today that is daring or that is a bit of a stretch. If at the end of each day you can find just one thing, then you are moving, but if not, then you are getting more and more limited and your horizons are getting smaller and smaller."
Wednesday, June 22, 2011
Critical Difference Between A Gamble And A Calculated Risk!
Life so often appears a paradox at every level. The universe is both chaotic and yet "ordered." You have your own "predetermined" destiny, yet you also have free will. If truth and love is total where lies untruth and hate? If God is all encompassing, where lies the proverbial devil?
A paradox indeed! Life may well even appear a gamble, yet gambling will lead you to failure.
From the outset, let us define a gamble: A gamble is when the outcome is left to pure chance.
Note that all forms of legalized gambling are understandably not left to pure chance. The fact that the house always has the edge to pay their taxes and overheads and to afford themselves a more than healthy profit, creates the situation where they are not gambling but taking a calculated risk. When you use their services, you are *not* gambling but paying dearly for the privilege of being a recipient of their calculated risk.
A calculated risk is exactly what the words state. The risks associated with the contemplated action have been calculated. For example, when you drive your car to work or fly in a commercial airliner, you are taking a calculated risk. You are not gambling. You have accurately calculated that the risks are negligible. Going to a casino to win money rather than to be entertained is also a calculated risk. However the risks are substantial. The odds are intentionally stacked against you mathematically.
When you make a purchasing decision in your wealth creation program there will always be a calculated risk. Make sure that this risk factor is minimized as close to zero as possible. Always do your homework first. Remember: Fools rush in where angels fear to tread.
Never, ever gamble on the outcome. If you leave the outcome to pure chance you are by default accepting the victim role in life.
Enthusiasm may lead to impulsive and rash decisions that prove to be a sheer gamble. Ego can also get in the way of your better judgment, especially when success follows success follows success. After a while it seems you can do no wrong and then all of a sudden, bang! You are bought down to earth with a thud. You had forgotten the cardinal rule - take calculated risks when the odds are clearly in your favor, but never gamble.
There is an old Indian saying that translates: After success (or victory), your turban becomes tight and restricts the blood flow to your brain.
Your ego insists on being right. It hates to be wrong. Even when all the logical evidence says "NO," your ego will say "YES, by all means go for it."
Beware when your hat begins to feel tight!
You cannot avoid calculated risks - but fortunately you have the freedom to calculate the risk factor.
So, the main difference between a gamble and a calculated risk is the element of freedom to make a decision. In a gamble you are allowing yourself to be the victim. In a calculated risk, you remain the master of your own destiny!
A paradox indeed! Life may well even appear a gamble, yet gambling will lead you to failure.
From the outset, let us define a gamble: A gamble is when the outcome is left to pure chance.
Note that all forms of legalized gambling are understandably not left to pure chance. The fact that the house always has the edge to pay their taxes and overheads and to afford themselves a more than healthy profit, creates the situation where they are not gambling but taking a calculated risk. When you use their services, you are *not* gambling but paying dearly for the privilege of being a recipient of their calculated risk.
A calculated risk is exactly what the words state. The risks associated with the contemplated action have been calculated. For example, when you drive your car to work or fly in a commercial airliner, you are taking a calculated risk. You are not gambling. You have accurately calculated that the risks are negligible. Going to a casino to win money rather than to be entertained is also a calculated risk. However the risks are substantial. The odds are intentionally stacked against you mathematically.
When you make a purchasing decision in your wealth creation program there will always be a calculated risk. Make sure that this risk factor is minimized as close to zero as possible. Always do your homework first. Remember: Fools rush in where angels fear to tread.
Never, ever gamble on the outcome. If you leave the outcome to pure chance you are by default accepting the victim role in life.
Enthusiasm may lead to impulsive and rash decisions that prove to be a sheer gamble. Ego can also get in the way of your better judgment, especially when success follows success follows success. After a while it seems you can do no wrong and then all of a sudden, bang! You are bought down to earth with a thud. You had forgotten the cardinal rule - take calculated risks when the odds are clearly in your favor, but never gamble.
There is an old Indian saying that translates: After success (or victory), your turban becomes tight and restricts the blood flow to your brain.
Your ego insists on being right. It hates to be wrong. Even when all the logical evidence says "NO," your ego will say "YES, by all means go for it."
Beware when your hat begins to feel tight!
You cannot avoid calculated risks - but fortunately you have the freedom to calculate the risk factor.
So, the main difference between a gamble and a calculated risk is the element of freedom to make a decision. In a gamble you are allowing yourself to be the victim. In a calculated risk, you remain the master of your own destiny!
Tuesday, June 21, 2011
Live Wild and Brisk, But With Calculated Risk
Sometimes an audience member tells me "Risk is risk. How can you divide it into wild and calculated?" So I decided to delve deeper into this. Though we have a complete field of risk management these days but it primarily focuses on large scale businesses and organized sector. Let's try to understand risk from Small Business point of view.
How do we decide, what types of risk are wild and what types of risk are calculated?
According to dictionary.reference.com, a calculated risk is a chance taken after careful estimation of the probable outcome. The site further explains the history and usage of the term, "This term uses calculated in the sense of "planned with forethought," a usage from the mid-1800s. Its pairing with risk dates from World War II, when the chances for losing bombers were taken into account before a bombing mission was sent out. After the war the term was transferred to other undertakings where taking a chance to succeed had to be weighed against the costs of failure."
There is a difference between driving fast and driving rash on the road. One has to drive fast, if one is on the highway or expressway, but one should not be rash. One should also know the speed limits upto which one is able to exercise reasonable control. In spite of calculations behind the risk things can still go wrong but you will not be completely ruined and the probability of such a thing happening would be low. Edmund H. North rightly says, "I think there is a difference between a gamble and a calculated risk." Andre Malraux further elaborates, "Often the difference between a successful person and a failure is not one has better abilities or ideas but the courage that one has to bet on one's ideas, to take calculated risk and to act."
In simple words, calculated risk is a risk which is within our capacity to absorb and which is taken after thorough cost benefit analysis (due diligence). Our capacity for risk is dependent upon several factors. To assess one's risk capacity, one needs to ask the following questions to oneself:-
• Do I have another source of income? (Spouse income, investments etc)
• Are people dependent upon me? Am I supporting a family?
• What is my loss bearing capacity? For how long I can wait for break even?
• What is my next option / safety net if this business fails?
• Have I taken necessary steps to minimize the risks?
• What are my contingency plans if my assumption/s go wrong?
There is an interesting saying in Punjabi language of India, Pehle saal chatti, duje saal hatti, teeje saal khatti. (Approximate translation: you experiment and spend during the first year of business; set up shop in the second, and earn profit only in the third year of business). The saying emphasizes on the fact that it takes time to plan, set up and specially break even and make profits in business.
While calculated risk is the smartest thing to do in business, wild risk is the dumbest thing to do. Especially when it comes to our passion or the love of our life, calculated risk is the best thing you can do to yourself, your career and indirectly even making your relationships more fulfilled. The more you take calculated risks, the easier they become with practice and the further you can go in entrepreneurship journey. From the practical perspective, it's difficult to define calculated risk. But businessmen tend to have stronger hunch and gut feeling (compared to employees) because they use their hunch (intuition) more and it develops with practice. Start with small risks and as your intuition becomes stronger, start taking bigger risks.
Do not put everything at stake. Constantly analyze and learn from your mistakes. If possible do not put all your eggs in one basket and spread the risks. Take a close look at the uncontrollable factors. I remember a nice poem on driving which we can apply here. It goes like this
Biggest enemies on the road
Speed, Liquor and Overload.
On the road of entrepreneurship, don't take rash decisions (which become uncontrollable), don't get drunk with overconfidence and do not take risks beyond your capacity. If you forget the rules, you might be violently thrown at the wayside. After all entrepreneurship is not for the chicken-hearted.
The final question, which arises in one's mind is what is the right time to take risk? When should I jump into business?
How do we decide, what types of risk are wild and what types of risk are calculated?
According to dictionary.reference.com, a calculated risk is a chance taken after careful estimation of the probable outcome. The site further explains the history and usage of the term, "This term uses calculated in the sense of "planned with forethought," a usage from the mid-1800s. Its pairing with risk dates from World War II, when the chances for losing bombers were taken into account before a bombing mission was sent out. After the war the term was transferred to other undertakings where taking a chance to succeed had to be weighed against the costs of failure."
There is a difference between driving fast and driving rash on the road. One has to drive fast, if one is on the highway or expressway, but one should not be rash. One should also know the speed limits upto which one is able to exercise reasonable control. In spite of calculations behind the risk things can still go wrong but you will not be completely ruined and the probability of such a thing happening would be low. Edmund H. North rightly says, "I think there is a difference between a gamble and a calculated risk." Andre Malraux further elaborates, "Often the difference between a successful person and a failure is not one has better abilities or ideas but the courage that one has to bet on one's ideas, to take calculated risk and to act."
In simple words, calculated risk is a risk which is within our capacity to absorb and which is taken after thorough cost benefit analysis (due diligence). Our capacity for risk is dependent upon several factors. To assess one's risk capacity, one needs to ask the following questions to oneself:-
• Do I have another source of income? (Spouse income, investments etc)
• Are people dependent upon me? Am I supporting a family?
• What is my loss bearing capacity? For how long I can wait for break even?
• What is my next option / safety net if this business fails?
• Have I taken necessary steps to minimize the risks?
• What are my contingency plans if my assumption/s go wrong?
There is an interesting saying in Punjabi language of India, Pehle saal chatti, duje saal hatti, teeje saal khatti. (Approximate translation: you experiment and spend during the first year of business; set up shop in the second, and earn profit only in the third year of business). The saying emphasizes on the fact that it takes time to plan, set up and specially break even and make profits in business.
While calculated risk is the smartest thing to do in business, wild risk is the dumbest thing to do. Especially when it comes to our passion or the love of our life, calculated risk is the best thing you can do to yourself, your career and indirectly even making your relationships more fulfilled. The more you take calculated risks, the easier they become with practice and the further you can go in entrepreneurship journey. From the practical perspective, it's difficult to define calculated risk. But businessmen tend to have stronger hunch and gut feeling (compared to employees) because they use their hunch (intuition) more and it develops with practice. Start with small risks and as your intuition becomes stronger, start taking bigger risks.
Do not put everything at stake. Constantly analyze and learn from your mistakes. If possible do not put all your eggs in one basket and spread the risks. Take a close look at the uncontrollable factors. I remember a nice poem on driving which we can apply here. It goes like this
Biggest enemies on the road
Speed, Liquor and Overload.
On the road of entrepreneurship, don't take rash decisions (which become uncontrollable), don't get drunk with overconfidence and do not take risks beyond your capacity. If you forget the rules, you might be violently thrown at the wayside. After all entrepreneurship is not for the chicken-hearted.
The final question, which arises in one's mind is what is the right time to take risk? When should I jump into business?
Monday, June 20, 2011
Overseas Trade Calculated risk Management Approaches Will Improve You Prevent Losses
Unfortunately, quite a few merchants do not consider overseas exchange risk administration at all. Or if these folks do, these folks only think about market chance. Critical investors understand there are at least 5 sorts of chance related with trading forex, and industry risk is solely one small one.
There is constantly a little chance that your brokerage should go bankrupt or in any other case encounter their demise. Knowledgeable merchants may possibly keep in mind the 2005 Refco fiasco where one of the largest and most respected brokerage companies in the currency markets resolved to go bankrupt. The effects of doing so are still becoming was feeling today.
There’s no doubt that computer, power or Web issues may significantly dampen your final results in the markets. With trades at times needing to be forced at absolute times, and Murphy’s law in well-rounded effect, you should always prep for the worst when it will come to know-how. I highly point to you backup your computer on a everyday basis, ideally to an off-site place it is possible to backup from in lawsuit of fireplace or theft. Traders with significant commitment to the markets, or sizable portfolios, should make investments in fail-safe backup methods which includes generators and surge protectors.
Marketplace chance is the only kind of overseas exchange risk administration a lot traders think about — how daily fluctuations of forex beliefs influence our positions. The most sure-fire way to relieve market calculated risk is to trade utilizing a demonstrated trading computer which integrates international exchange chance management methods at the bottom level. This contains having set access and exit points, profit targets, and cease losses. Political coverage changes, key economic emergencies and governing power treatment can all have an affect on a country’s forex value. It is easy to avoid these class of dangers by utilizing a trading program that integrates stable foreign trade calculated risk management approaches and identifies issues before they influence your positions.
One can keep away from these calculated risk by trading solely the main foreign currencies and staying clear of rising markets and nations with critical financial deficits. As it is possible to see, there are a lot of a lot more risks concerned with forex than just industry calculated risk. Broker, technological innovation, market, economic and region chance need to all be confiscated into account and mitigated.
The most acoustic forex risk management strategies are still not perfect, and there will always be some risk involved when currency trading. Constantly use your own very best judgment regarding your chance tolerance levels and by no means industry above your head.
There is constantly a little chance that your brokerage should go bankrupt or in any other case encounter their demise. Knowledgeable merchants may possibly keep in mind the 2005 Refco fiasco where one of the largest and most respected brokerage companies in the currency markets resolved to go bankrupt. The effects of doing so are still becoming was feeling today.
There’s no doubt that computer, power or Web issues may significantly dampen your final results in the markets. With trades at times needing to be forced at absolute times, and Murphy’s law in well-rounded effect, you should always prep for the worst when it will come to know-how. I highly point to you backup your computer on a everyday basis, ideally to an off-site place it is possible to backup from in lawsuit of fireplace or theft. Traders with significant commitment to the markets, or sizable portfolios, should make investments in fail-safe backup methods which includes generators and surge protectors.
Marketplace chance is the only kind of overseas exchange risk administration a lot traders think about — how daily fluctuations of forex beliefs influence our positions. The most sure-fire way to relieve market calculated risk is to trade utilizing a demonstrated trading computer which integrates international exchange chance management methods at the bottom level. This contains having set access and exit points, profit targets, and cease losses. Political coverage changes, key economic emergencies and governing power treatment can all have an affect on a country’s forex value. It is easy to avoid these class of dangers by utilizing a trading program that integrates stable foreign trade calculated risk management approaches and identifies issues before they influence your positions.
One can keep away from these calculated risk by trading solely the main foreign currencies and staying clear of rising markets and nations with critical financial deficits. As it is possible to see, there are a lot of a lot more risks concerned with forex than just industry calculated risk. Broker, technological innovation, market, economic and region chance need to all be confiscated into account and mitigated.
The most acoustic forex risk management strategies are still not perfect, and there will always be some risk involved when currency trading. Constantly use your own very best judgment regarding your chance tolerance levels and by no means industry above your head.
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