Dipping a toe into a new career

Vocation Vacations gives the curious a chance to try out new jobs, be it cheese maker, dog trainer or innkeeper.
By Kathryn Robinson, Special to The Times
October 30, 2005
BOB MULROY thinks he may be a pioneer.

Or an idiot.

On an October day at Oregon's Cristom Vineyards, he was laboring to figure out which.

Mulroy, an electrical engineer from Ellicott City, Md., had purchased 28 acres in Howard County, Md., and was thinking of planting some of the land with wine grapes.

His was no idle rumination: He was trying to decide whether to stay in engineering or become a vintner.

"First, I wanted to find out whether I'm making a mistake trying to grow grapes out there in the first place," he said. "There are no registered wineries in Howard County."

So Mulroy contacted Vocation Vacations, a Portland, Ore., organization that connects individuals interested in a particular career with mentors who are succeeding at it.

That's how Mulroy met up with winemaker Steve Doerner, a 14-year veteran of Cristom, a 28-year veteran of the winemaking trade and one of the most highly regarded crafters of the noble Oregon Pinot Noir.

Vocation Vacations operates on a simple principle: It lets curious individuals test-drive their dream careers.

Prospective clients contact Brian Kurth, the founder and president of Vocation Vacations, with their fantasies.

They tell him they want to be a sports announcer, a brew master or an innkeeper, for example; then he sets them up to shadow a professional in that field for an average of two to three days, from a list including more than 130 professionals in 70-plus lines of endeavor.

Most test drives cost between $349 — that's for one day with an animal therapist in West Palm Beach, Fla., or with a cheese maker in Seattle — and $2,000.

Some are even higher: You would spend $3,500 for two weeks with a boot maker in Guthrie, Okla., or $5,449 for eight days with a fishing outfitter in Dillingham, Alaska.

Unlike the Alaska adventure, which includes camping and meals, most vacations exclude airfare and accommodations. Mulroy's Vocation Vacation, which consisted of two lunches and two days of intensive immersion at Cristom, cost $995.

Speculation vs investment

It is very important that the individual wanting to trade foreign exchange be aware of the very marked difference between speculation and investment. Forex trading is by nature a speculative occupation. Foreign exchange markets are amongst the most volatile markets in the world. When traded on a margined basis they effectively become the most volatile in the world. Day trading in foreign exchange can be extremely profitable and high-risk profile traders can generate huge percentage returns even overnight. Day trading is however a mentally and psychologically challenging activity and is by no means meant for everyone. Day trading is essentially speculation and day traders essentially only do that: day trading. Most people who trade foreign exchange are not professional day traders however.Often the contractors of foreign exchange brokerage services are professionals in some capacity or other. These people do not day trade but take the occasional position from time to time. This is also speculation and should not be confused with making an investment.The conclusion here is that the nature of foreign exchange trading not lend itself as much to investment as it does to speculation and hedging (hedging may be performed in forward instruments). It is possible in a sense to make an investment in foreign exchange over a long-term period but this necessitates a large account value and low leveraging.

Market dynamics

The breadth, depth, and liquidity of the market are truly impressive. It has been estimated that the world's most active exchange rates like EURUSD and USDJPY can change up to 18,000 times during a single day.Somewhere on the planet, financial centers are open for business, and banks and other institutions are trading the dollar and other currencies, every hour of the day and night, aside from possible minor gaps on weekends. In financial centers around the world, business hours overlap; as some centers close, others open and begin to trade.The foreign exchange market follows the sun around the earth. Each business day arrives first in the Asia-Pacific financial centers; first Wellington, New Zealand, then Sydney, Australia, followed by Tokyo, Hong Kong, and Singapore. A few hours later, while markets remain active in those Asian centers, trading begins in Bahrain and elsewhere in the Middle East. Later still, when it is late in the business day in Tokyo, markets in Europe open for business. Subsequently, when it is early afternoon in Europe, trading in New York and other U.S. centers starts. Finally, completing the circle, when it is middle or late afternoon in the United States, the next day has arrived in the Asia-Pacific area, the first markets there have opened, and the process begins again.The graph underneath displays not only the currency trading time cycle but also the average 'depth' of trading at different times during the day in the various business hours.1. Spot rateA spot transaction is a straightforward (or outright) exchange of one currency for another. The spot rate is the current market price or 'cash' rate. Spot transactions do not require immediate settlement, or payment 'on the spot'. By convention, the settlement date, or value date, is the second business day after the deal date on which the transaction is made by the two parties.2. Bid & askIn the foreign exchange market (and essentially in all markets) there is a buying and selling price. It is important to perceive these prices as a reflection of market condition.A market maker is expected to quote simultaneously for his customers both a price at which he is willing to buy (the bid) and a price at which he is willing to sell (the ask) standard amounts of any currency for which he is making a market.ACM quotes very competitive spreads to customers, to site an example if a trader is interested in a transaction in EURUSD then he can trade on a bid/ask of say 0.9150 / 0.9153. This means that ACM is willing to buy from him a pre-determined amount at 0.9150 or inversely to sell to him at 0.9153.Generally speaking the difference between the bid and ask rates reflect the level of liquidity in a certain instrument. On a normal trading day, the major currency pairs EURUSD, USDJPY, USDCHF and GBPUSD are traded by a multitude of market participant every few seconds. High liquidity means that there is always a seller for your buy and a buyer for your sell at actual prices.3. Base currency and counter currencyEvery foreign exchange transaction involves two currencies. It is important to keep straight which is the base currency and which is the counter currency. The counter currency is the numerator and the base currency is the denominator. When the counter currency increases, the base currency strengthens and becomes more expensive. When the counter currency decreases, the base currency weakens and becomes cheaper. In telephone trading communications, the base currency is always stated first. For example, a quotation for USDJPY means the US dollar is the base and the yen is the counter currency. In the case of GBPUSD (usually called 'cable') the British pound is the base and the US dollar is the counter currency.4. Quotes in terms of base currencyTraders always think in terms of how much it costs to buy or sell the base currency. When a quote of 0.9150 / 53 is given that means that a trader can buy EUR against USD at 0.9153. If he is buying EURUSD for 1'000'000 at that rate he would have USD 915'300 in exchange for his million Euro. Of course traders are not actually interested in exchanging large amounts of different currency, their main focus is to buy at a low rate and sell at higher one.5. Basis points or 'pips'For most currencies, bid and offer quotes are carried down to the fourth decimal place. That represents one-hundredth of one percent, or 1/10,000th of the counter currency unit, usually called a 'pip'. However, for a few currency units that are relatively small in absolute value, such as the Japanese yen, quotes may be carried down to two decimal places and a 'pip' is 1/100th of the terms currency unit. In foreign exchange, a 'pip' is the smallest amount by which a price may fluctuate in that market.6. Euro cross & cross ratesEuro cross rates are currency pairs that involve the Euro currency versus another currency. Examples of Euro crosses are EURJPY, EURCHF and GBPEUR. Currency pairs that involve neither the Euro nor the US dollar are called cross rates. Examples of cross rates are GBPJPY and CHFJPY. Of course hundreds of cross rates exist involving exotic currency pairs but they are often plagued by low liquidity. Ever since the Euro the number of liquid cross rates have decreased and have been replaced (to a certain extent) by Euro crosses.