Money Flow Trading Method along with Risk Management

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http://traderfeed.blogspot.ca/2017/0...t-markets.html

TUESDAY, JUNE 06, 2017
What Do We Truly Know About Markets?
https://3.bp.blogspot.com/-aGWiAUAeC...edgeWisdom.jpg
Let's do a little exercise.

Here's a question. Please write down your answer to the question before reading on:
WHAT DO YOU KNOW WITH A HIGH DEGREE OF CONFIDENCE ABOUT TRADING/INVESTING THAT DOESN'T REQUIRE ANY STATISTICAL SUPPORT?

Knowledge is what has statistical support; wisdom is what we know to be true from hard-earned life experience. What do you truly know about markets and trading? What wisdom do you draw upon in your best trading and investing?

Once you've written out your answer, please compare your wisdom with the answers offered by a number of thoughtful market participants. This blog post from Abnormal Returns has plenty of insight to inform our trading.

Good trading is grounded in knowledge; great trading reflects wisdom. The best market lessons are also phenomenal life lessons. Your best trading will result from acting on your greatest wisdom.
Further Reading: Life Lessons From The Trading Trenches
Posted by Brett Steenbarger, Ph.D.at 3:13 PM




“The fool doth think he is wise, but the wise man knows himself to be a fool.” ― William Shakespeare, As You Like It


This week is Blogger Wisdom week on Abnormal Returns. As we have done in previous years we asked an esteemed group of independent finance bloggers a series of (hopefully) provocative questions. Answers are not edited and the author’s name, blog name and Twitter handles follow. We hope you enjoy these posts as much as we do putting them together.


Question: What do you know with a high degree of confidence about investing that does not require any statistical support?(Answers in no particular order.)


Wayne Lloyd, Dynamic Hedge, @dynamichedge:
Leverage can be deadly. It doesn’t take a statistician to know that if you bet more than you have, you are dramatically increasing your risk. It’s great on the way up, though!


Barry Ritholtz, Big Picture, @ritholtz, Masters in Business podcast:
I know how little I know: I am aware of the limitations of what I truly know for sure; that I have no idea what the market will do next year or the year after; what sectors are going to outperform, what stocks will still be here in a decade or two; what the Fed will do, where the Dow will be, what GDP looks like. Once we acknowledge what we do and don’t know, it makes the task before us easier, as we are not relying on a false set of premises to build our investments and portfolios upon.


Tom Brakke, the research puzzle, @researchpuzzler:
Performance distorts decision making. Almost always and almost everywhere. Very few investors, including professionals, can avoid the tug of historical numbers when making decisions. (Some are more swayed by long-term numbers and others by what’s happened recently.) The evidence backs up that belief, but you don’t need it to know it’s the way of the world; you can easily observe it.


David Merkel, The Aleph Blog, @alephblog:
We know that stocks represent shares in the ownership of businesses and bonds and loans are promises to pay. If we buy sound investments and hold them, we will make money in the long run at minimum (absent war on your home soil, famine, plague, socialism, etc.)


David Shvartsman, Finance Trends, @financetrends, newsletter:
Top traders and investors work to find strategies that suit their personalities (so they can stick with it) and produce net profits over time. Then there is risk management, which keeps you in the game. Whether you are a chart-based swing trader or a long-term value investor, you must find some way to limit your losses or define your “margin of safety” in order to preserve your capital and secure your ability to take advantage of future opportunities. As the popular Market Wizards book series suggests, there are many paths to trading and investing success. While investing styles can vary wildly, a common thread among the top investors interviewed is a respect for the markets and a defined process for controlling risk.



Ben Carlson, A Wealth of Common Sense, @awealthofcs, author of Organizational Alpha: How to Add Value in Institutional Asset Management:
No matter what anyone tells you, successful investing is hard. No stance in the financial markets is ever easy and no strategy will ever give you 100% confidence in your ability to achieve your financial goals. You can make things simpler or more complex but no matter what you do it’s going to be hard. There are far too many psychological landmines to allow this game to ever be easy.


[Membership] An annual membership helps support Abnormal Returns and gives you access to exclusive e-mails and perks.


Tobias Carlisle, The Acquirer’s Multiple, @greenbackd, co-author of Concentrated Investing: Strategies of the World’s Greatest Concentrated Investors:
Value investing works. Buying something for less than it’s worth increases the value of the buyer’s holdings. I don’t need a backtest to know it makes sense.


Andrew Miller, Miller Financial, @millerak42 , guest blog at blog.alphaarchitect.com:
Investors should minimize or optimize taxes and fees.


Roger Nusbaum, Random Roger, @randomroger:
The stock market goes up most of the time and every so often it goes down a lot and scares the hell out of a lot of people because it is somehow “different” than other past declines. The circumstances for the declines are different but not the market process for handling declines. It goes down a lot, people panic then it stops going down, often for no apparent reason and then it starts to go back up to a new high. The only variable is how long it will take to make that new high. An advisor or investor may or may not be able to add alpha along the way but the simple act of remembering there is nothing new about the market going down a lot along with maintaining a suitable asset allocation and adequate savings rate should be sufficient provided that panic is not succumbed to.


Jonathan Clements, Humble Dollar, @clementsmoney, author of How to Think About Money:
Thanks to investment costs, investors must collectively lag behind the market–and, thanks to skewness, the number who outperform will be far fewer than a normal distribution curve would suggest.


Phil Huber, bps and pieces, @bpsandpieces:
Hindsight is a hell of a drug.


Jesse Felder, The Felder Report, @jessefelder:
Markets and economies move in cycles characterized by mean reversion.


[E-mail] Subscribe to our daily e-mail newsletter to stay up-to-date with all of our posts.


James Osborne, Bason Asset Management, @basonasset:
That most decisions get made with a high degree of confidence without having any statistical support.


Andrew Thrasher, Andrew Thrasher, @andrewthrasher, 2017 Charles H. Dow Award Winner:
The price of a stock is a result of its supply and demand.



Charles Sizemore, Charles Sizemore, @charlessizemore:
Overweighting a position, no matter how good it looks, is almost always a bad idea. For every Warren Buffett that massively overweights a position like Coca-Cola that ends up doing well, there are many more Bill Ackmans that massively overweight a Valeant Pharmaceuticals and have it blow up in their face.


Morgan Housel, Collaborative Fund, @morganhousel:
That relative values are confusing. That compounding is not intuitive. That many people are here for the game more than the outcome. That simple things are too easy for smart people to take seriously. That Michael Batnick is a good writer.


Cullen Roche, Pragmatic Capitalism, @cullenroche:
I know, with increasing certainty, that I know less than I think I do.



Michael Kitces, Nerd’s Eye View, @michaelkitces:
The ongoing march of market efficiency will always be limited by the ability of human beings to behave rationally. Which means that even as most forms of available alpha seem to be shrinking, some level of sustainable alpha – “behavioral” alpha – will remain.

In essence, we can think of market inefficiencies as providing two different types of alpha: informational alpha, available to use who can rationally access and use available information better than peers, but prone to being arbitraged away; and behavioral alpha, available to those who can behave better than peers, and capture the return opportunities created by the behavioral mistakes of others, and more likely to sustain (as long as our brains are wired the way they are). Of course, the caveat is that the behavioral biases that create behavioral alpha opportunities are the same biases that make it hard for any particular investor to capture behavioral alpha in the first place!


Wesley R. Gray, Ph.D., Alpha Architect, @alphaarchitect, co-author of Quantitative Momentum: A Practitioner’s Guide to Building a Momentum-Based Stock Selection System:
Better to be lucky than good.


Ivaylo Ivanov, Market Wisdom and Ivanhoff, @ivanhoff:
Big corrections lead to great buying opportunities. Trends last a lot longer than most expect because different people buy for different reasons and at different stages of a trend. All trends need sceptics; otherwise, there won’t be anyone left to buy. Corrections are relatively rare, but they are fast and furious and most people don’t act the way they think they will act during them.


Robert Seawright, Above the Market, @rpseawright:
I know a lot less than I assume I do.


Jake, EconomPic Data, @econompic:
That investors love stories aligned with their prior views and will look for flaws with any new information that runs counter to these views.


Michael Martin, MartinKronicle, The Michael Martin Show, @martinkronicle:
As an investor and trader it’s clear that market participants will continue to act emotionally around money.Ego can be a much more powerful emotional force than fear or greed. People who are very well educated don’t like being wrong. They are not used to it. Designations and degrees are “perceived as success” around attaining knowledge, but that is not the same as being able to have tactical mastery. Having a big ego around intelligence can keep individuals tied to the whipping post for a lot longer than they have to be. Rule: Your first loss is your best loss. Get out. Learn from your mistakes. You can always get back in at a better time.




Peter Lazaroff, Peter Lazaroff, @peterlazaroff:
You have no control over the market. The implication is that you should spend way less time thinking about the market and worrying about short-term moves.



Robin Powell, The Evidence-Based Investor, @robinjpowell:
Everyone who expresses an opinion about it is in some way conflicted. It’s usually to do with our business model or some other financial incentive; it’s sometimes about personal or professional pride, or trying to justify silly things we’ve said or done in the past. Always ask, Who’s saying this and Why?



Jeffrey Miller, A Dash of Insight, @dashofinsight:
Whatever proposition you make or conclusion you reach can be supported by a carefully-selected chart, some ancient investing wisdom, or advice from a “billionaire fund manager or investor”.


Jeff Carter, Points and Figures, @pointsnfigures:
Markets will take you to the point of emotional breakage. You will get out. Then it will go the way you wanted it to go.



Brett Steenbarger, TraderFeed, @steenbab, author of Trading Psychology 2.0: From Best Practices to Best Processes:
Diversification works. If you can harvest returns from relatively uncorrelated strategies with positive expected value, your return stream will be smoother and more reliable than if you go big on any particular strategy. The way to get big is to get broad. Investors have finite Sharpe ratios and those Sharpes have some degree of variability. Many of the psychological problems that occur among investors and traders are the result of amping up strategies and being unable to tolerate the drawdowns when those strategies hit expectable drawdowns.



Thanks to everyone for their time and effort. Don’t forget to check out Tuesday’s Blogger Wisdom question on what we would learn if we had 1000 years of good financial data.

COMMENTS FROM BENJAMINIS: Of all the GREAT QUOTES THE ONE THAT BEST APPLIES TO MY FOREX TRADING STYLE IS THIS ONE.

"Michael Martin, MartinKronicle, The Michael Martin Show, @martinkronicle:
As an investor and trader it’s clear that market participants will continue to act emotionally around money.Ego can be a much more powerful emotional force than fear or greed. People who are very well educated don’t like being wrong. They are not used to it. Designations and degrees are “perceived as success” around attaining knowledge, but that is not the same as being able to have tactical mastery. Having a big ego around intelligence can keep individuals tied to the whipping post for a lot longer than they have to be. Rule: Your first loss is your best loss. Get out. Learn from your mistakes. You can always get back in at a better time."

Michael Martin, MartinKronicle, The Michael Martin Show, @martinkronicle:

As an investor and trader it’s clear that market participants will continue to act emotionally around money.

Ego can be a much more powerful emotional force than fear or greed.

People who are very well educated don’t like being wrong. They are not used to it.

Designations and degrees are “perceived as success” around attaining knowledge, but that is not the same as being able to have tactical mastery.

Having a big ego around intelligence can keep individuals tied to the whipping post for a lot longer than they have to be.

Rule: Your first loss is your best loss. Get out. Learn from your mistakes. You can always get back in at a better time.

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http://theeconomiccollapseblog.com/a...y-selling-them

Central Banks Now Own Stocks And Bonds Worth Trillions – And They Could Crash The Markets By Selling Them
http://theeconomiccollapseblog.com/w...icons/user.gif By Michael Snyder, on June 7th, 2017


http://theeconomiccollapseblog.com/w...in-460x258.jpgHave you ever wondered why stocks just seem to keep going up no matter what happens? For years, financial markets have been behaving in ways that seem to defy any rational explanation, but once you understand the role that central banks have been playing everything begins to make sense. In the aftermath of the great financial crisis of 2008, global central banks began to buy stocks, bonds and other financial assets in very large quantities and they haven’t stopped since. In fact, as you will see below, global central banks are on pace to buy 3.6 trillion dollars worth of stocks and bonds this year alone. At this point, the Swiss National Bank owns more publicly-traded shares of Facebook than Mark Zuckerberg does, and the Bank of Japan is now a top-five owner in 81 different large Japanese firms. These global central banks are shamelessly pumping up global stock markets, but because they now have such vast holdings they could also cause a devastating global stock market crash simply by starting to sell off their portfolios.



Over the years I have often been asked about the “plunge protection team”, but the truth is that global central banks are the real “plunge protection team”. If stocks start surging higher on any particular day for seemingly no reason, it is probably the work of a central bank. Because they can inject billions of dollars into the markets whenever they want, that essentially allows them to “play god” and move the markets in any direction that they please.


But of course what they have done is essentially destroy the marketplace. A “free market” for stocks basically no longer exists because of all this central bank manipulation. I really like how Bruce Wilds made this point…
One indication of just how messed up and flawed the global markets have become is reflected in the way central banks across the world are now buying stocks. This has become a part of their response to correcting the forces of past excesses. Their incursion into this bastion of the free markets signals we have entered the era where true price discovery no longer exists. The central banks are often viewed as price-insensitive buyers, so this incestuous influx of money is in some ways the ultimate distortion.

According to Business Insider, global central banks are on pace to purchase an astounding 3.6 trillion dollars in stocks and bonds in 2017.

Overall, the five largest global central banks now collectively have 14.6 trillion dollars in assets on their balance sheets.



You can call this a lot of things, but it certainly isn’t free market capitalism.


The Swiss National Bank is one of the biggest offenders. During just the first three months of this year, it bought 17 billion dollars worth of U.S. stocks, and that brought the overall total that the Swiss National Bank is currently holding to more than $80 billion.


Have you ever wondered why shares of Apple just seem to keep going up and up and up?

Well, the Swiss National Bank bought almost 4 million shares of Apple during the months of January, February and March.

And as I mentioned above, the Swiss National Bank “now owns more publicly-traded shares in Facebook than Mark Zuckerberg”…

Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.

The tech giant’s founder and CEO has other ways to control his company: Zuckerberg holds most of his stake in a different class of stock. Nevertheless this example illustrates how the Swiss National Bank has become a multi-billion-dollar equity investor due to its campaign to hold down the Swiss franc.

It is now the world’s eighth-biggest public investor, data from the Official Monetary and Financial Institutions Forum show.

But as shameless as the Swiss National Bank has been, the Bank of Japan is even worse.

Today, the Nikkei is essentially a giant sham. The Bank of Japan regularly goes in and just starts buying up everything in sight, and according to Bloomberg they are on pace to become the largest shareholder in dozens of the most prominent Japanese corporations by the end of 2017…

Already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year, according to estimates compiled by Bloomberg from the central bank’s exchange-traded fund holdings.

If global central banks have the power to pump up these markets, they also have the power to crash them.
Why would they want to do such a thing?

I can answer that question with just two words…
Donald Trump.


If the Comey angle doesn’t work, the elite could try to destroy Trump by engineering an absolutely devastating stock market crash. Close to half the U.S. population dislikes Trump anyway, and so it would be fairly easy to get them to believe that Trump’s policies have caused a new financial crisis. Of course that would be complete nonsense, but in our society today the truth often doesn’t really matter.


And without a doubt, evidence continues to mount that the real economy is starting to slow down substantially. For example, we just learned that bankruptcies surged once again in May. The following comes from Wolf Richter…
So here we go again. Total US business bankruptcies in May rose 4.7% year-over-year to 3,572 filings, according to the American Bankruptcy Institute. That’s up 40% from May 2015 and up 10% from May 2014.

And there’s another concern: Bankruptcy filings are highly seasonal. They peak in tax season – March or April – and then fall off. The decline in April after the peak in March was within that seasonal pattern. Over the past years, filings dropped in May. But not this year.


Without unprecedented intervention by global central banks, financial markets would have crashed long ago.

And if they keep increasing their purchases of stocks and bonds, the central banks may be able to prop things up for a while longer.

Who knows? Perhaps with enough financial engineering they would be able to keep this bubble going for years.

Of course things would start to get really awkward once they eventually owned virtually everything, but I have a feeling that things will never get that far.

I have a feeling that global central banks will eventually find an excuse to start “unwinding their balance sheets”, and I have a feeling that it will be at a time that is highly inconvenient for President Trump.

https://www.forexfactory.com//dsms0m...ing-caring.png


COMMENTS FROM BENJAMINIS:

For myself when I first wake up and come to my computer and start to read my emails from overnight, when I come across information that best represents the reality of the day I read the article and since December 3, 2016 when I started this thread in advance of putting my material on my corporate website I post it here on my thread.

The article that you have just read perhaps is one of the most enlightening ones that I have read not that I was unaware of the information contained in the article however in light of the importance of today for many reasons the article is very much on topic.

This is what the topics are for today.

(1) The decision by the ECB led by Draghi.

(2) The hearings in the USA concerning James Comey and President Donald John Trump.

(3) The election in Great Britain today.

The results will surely whatever they are have major effects on the valuing of all the Asset Classes in the World.

Since all of us that have any interest in what is happening in our world have heard the term "FAKE NEWS"

Yes we surely live in a FAKE WORLD...

Here is the REALITY OF THE WORLD WE ALL LIVE IN TOGETHER.

When in human history have we had Central Banks of the World buy the Stock Market as this article by Michael Snyder explains FACTUALLY. This is NOT FAKE NEWS.

This clearly explains why MARKETS KEEP DEFYING GRAVITY and continue to go up. Is it any wonder that we have for the moment Winners and Losers ?

The answer is no however it actually is not only about Winners and Losers... It is about the FUTURE of your life.

It is about FOCUS. It is about PRIORITY. It is about HONESTY and INTEGRITY. It is about Human Nature.

So.... We who have any interest in what happens today are first waiting for FAKE NEWS from Draghi although what he has been doing in the name of Europe is REALITY and there is nothing FAKE about his actions. However his actions change REALITY for the time being and cause FALSE PERCEPTIONS to form because of the IGNORANCE out there for whatever reason. The 1% are surely NOT IGNORANT as they are the ones that BENEFIT FINANCIALLY.

Now I turn to the Congressional Hearing starting in the USA at 10:00 AM (Montreal Time) that again will have the Eyes of the World on them. Michael Snyder refers to this as the TRUMP FACTOR....

I will share my realistic opinion on the 45TH President of the USA , Donald John Trump.

I had correctly predicted that he would be elected because I could see what was involving since he first entered the election race as one of 17 Republicans candidates. His main ROLE has been as a DISRUPT-ER.

We can all see 100% however there is nothing that he has not changed. When I say CHANGED, I refer to the STATUS QUO...

Now I move ahead to 5:00 PM Eastern Standard Time or 10:00 PM in London England when we will have the first indications of who will win the Election in Great Britain today.

My closing COMMENTS will hopefully tie everything together for anyone that takes the time to read my Morning Thoughts and UNDERSTAND THEM.

The world started to change first with BREXIT..... That was the beginning of the 1% starting to lose CONTROL of their agenda and we saw the results which complete the circle with a NEW ELECTION on Thursday, June 8, 2017.
There is the hearings concerning the DISRUPT-ER and he has done that with all of the decisions made with his taking input from his family, friends and enemies of which he has many.

The WORLD IS TODAY UPSIDE DOWN and ALL US HUMANS will be shaken out of our cozy little world whether it is running a family business as one of my friends is doing in South Africa or living their lives perhaps AWARE yet just assuming that it will not affect them.

I will be watching and reacting and trading today until the North American Equity Markets close today at 4:00 PM.


Sincerely submitted Benjaminis has learned so much about himself and others and the world by faithfully posting on my thread since December 3, 2016 HOPEFULLY helping TEACH some of you how to improve your Forex Trading and much more importantly your lives.

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1. BenjaminIs
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PLEASE GO WITH THE MONEY FLOW

COMMENTS FROM BENJAMINIS: Let us review what we teach and why it works if YOU WORK.

Without your WORK then you are just wasting your time and probably your money.

There is no such thing as Political Correctness here because we are here to teach and share our knowledge ALL FOR FREE until May 31, 2017 and then if you have subscribed to this thread before May 31, 2017, then you will get a FREE LIFETIME PASS to our company website.

SO.... going back to our winning FORMULA for FOREX SUCCESS.

20% of the SUCCESS is yourself the Forex Trader.

20% of the SUCCESS is your EDGE which we teach you and that is Money Flow Trading.

20% of the SUCCESS is control of your RISK (Your hard earned money) Our UNIQUE RISK MANAGEMENT allows you to trade without worry, fear and greed. Of course we want to make sure that you have the right qualities to be a winning Forex Trader so our course is for a period of three months, so we can teach you the right trading methods and we can see your results and make adjustments without your FEAR OF LOSS of Real Money.


20% of the SUCCESS is using and understanding the USE of Technical Indicators which include not only the common ones. It includes the understanding of Supply and Demand. Support and Resistance and the use of Pivot Points which you can see each day on our daily charts that cover ALL our Trade Plans which we also help you develop and explain WHY. These are our Winning Trade Plans that we review every three months or earlier if circumstances in the markets require that.

20% of the SUCCESS is the FUNDAMENTALS, which are much more than Data Releases each day around the world. It includes reports and articles extremely well researched as you can clearly see from this article that explains why the TREND in the Equity Markets especially in North America is DOWN. By understanding the difference between PERCEPTIONS (MARKETS) and REALITY, you then have a good handle on REALITY before the MASSES do and you are not surprised when events eventually unfold.

In order to be able to help you better it is VERY IMPORTANT that you share your thoughts and your QUESTIONS here on our thread.


Benjaminis

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http://www.learntotradethemarket.com...hs-off-trading

What I Learned After Taking Three Months Off From Trading
By Nial Fuller in Forex Trading Articles |
http://bfbddad795fe6760de935eb7.lttt...dom.jpg?x13614This is an article inspired by a member and close friend of mine. He is someone who has been trading for over a decade and who has struggled with the ups and downs of trading, like so many other traders. Here’s a little background on him: He is a family man, recently unemployed and looking to be his own boss so he can spend more time with his family and have the lifestyle he’s always wanted. After recently losing his job, he was forced to stop trading live and so he went back to demo trading only. He called me up after about three months of demo trading to tell me what he had learned.


When I spoke with him, he recounted a truly inspiring revelation that he had after taking a few months off from live trading and switching back to demo. He told me that after nearly 16 years in the market and trying to ‘figure it out’, he finally had his “Ah Ha” moment where everything he had learned from me and from his own personal experience, finally came together.


I asked him if I could use his experiences to write an article for you guys, because I know many of you are still struggling and are waiting for everything to “click” with your trading. Hopefully, the insight you are about to learn from will help you have your own “Ah Ha” moment so you can finally get on the track to profitable trading…
(The story below is his, I have paraphrased him and edited it a bit, but this is his 1st person account…)
You don’t need to trade a lot to make a lot of money.


I had always been trying to make a lot of money on small accounts. I’d chuck 1k or 2k into a trading account and think I was going to make 100k a year from that by the end of the year. LOL. Looking back, that kind of thinking really does make me laugh.


Perhaps the most impactful lesson that I learned during my three-month absence from live trading, was that I didn’t need to trade a lot to make a lot of money. I was trading a 50K demo account during my absence, and I only took two trades during that time. One trade was buying the GBPUSD which netted me about 6k and the other was buying Gold, which netted me about 25k. So, I made $31,000 in about three months (10k a month) trading only 2 times. I had no losers, just two big winners. I don’t know about you, but I am pretty happy with making $31,000 in 3 months time, for doing virtually no actual ‘work’ other than using my brain.


Now, I don’t have $50,000 real money to trade with, unfortunately. But, that is OK, because I finally realized and experienced the FACT that you don’t have to trade a lot to make a lot of money! Where have you heard this before?! Probably from the same person I did … Nial Fuller.


How many articles have you read of Nial’s where he talks about low-frequency trading or that over-trading is the death of most traders’ accounts? There’s a reason for this, it’s very, very true! You don’t realize it when you’re caught up trying to make ‘a lot of money’ on a tiny account. You get caught up over-trading and forcing trades, rather than letting trades come to you.


Trading strategy and mastering it, matters, a lot.


During my three-month demo trading odyssey, I was primarily looking to trade pull backs, something Nial teaches and strongly emphasizes in his trading course, something I’ve learned from him primarily, yet I never really put into practice quite right.


The thing about pull backs, I finally realized, is that you basically have to buy a market when it’s down and sell a market when it’s up…both are very hard to do and counter-intuitive to do in the moment. It’s easy to understand but hard to put into motion.


When a market is moving higher, you feel like you want to buy it, and vice versa when it’s moving lower. The KEY is to look at the context of the chart; is the market simply retracing higher within a downtrend? If that is the case, then you should be looking to sell on that up-swing, even though you may not feel like you want to! Sell when a market is up and buy when it’s down.


Most of the time, you should be doing nothing in the market

It’s hard to not care or think about your trades on a real account, but on a demo account, you truly just don’t think about the trades as much, and most of the time, this works to your advantage in dramatic fashion.


I literally didn’t even look at my Gold trade until I was already up $19,000 dollars on it. Had that trade been real, I probably would have already sabotaged it and been out with a tiny profit or a loss by that point.


The point is, we need to detach from the markets more, especially after we enter trades.

Set the trade up, do your due diligence, make sure it meets your criteria and trading plan or strategy, set the stop loss (at least) and possibly target, and just forget about the damn thing for a few days at least! It took me YEARS, actually DECADES to be able to do this! Don’t let this be you!



Bottom-line is; Not looking at your trades once you enter them is probably the single greatest thing you can do to make money as a trader. We are swing trading, not day-trading. Remember that!


Bankroll matters.


In a recent article of Nial Fuller’s, he discussed some things he would say to his former trading self from his current trading self, having gained over a decade and a half of experience. One of the things that hit me the most was how he learned he needed his bankroll to survive in the markets. It seems obvious on the surface, but so many of us trade as if our bankroll doesn’t matter. Then, when a good trade finally comes along, we have little or no money left to take advantage of it.


This point was driven home for me during my three months of demo trading. First off, having a 50k account to start with certainly made things easier, as far as keeping my bankroll intact. That said, I also realized that even though I had 50k to trade with, I could simply crank up the risk if I wanted to, and potentially lose a lot of money very fast.

So, yes, account size has advantages, but if you don’t know how to preserve your trading capital, the size of your account is irrelevant. Therefore, Nial is always saying that if you can trade successfully on a small account you can do it on a big account too. So, don’t worry if you have a small account and can’t trade the size you want; work on the mechanics, on the process and then you will be able to use that same approach as your account grows or if you find an investor.


Don’t be in a trade just to be in a trade.

This was a lesson that really hit me after switching back to demo trading for a few months. It was apparent that much of my struggles with live trading were because I simply felt an urge to be in the market nearly all the time.

It was almost like a guilty pleasure; something I knew was wrong but it felt good so I did it anyways. Of course, it felt good until I lost money, which is the inevitable outcome of most trades taken for this reason.


After my demo trading success, I realized that I only had taken a handful of trades over three months, and those trades led to large gains. So, not only was I trading far less, I also made far more money, there is indeed a connection and I believe in this case correlation does indicate causation!


Patience is what makes you money, but patience is not easy.


Being patient while trading a demo account seems to be far easier than being patient on a live account. This is typically because when you’re trading demo you simply ‘don’t care’ as much as when you’re trading live, since there’s no real money on the line. When people go from a big 50k demo account to a small real account, they feel an urge to build up that real account fast, so they can trade the big size they were on the 50k demo. But, this simply leads them to over-trade and over-leverage and blow out their accounts. For this reason, it’s probably a good idea to open your demo account with the same amount of money or close to the same as what you will trade with live.


Failure eventually became success
Finally, after many years of failing as a trader, I realized that the reasons I was failing were things I had the ability to fix. Here is how I fixed it:

 

1. I wrote down in detail, everything I was doing differently as I traded my demo account. This included how I was feeling as I analyzed the market each day, how I felt as I set up a trade, how I felt as I did nothing and let the trade play out, the actual setups I took and how I managed them, etc. This was basically a trading journal, and I suggest every trader creates one. It doesn’t have to be anything fancy, so don’t over-think it. You can just record your thoughts in a Word document or even write them in a notebook. Just make a record or journal of your trades and your thoughts and feelings each day as you interact with the market in any way, shape or form.
2. I stopped being in a rush to make money. My demo trading success made me realize that the underlying issue behind why I was losing on my real account and why most traders lose, is simply due to being in a rush to make money. Trading is so difficult because psychologically, the more you want and try to make money from the market, the less likely you are to do so. People do well on demo accounts because their brain and the hormones it produces lead to the type of interaction and behavior in the market that results in profits. On live accounts, it’s typically the opposite. The reason why is because on a live account, people are in rush to make money, whilst on a demo account, they are just thinking of it as a ‘game’, since there’s no money involved.
3. So, really, if I could sum up what I learned from my success on a demo account for 3 months, it’s to simply treat your live trading account as if it’s game, and you are playing to win the game, not to make money! Making money is simply a byproduct of playing the game well enough to win.

I could not have done any of this nor would I have had these dramatic realizations had I not started studying the trading ideas and philosophies taught by Nial Fuller on his blog and in his courses. I know that probably sounds cliché to some of you, but it’s true.

The main ideas Nial teaches sound simple and effective, and they truly are, but it is our own flaws and emotional miscues that make them so hard to follow. If you are having trouble with your live account, I would suggest going back to a practice account and start studying Nial’s teachings, until you finally have your own “Ah Ha” moment.


PLEASE LEAVE A COMMENT BELOW – I WOULD LIKE TO HEAR YOUR FEEDBACK
QUESTIONS ? – CONTACT ME HERE

COMMENTS FROM BENJAMINIS: This is not my course however Nial is one of the best Forex traders and teacher's and since this promotion that I link here does have similarity's with what I teach over 3 months using a $50,000 US Funds Demo Trading Account...

MY SHOUT OUT just posted...

BenjaminIs
Hello Everyone - On The Last Two Pages Of My Thread, I have UPDATED what I Teach. If You Want A FREE Lifetime Subscription to our Corporate Website PLEASE Subscribe to my Thread and I will PM you the URL. Thank You. Benjaminis

Hi, BenjaminIs I'm glad that you have opened your site as success?

Thank You wayfarer

Take care and be well.


Benjaminis

EVERYONE SHOULD WATCH THIS...

http://www.marketwatch.com/story/wal...teid=rss&rss=1

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

"Why Does Extraordinarily Low Volatility Matter" Baupost Explains...
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Jul 30, 2017 5:00 PM



With elites increasingly sounding the alarm about the state of the stock market, and various market participants fearing the complacency is masking the fragility of the market's true character; it is no surprise that Baupost's recently named President and Head of Public Investments, Jim Mooney, has joined the chorus.
http://www.zerohedge.com/sites/defau...5_elites_0.jpg
While Mooney (and Klarman's) warning regarding market volatility is not new, perhaps the most interesting nuance is the 'difference this time'.


Confirming JPMorgan's Marko Kolanovic's concern that "we may be very close to a tipping point" as he explained that "low volatility would not be a problem if not for strategies that increase leverage when volatility declines," Baupost's Mooney explains that crucial market structure differences between current times and the 2008 market crash could lead to an exacerbation of any stock market price readjustment.


A Period of Subdued Volatility
"Stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits." — Hyman Minsky


...Realized (actual) and implied (anticipated) volatilities hover near their lowest levels ever. The most commonly referenced measure of equity market implied volatility, the VIX has traded at an average of 11 since late April. To put this level in context, since 1990 when the VIX was first created, the index has closed below 10 on only 16 days; seven of those days have been since May 1, 2017. The average closing of the VIX between 1990 and 2016 was about 20 versus a 2017 year-to-date average of roughly 12. Similarly, realized SPX 500 volatility has fallen, with the one and six month levels both at seven. ON these measures, 2017 is the least volatile year since 1965.


Not surprisingly, there is a fair bit of commentary attempting to justify today's historically low levels. The most prominent explanation is that the low realized volatility, which results when asset prices march steadily upward with very few interruptions, naturally causes quantitative models to predict a continuation of subdued volatility, i.e. low implied volatility. Some suggest that dampened market fluctuations result from the consistent bid for equities provided by capital flows into passively managed index finds. Many cite limited realized volatility in underlying U.S> and global economic measures such as economic growth and inflation and conclude we are in a new era of stability. Finally, there is the abiding view that central banks will reliably deploy accommodative monetary policy to arrest any downward market moves.


These explanations almost certainly contain elements of truth, but it is hard not to see a bit of sophistry as well. While there may be a mathematical answer for why volatility is low when nearly every financial asset trades at all-time highs, common sense might suggest the opposite conclusion.

Why does extraordinarily low volatility matter?

The answer lies in volatility influence on risk-taking and, by extension, leverage. In any elevated market, one very important thing to identify is where leverage exists in the system — both that which is obvious and more perniciously, that which is hidden. While leverage is not directly responsible for every financial disaster, it usually can be found near the scene of the crime. Structural leverage linked to low realized volatility may well prove destabilizing and the precipitant, or at least an accelerant, for the next financial crisis. Realized volatility is a critical reference point for a substantial amount of investment activity. For many investors, the level of market volatility determines the level of risk incurred both in their portfolios as well as in many investment products. The lower the volatility, the more risk investors are willing to or, in some cases, required to incur.


http://www.zerohedge.com/sites/defau...ms%20vix11.jpg
Specifically, realized volatility is the essential input for Value-at-Risk (VaR) calculations, and determines the degree of leverage incorporated in a variety of quantitative and structured investment strategies.

For instance, the models used by both risk parity and volatility targeting funds, which use volatility levels to determine asset allocations, have been signalling "risk-on" for some time. This has resulted in steadily increased portfolio leverage as realized volatility has fallen across asset classes. Additionally, certain structured short-volatility ETFs have algorithm-based selling and buying programs that automatically lever up and, critically,d own based on realized volatility.

Over the last several years, one of the most reliable winning betes has been shorting volatility in just about any asset class.Investors have generated significant returns with high Sharpe ratios by capturing the spread between higher implied volatility and lower realized volatility. As realized volatility has remained low, profits have mounted and assets deployed in these volatility-targeting and short-volatility trades have grown tremendously. However, it is hard to ignore that this strategy becomes less and less attractive as the absolute level of volatility declines and the spread between implied and realized volatility falls. As the saying goes, "what a wise man does in the beginning, a fool does in the end "


Although it is impossible to calculate with precision, the volume of assets whose performance is, in some manner, linked to volatility likely runs into the hundreds of billions of dollars. As such, any spike in equity markets realized volatility, even to historical average levels, as the potential to drive a significant amount of equity selling (much of it automated). Such selling would, in turn, further incresae volatility which would call for more de-leveraging and yet more selling.


We cannot know whether a dramatic increase in volatility is imminent or even inevitable, nor can we be certain that a spike in volatility would have cataclysmic results...although it certainly could. One thing, however, is for sure: anyone who is directly or indirectly shorting volatility at the current lows is betting current benign environment will persist. Our experience would suggest that, "benign" and "persist" are not words normally associated with one another.


In addition to our areas of regular focus, we have exposure to hedges designed to help protect the portfolio from a sustained change in the volatility environment.


Mooney concludes, rather ominously...
"As has been the case for longer than we would have imagined, we remain in a market that is broadly expensive and largely indifferent to risk.

This continues to be a time for patience and, above all, caution. If there is anything to be taken from Hyman Minksy's words, it is that no one should be lulled into a false sense of comfort by the illusion of stability which surrounds us... We most assurdely, are not"


And if one wants a picture of what that looks like, Morgan Stanley recently explained...A violent rise in volatility could be driven by just a 3% to 4% one-day S&P 500 selloff. Right now the risk is greatest in the VIX complex, and demand for VIX futures from three main sources could result in 100,000 contracts ($100mm vega) to buy in a down 3.5% SPX move. For context VIX futures ADV over the last year is 230,000 (although has risen to as high as 700,000 in big selloffs).
http://www.zerohedge.com/sites/defau.../ms%20vix1.jpg

1. Morgan Stanley
2. Volatility

http://traderfeed.blogspot.ca/2017/0...ining-our.html

SUNDAY, JULY 30, 2017
Renewing Our Trading And Regaining Our Passion
https://1.bp.blogspot.com/-OK_HxwRTo.../Pessimist.jpg
One of the most striking differences among traders I have encountered is their grounding in a problem-based mindset versus an opportunity-based mindset. The problem-focused trader is chronically frustrated, battling one challenge after another. The opportunity-focused trader is inspired, finding meaning and direction in setbacks. It's easy to become problem-focused when losing money and it's easy to perceive opportunity when things are going well. The successful traders I've known look for problems when things are going well, because they are always looking for opportunities to improve. They are also looking for what is going well during periods of drawdown, because that is where opportunities may be showing up.

In a recent article, I outline why I believe we could be on the cusp of important market opportunities. Yes, it's been a challenging period for traders in terms of low-volatility market behavior and erratic trends. But, as I outline in the article, there *are* strategies and approaches that are working; I *do* see people succeeding. There is opportunity in current difficulty.

What has kept me alive in markets since the late 1970s, besides risk management, has been research. Every week I update my database, explore ideas, and test out strategies. Easily 80% of what I look at is either worthless or duplicates what I already have. Another 10% is promising but ultimately has limited value. It's that final 10% that opens new doors and yields fresh opportunity. I could become discouraged about the 90% of research that never finds its way into my trading, or I could be energized by the 10% that moves me forward.

If I were not innovating, what would keep me interested, driven, optimistic, and energized during periods of drawdown? Too often, we are mired in problem-based mindsets because our focus is solely on P/L. So our focus and passion rises and falls with our equity curves. When we approach markets with intellectual curiosity and a love of sharing ideas with like-minded colleagues, we create whole new sources of motivation.

Trading was fun when it was new. The challenge is keeping ourselves re-newed.
Further Reading: Why Trading Has A Future
.

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

John Mauldin has often written about the Fed's abysmal track record in managing the economy. Here Lacy Hunt and Van Hoisington of Hoisington Investment Management explain the reasons for the Fed's consistently poor track record.


They start by considering the Fed’s “dual mandate,” which sets “the goals of maximum employment, stable prices and moderate long-term interest rates.” (And yes, that is actually three goals, not two.)

But a problem arises, the authors note, “because considerable time elapses between the implementation of the monetary actions designed to follow the mandate and when the impact of those actions take effect on broader business conditions.”

The time lag can easily be three years or longer, with the result that policy changes often end up being pro-rather than countercyclical.

To make matters even worse, “the economic risks from adherence to this dual mandate are now much greater than historically due to the economy’s extreme over-indebtedness, poor demographics and a fragile global economy.”
Hoisington Quarterly Review and Outlook, Second Quarter 2017


By Dr. Lacy Hunt and Van Hoisington
The Fed’s Dual Mandate
“Dual mandate” is one of the most commonly used phrases in U.S. central banking. The current Chair of the Federal Reserve often mentions it in both speeches and testimony to Congress. Not surprisingly, this is an extremely hot topic in monetary economics, and execution of this mandate has profound significance.

The mandate originated in The Federal Reserve Reform Act of 1977. This legislation identified “the goals of maximum employment, stable prices and moderate long-term interest rates.” Ironically, these goals have come to be known as the Fed’s “dual mandate”, even though there are actually three goals. The manner in which the Fed operates in following these goals has had and will have dramatic effects on economic activity. In this report we consider:

1. What is the causal link between the mandate and the Fed’s capacity to act in a counter-cyclical fashion?
2. How has the dual mandate morphed into the Phillips Curve?
3. What are the arguments for and against a Phillips Curve based approach for conducting monetary policy?
4. What does empirical research reveal?

In view of the extreme over-indebtedness and other adverse initial conditions, what are the immediate consequences of using a Phillips Curve based dual mandate for the economy, the Fed and fixed income investors?


Causality
To achieve the goals of this mandate (maximum employment, stable prices and moderate long-term rates), the Fed will inevitably tighten for too long and by too much. This occurs because considerable time elapses between the implementation of the monetary actions designed to follow the mandate and when the impact of those actions take effect on broader business conditions. By waiting to recognize a definitive change in inflation and unemployment, monetary policy changes will be pro-, not counter-cyclical. The time difference between leading or causative measures like the money and reserve aggregates, on the one hand, and the economically lagging series of the unemployment rate and inflation, on the other hand, can easily be three years or longer.

This difference between the actions of the Fed and the reactions within the economy explains why the Fed historically has not begun easing cycles until the economy was either in, or on the cusp of, a recession. When the Fed takes action, relief is painfully slow in arriving. Importantly, the economic risks from adherence to this dual mandate are now much greater than historically due to the economy’s extreme over-indebtedness, poor demographics and a fragile global economy.

To demonstrate, suppose that in the fourth quarter of this year, unemployment turns significantly higher while the inflation rate decelerates from its already subdued pace. The downturn that the Fed would be witnessing in the fourth quarter could be reflecting policy actions all the way back to the fourth quarter of 2015 when they initiated the current tightening cycle. This cumulative evidence is reflected in the monetary and credit aggregates (Charts 1 and 2). This change in economic fortunes might cause the Fed to accelerate the rate of growth in the monetary base and lower the policy rate in order to stimulate money and credit growth. However, the monetary and credit aggregates might not respond to these first steps until 2019 or even 2020, thus putting the Fed three years or more out of sync with the needs of the economy, suggesting a prolonged period of severe underperformance.
http://ggc-mauldin-images.s3.amazona...PFedimage1.jpg
http://ggc-mauldin-images.s3.amazona...PFedimage2.jpg

Being out of step with the goals of a counter-cyclical monetary policy will arise as long as the Fed keys its decision-making on unemployment and inflation, rather than on maintaining financial stability, which focuses on the reserve, monetary and credit aggregates. Achieving such stability, however, is now much more difficult for the Fed than in the past. Until the economy became so heavily indebted, M2 was a consistent leading economic variable. Now M2 only leads recessions. Until the debt overhang is corrected (which does not appear to be in the immediate future), the velocity of money is likely to continue declining. Thus, when the Fed eases in the future, the strong leading relationship between M2 and the economy will no longer prevail.


There have always been lags between the time of a policy shift and evidence of that shift in the broader economy. However, in a heavily indebted economy, with the velocity of money likely falling further, and policy rates close to the zero bound, the Fed’s current capabilities are decidedly asymmetric. Any easing actions taken now would be far less powerful than the steps taken in the prior tightening cycle. Thus, by keying off the dual mandate in an economy with a severe debt overhang, the Fed would be more disadvantaged than normal in trying to come to the quick aid of a faltering economy.


From the Dual Mandate to the Phillips Curve
The Federal Reserve Reform Act of 1977 does not spell out the nature of the trade-off between the unemployment rate and the inflation rate, nor does it say how the Fed should act if the mandates are at odds in terms of the policy approach.
The potential problems that arise from this lack of clarity are clearly illustrated by the current situation. The Fed has extended the current tightening cycle twice this year, with the latest move on June 14. At the time of the latest decision, headline and core CPI had year-to-date price increases of 1% and 1.3%, respectively, substantially below their 2% target. Additionally, the latest twelve-month increases in both of these inflation gauges were below the 2% target. Only the unemployment rate warranted more restraint. This means that inflation and unemployment are at odds, thus the dual mandate is dead. It now boils down to the Fed’s interpretation of the Phillips Curve.


The most definitive study of the Fed’s operations is widely considered to be the multi-volume series, A History of the Federal Reserve written by the late Carnegie Mellon economist Alan Meltzer (1928-2017). Volume I examines the span from the creation of the Fed in 1913 until the accord with the Treasury in 1951. Volume II, Book 1 covers the years from the accord in 1951 until 1969, while Volume II, Book 2 discusses the period from 1970 until the end of the great inflation period in the mid-1980s. In this scholarly historical examination, Meltzer, on the basis of price and financial stability, gave the Fed high marks in only one-fourth of its years of operation. Meltzer made many seminal contributions to economics, including identifying the algebraic determinants of the money multiplier and outlining the transmission of monetary policy actions to the real economy.


In his 2014 paper, “Recent Major Fed Errors and Better Alternatives,” Meltzer summarized the root cause of the Fed’s policy errors and long record of failed forecasts as follows: “The Fed’s error was to rely on less reliable models like the Phillips Curve ... that ignore or severely limit the role of money, credit, and relative prices.” By focusing on the Phillips Curve, Meltzer contends that the Federal Open Market Committee (FOMC) overemphasizes information in monthly and quarterly data periods while giving insufficient attention to persistent trends in money and credit, which are the very aggregates that the Fed supplies. To paraphrase Meltzer, by relying on the Phillips Curve, the FOMC avoids developing a strategic view of their role and the complex world in which they operate. As the massive credit buildup leading up to 2007 illustrates, the Phillips Curve mandate also diverts the Fed’s attention from important regulatory matters that can have extremely consequential and long lasting macro implications.


The key passage that Meltzer writes to describe the inadequacies of the Phillips Curve/ dual mandate within the Fed is as follows:
No less an authority than Paul Volcker explained publicly and to the staff that the Phillips Curve was unreliable and not useful. As Chair, he gave many talks about what I have called the anti-Phillips Curve. Volcker claimed repeatedly that the best way to reduce unemployment was to reduce expected inflation. He did not use Phillips Curve forecasts. He ran a very successful policy. Alan Greenspan was less outspoken, but he also rejected Phillips Curve forecasts as unreliable. Instead of finding a better model, the staff resumed use of Phillips Curve forecasts. They were again unreliable as should be evident from the repeated prediction errors ... Year after year, growth and employment are below forecast. One might hope that repeated forecast errors all in the same direction would raise doubts about the usefulness of the model or models and initiate search for a better model. This does not appear to have happened.


In the three years since this prophetic passage, the string of unbroken economic forecasts continued unabated.

https://en.wikipedia.org/wiki/Allan_H._Meltzer

The Phillips Curve
The Phillips Curve represents the relationship between the rate of wage inflation and the unemployment rate. In a 1958 study, New Zealand economist A. W. H. (Bill) Phillips (1914-1975) found an inverse relationship between wage inflation and the unemployment rate in the United Kingdom from 1861 to 1957. A high unemployment rate correlated with slowly increasing wages, while a lower unemployment rate correlated with rapidly rising wages.

According to Phillips, the reasoning for this finding was that the lower the unemployment rate, the tighter the labor market, thus firms would raise wages to attract scarce workers. Conversely, at higher rates of unemployment the pressure on wages abated. Thus, this curve attempts to capture a cyclical process that can be used for evaluating the business cycle. This curve presumes the average relationship between wage demands and the unemployment rate is stable, thus there is a rate of wage inflation that results if a particular level of unemployment persists over time. As time has passed, Phillips Curve proponents have also asserted that a stable relationship exists between the unemployment rate and the overall rate of inflation, not just that for wages. The original Phillips Curve shows a downward sloping line on a graph, with wage inflation on the vertical axis and the unemployment rate on the horizontal axis.


In a 1967 peer-reviewed paper, Edmund Phelps challenged the theoretical structure of the Philips Curve. Independently of Phelps, Milton Friedman (1912-2006) in his Presidential address to the American Economic Association in 1967 (published in 1968) came to similar conclusions. They reasoned that well-informed rational employers and workers would pay attention only to real wages (i.e. the inflation adjusted level of wages). In the view of Friedman and Phelps, real wages would adjust to make the supply of labor equal to the demand for labor, and the unemployment rate would then stand at a level uniquely associated with the real wage rate. In time this uniquely associated real wage rate has come to be called the “natural rate of unemployment.”


Friedman and Phelps argued that the government could not permanently trade higher inflation for lower unemployment. When the natural rate of unemployment prevails, the real wage is constant. Workers who expect a given rate of inflation insist that wages increase at the same rate to prevent the erosion of their purchasing power.


Consistent with Friedman and Phelps, consider the effects of a monetary policy designed to expand economic activity in an attempt to lower the unemployment rate below its natural rate. The resulting increase in demand (pricing power) encourages firms to raise prices faster than workers anticipate. With higher revenues, firms are willing to employ more workers at the old wage rates and in some cases are willing to somewhat boost them. With rising wages, workers willingly supply more labor, which leads to a drop in the unemployment rate. Initially, they do not realize that their purchasing power has eroded since prices have advanced more rapidly than expected. In this initial period workers suffer from what is known as a “money illusion” – the rise in nominal wages is not equal to the rise in real wages. As workers come to anticipate higher rates of price inflation over time, they see through the money illusion, and less labor is supplied and demanded. The real wage is restored to its old level, and the unemployment rate returns to its natural rate. Today, the opposite case is present. Monetary restraint is limiting demand and eroding pricing power, causing employers to restrain wages. Once workers realize this restraint is not a cut in real wages, they will continue to supply the same amount of labor. The Phillips Curve trade-off does not exist in either of the two alternative situations.


Phelps and Friedman also distinguish between these effects over the “short run” and the “long run”. Phillips Curves only prevail so long as the average rate of wage inflation remains fairly constant. Only in such a limited time frame will wage inflation and unemployment be significantly inversely related. Once the higher inflation is fully incorporated into expectations, unemployment returns to the natural rate, with the result that the natural rate of unemployment is compatible with any rate of inflation. These long and short run relationships can be combined in an “expectations augmented” Phillips Curve. The quicker workers adjust price expectations to changes in the actual rate of inflation, the quicker the unemployment rate will return to the natural rate and the less successful the government will be in reducing unemployment through monetary and fiscal policies. The expectations augmented Phillips Curve approach is used in and appears to play a major role in the Federal Reserve’s large-scale econometric model.



Empirical Evidence
We examined the relationship between percent changes in real average hourly earnings and the unemployment rate from 1965 through 2016 – the entire historical record for wages. This sample is comprised of over 600 monthly observations (Chart 3). The trendline fitted through the observations does have a slightly negative tilt, but the line is not statistically different from a straight horizontal line, which signifies a total lack of responsiveness of real wage changes to the unemployment rate. The adjusted R2 is 0.04, which is not statistically significant. Thus, our empirical findings are consistent with the causality outlined – that the Phillips Curve assumption is not valid. Cherry picking through the data points can identify limited time periods when a greater inverse relationship exists between wage increases and the unemployment rate. As many researchers have pointed out this was true of the 1960s. From the first half to the second half of the 1960s, nonfarm business sector compensation per hour (a widely followed measure of labor compensation) increased from 3.6% per annum to 5.9% as the unemployment rate fell from 5.7% to 3.8%. The critical point is that these individual episodes of an apparent Phillips Curve trade-off are too weak and too infrequent to establish an enduring relationship over time.
http://ggc-mauldin-images.s3.amazona...PFedimage3.jpg
The adherents to the Phillips Curve do not accept these various empirical criticisms. For many decades, they insist that the poor results are due to the fact that the basic relationship has not been properly quantified. They point to the problems capturing leads and lags between the unemployment rate and wage changes as well as difficulties that arise from measuring expectations and working with aggregate data. For followers of the Phillips Curve, it is just a matter of time before these issues of statistical quantification are resolved.
These arguments are not compelling, yet they have been used repeatedly for at least a half a century. As the years have passed, the constantly restated Phillips Curve formulations have regularly missed major business cycle developments, a pattern which has been evident in the Fed’s record. The Fed presided over the worst U.S. peacetime inflation from 1977 to 1981, and tightened before all of the recessions after 1977. The Fed did contain the Panic of 2008 with excellent lender of last resort tools, but a far better result might have been achieved if the Fed had learned the lesson of the 1920s and prevented the massive buildup of debt prior to 2008 that the regulatory powers of the Fed were designed to prevent.


For most of the past eight years, the frequently restated Phillips Curve models have pointed to a sustained acceleration in wage and price inflation that has failed to materialize. These failures not only impair monetary policy but also portfolio decisions based on the presumed efficacy of the Phillips Curve and the reliability of the dual mandate. Based on the slowdown in the monetary and credit aggregates, and the continuing fall in the velocity of money, the rate of inflation is more likely to moderate rather than accelerate, even as the unemployment rate in May 2017 stood at a sixteen year low. Thus, inflation, on average, moved lower during this current expansion, contradicting the forecasts for higher inflation based on the Phillips Curve concept. the velocity of money, the rate of inflation is more likely to moderate rather than accelerate, even as the unemployment rate in May 2017 stood at a sixteen year low. Thus, inflation, on average, moved lower during this current expansion, contradicting the forecasts for higher inflation based on the Phillips Curve concept.


Implications
For the Fed, the more advisable approach would be to pull the Phillips Curve relationships from their model and their policy decisions. Instead, they should rely on capturing the strategic role of the monetary transmission mechanism and its potentiality for moving through the reserve, monetary and credit aggregates in a highly leveraged economy. If the Phillips Curve proponents are right, and the quantification efforts are eventually proved to be valid, then at that point they can be inserted into the Fed’s model as well as into their subjective decision-making process.

This is relevant to investors as well. If adherence to the dual mandate induces financial insatiability, then investor performance, like overall economic activity, will be directly influenced. If the Fed’s mandate consistently leads them in the wrong direction, then long-term investors may often be forced to construct portfolios that are contradictory to the error-prone words, forecasts and policy actions of the FOMC. Moreover, investors should expect that the Fed’s actions will create substantially more volatility in the financial markets and particularly so over the short-term. Operating with strategic views and multi-year trends, rather than trying to focus on the Fed-generated noise in many monthly and quarterly indicators, may be a preferred method of generating investor returns.

Our economic view for 2017 is unchanged and continues to suggest that long-term Treasury bond yields will work irregularly lower. The latest trends in the reserve, monetary and credit aggregates along with the velocity of money point to 2% nominal GDP growth for the full year, down from 3% in 2016. This would be the third consecutive year of decelerating nominal GDP growth and the lowest since the Great Recession. This suggests that the secular low in bond yields remains well in the future.

Gold And Silver – Value Remains Irrelevant To Price
Commodities / Gold and Silver 2017 Jul 30, 2017 - 01:56 PM GMT
By: Michael_Noonan
http://www.marketoracle.co.uk/images/gold_star.gif
Value is subjective, reflective of one’s feelings or opinions. In the minds of those who value gold, throughout the ages and around the world, this precious metal is deemed to have an intrinsic value superior to most other assets. The well-used adjective, intrinsic, is also subjective, construed as essential, belonging naturally in its association with gold. In the end, "intrinsic value" is elusive, a figment of one’s mind.


There are many, and we fall in this camp, who associate gold with an inherent preservation of wealth. This has been true throughout history but with intervening failures during some time frames. Failure may not be the most apt expression, but many detractors are happy to point out those times when gold did not retain its status as a wealth preserver, and in fact, losses were on the table for many who paid a price higher than for what their gold was sold. It happens. The net result of gold being a wealth preserver holds true, but with periodic, and some times substantial, yet temporary, reversals. This time will be no different.


Price is objective, not dependent upon one’s feelings or opinions for price is an actual number. The subjective value of gold is somewhat intertwined with the objective price of gold through the natural laws of Supply and Demand.

The latter are a function of what is available [Demand], in relation to the desire to have what exists [Supply], The desire to acquire can be greater or less than what is available, and that is what eventually determines price.

The natural laws of Supply and Demand have been usurped by the elites in their fervent determination to have a One World Order where the globalists are in charge of everyone and everything. The United Nations is the political arm of the globalists, while the Bank for International Settlements [BIS] and the International Monetary Fund [IMF] are the controlling financial entities used to dominate sovereign countries, dictating policies and controlling [enslaving through debt] the masses.

The globalists have been manipulating the price of gold since the formation of the US Federal Reserve in 1913. The formation of the Bretton Woods System, established in 1944, which is also when the IMF was created, led to an international basis for exchanging the currency of one country for any other, and the closing of the gold window by Nixon in 1971 were pivotal events that led up to massive and ongoing manipulation of gold by the central bankers of the world.

The run-up in the price for both gold and silver in 2011 was a precursor of the actual demand for the physical metals. They represent sound money, and the globalists would not tolerate any competition for their paper fiat Ponzi scheme of creating money out of thin air and demanding interest for the "privilege" of its use. This is the primary reason why both gold and silver have been "beaten down," as it were, to current levels over the past 6 to 7 years.

Drive down the price of both metals and tire out the public from any desire to own a declining "price" asset. This has been the ongoing objective of the globalists in order to corral everyone into their digital web of financial control from which there will be no escape. There is a similar Ponzi scheme going on in the stock market which continues to defy the laws of Supply and Demand, and gravity, as well.


The globalists have destroyed the middle class and elderly savers by driving interest rates to zero, and negative in some parts of the world. With no way to earn a return on one’s savings, people have been forced into paper stocks, around the world, chasing some kind of return on their money assets [while exposing themselves to tremendous loss of capital when the markets go south with "unexpected" impunity.] The unexpected part is only for those who fail to use business and financial sense, aka lemmings.


Debt around the world is in the trillions and has never been higher at any time in history. Even worse, financial derivatives is 10 to 100 times greater [owned by financial banks, for the most part], with no hope of ever being able to control them once market reverse to the downside. The globalists have created so much debt to save the totally bankrupt banking system.


Financial Armageddon is waiting in the wings. At some point, it will be unable to be controlled and financial disaster will prevail around the world. At that point, the price of gold will no longer be in control, and it will become subservient to the value of both gold and silver. The question all have been asking, especially those owning and holding either or both gold and silver, is when will price begin to reflect reality?


Reality, as most sane people would define it, does not exist while the globalists are financially in charge, and in charge they are. The war on cash is another example of how the bankers are preparing to financially fleece as many people as possible. Control over how much of their own money one can withdraw from a bank has been in place for several years, now. The destruction of the "dollar" [and the United States], continues unabated. All of the signs are there.


Who will survive? One group will be the owners of physical gold and silver. Of course, they will be subject to confiscation, theft, and government control, among others. That will be a small price to pay for having preserved, and more than likely greatly enhanced the value of their holdings. Trade and barter have always existed, and the demand for concrete, as opposed to paper or digital [non]- "assets" ensure value will prevail.


When will that process begin? [That never-ending question that has no viable answer.]


It will not happen one day sooner than when it begins, and that is not as nonsensical as it may seem. Many holders of the physical may feel like the Greek mythological Sisyphus for the past several years. Unfortunately, the duration of globalist control does not appear to be ending any time soon. How do we know at least that?

“Low Inflation” In Not “Good” – It’s Pure Propaganda

July 26, 2017Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. EconomyFed funds rate, FOMC meeting, low inflation, Yellen


Analysts who advocate a monetary policy that targets “low inflation” are the equivalent of chickens in the barnyard rooting for Colonel Sanders to succeed. This idea that a low level of inflation being good for the economy is beyond moronic.

The fiat currency money system era was accompanied by the erroneous notion that a general increase in the price of goods and services is “inflation.” But technically this definition is wrong. “Inflation” is the “decline in the purchasing power of currency.” This decline occurs from actions that devalue a currency. Rising prices are the visible evidence of ongoing currency devaluation.

Currency devaluation occurs when the rate of growth in a country’s money supply exceeds the rate of growth in real wealth output. Simply stated, it’s when the amount of money created exceeds the amount of “widgets” created, where “widgets” is the real wealth output of an economic system.

In ancient Rome, the currency devaluation occurred when the Roman Government began to “shave” gold and silver coins which enabled it to increase the amount of coins produced from mined gold and silver in order to finance Government spending. When spending continued to exceed the amount of currency produced, the Government increased the money supply by diluting gold and silver coins with cheaper and more abundant metallic additives.

In the United States currently, currency devaluation occurs through both money printing, which has been cleverly disguised for propaganda purposes as “quantitative easing,” and by the continuous growth in credit creation. Debt issued behaves exactly the same as printed currency until that time at which the debt is repaid, not by more debt issued, but from money that has been accumulated by the debtor in order to repay and retire the debt.

The U.S. Government has not reduced the amount of debt issued for decades. Apologists will look at the Treasuries outstanding chart on the Fed’s website and argue that the debt level declined ever so slightly in the late 1990’s. But this was achieved through accounting gimmicks, not an outright reduction in Federal debt outstanding.

Notwithstanding this, the total level of debt in the U.S. system has been continuously increasing for many decades. While it’s argued that this is debt and not money supply, it is a fact that debt issued spends just like printed money until the debt is repaid and retired. Thus, currency devaluation has been occurring in the United States on a continuous basis since at least 1913 (founding of the Fed).
Back to the erroneous idea that “low inflation is desirable.” I defy anyone to research this and present a rational explanation that has ever been offered. The best I could come up with is “low inflation is good for the economy.” That is unadulterated ignorance. That phrase means that “it is good for the Government to devalue the currency.” Why is it “good” for a consumer to pay higher prices, i.e. more money for goods and services on an ongoing basis?

Inflation, where “inflation” means the true definition, is a subtle mechanism by which the elitists redistribute wealth. Printing money benefits those who are closest to the money faucet to the detriment of those who are “downstream” from the flow of new money supply (or credit created). The banks are always first in line at the money faucet. The Federal Reserve was erected for that purpose. The creators of the Fed were all owners of the biggest banks in the U.S. at the time plus the political puppets of those owners. Go look up the roster of men who founded the Fed for yourself if you don’t believe me.

After the banks, the Government is next in line. And after that all of the companies that benefit from Government largess. Inflation, even “low inflation” is not beneficial to anyone other than those who are in a position to take advantage of the currency devaluation mechanism. Period. Anyone who tries to argue that “low inflation is good” and that a low inflation target should be a primary goal of the Fed’s monetary policy is either someone who is in position to benefit from that policy (banks, politicians, big corporations etc) or is tragically stupid.

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

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https://mishtalk.com/2017/08/01/comm...still-ongoing/

https://dailyreckoning.com/currency-...y+Reckoning%29

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BY BRIAN MAHER

POSTED

JULY 31, 2017

Currency Wars, Trade Wars... and Shooting Wars

Jim Rickards was a keynote speaker at the Sprott Natural Resource Symposium, concluded Friday.


Taking his presentation, we can understand why Jim was voted outstanding speaker at last year’s conference.


He had hundreds of people hanging on his every word Friday morning, all on edges of seats.


But they weren’t enthralled because Jim knows how to work a room.


No, it was his material that enthralled.

Jim pulled the cover off brand-new analytical material he’d never revealed before.

It was so current Jim was running the morning’s news through his wringer minutes before he took the podium.

You’re about to catch the highlights of Jim’s knockout speech.

Our own David Stockman was also a keynote speaker Friday.

David was nothing less than a human ripsaw… a tornado on two legs.

He thundered against the Fed from the opening whistle and didn’t surface for air until he had everyone ready to storm the Eccles Building.


But it was the prediction David made about Trump later Friday afternoon that everyone will remember most…



His prediction erupted like a thunderclap, sending the assembled into gasps and wild half-demented expressions of shock.


David’s thumping prediction, also, in a moment…


But first, Jim’s talk on “Currency Wars, Trade Wars and Shooting Wars — a Troubling Trifecta.”


The long and the short of the thing is that the one leads to the next… which sometimes leads to the last.

Hence the “trifecta.”
Jim scoured centuries of history to give examples — the Napoleonic Wars, the Opium Wars Britain waged on China — and Japan’s Pearl Harbor job on America.


Have you ever wondered why Napoleon invaded Russia in 1812?

Jim explained that Napoleon had imposed a continental embargo of English goods after the Royal Navy blockaded France.
But he caught Russia cheating.

So he invaded — at least in part — to bring Russia under discipline and enforce the embargo.

We lack the space here to go over the entire canvas.

But we suspect Jim will be writing about the connection between currency wars, trade wars and shooting wars in the days ahead.
And the “troubling trifecta” took on a sharper point Friday…


North Korea touched off another rocket Friday morning.


Subsequent estimates indicated it may have potentially had the legs to menace Denver — or even Chicago.

In exchange for Chinese assistance on North Korea, Jim previously explained, Trump soft soaped China’s currency manipulation and sharp trade practices


But China has failed to convince North Korea to abandon its nuclear weapons program.

Now, Jim says, Trump’s getting ready to uncork a trade war against China.


All of his trade top trade advisers are anti-China hawks hot to label China a currency manipulator and teach it a severe lesson on trade.


Jim says China will of course retaliate.


And he expects China will undertake a “maxi-devaluation” of its currency in early to mid-2018.


That devaluation could range from 10–20%.

Murdered Soviet Economist Exposes Next Crash


You can best prepare by signing up for the Daily Reckoning today and receive your FREE report: Kondratiev’s Final Lesson.
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Perhaps you’ll recall when the U.S. stock market took a nasty fall in August 2015, after China devalued just a few percent.
And a 20% devaluation?


Meantime, Congress just passed another severe round of sanctions against Russia last week.

Jim called them an “existential” threat to Russia.

That’s because these sanctions target Russia’s critical energy sector.

In response, Mr. Putin has threatened “asymmetric” and “painful” retaliation of his own.

So it seems the currency wars and the trade wars are well underway.


Does a shooting war follow to complete the “terrible trifecta”?

Both Russia and (especially) China share interests in North Korea.

And Jim now predicts that war with North Korea is a realistic possibility by early to mid-2018.


Curiously enough, that’s roughly the same time Jim expects a maxi-devaluation by the Chinese.

We also noted last week how global liquidity presently floating the stock market will begin evaporating in 2018, along with the possible consequences.

We thus begin to look upon 2018 with suspicion.

Now David’s scandalous prediction about Trump…



David sat on a panel later Friday afternoon with Jim, the legendary Doug Casey and another fellow named Adrian Day.


The panel was asked to pick a “black swan” that could blindside markets.

Each panelist spotted one (although Jim doesn’t like the term).


When David’s turn came he said forget a black swan.


Watch for an orange swan instead, one that presently occupies 1600 Pennsylvania.


Trump had just fired his chief of staff Reince Priebus Friday morning.

And the White House will now be going “bonkers,” as David styled it.

He went on to paint a dark picture of executive dysfunction and grand bungling.

Then the thunderclap erupted…
“I predict Trump will be out of office by February!”

Howls of shock arose in chorus. Mouths gaped open… jaws dropped.


It stole the entire show.
If David turns out being correct, don’t forget… you heard it here first.



For the record: February is also in 2018…


Alas, we are now back in steamy Baltimore.

We quit cool, breezy Vancouver with all the enthusiasm of a man rushing to catch a train he was eager to miss, as one Helen Hudson so aptly described our condition…


But nonetheless feeling better for the experience.

Regards,
Brian Maher
Managing editor, The Daily Reckoning

Ed Note: The world’s monetary system has collapsed three times over the past century: In 1914, 1939 and 1971. Every instance was followed by atrocity: war, civil unrest and devastation to everyday citizens’ wealth and savings. Now, we see another collapse just around the corner.

That’s why Jim Rickards has assembled a Dollar Collapse Preparation Plan to help you and your family not only survive but thrive. Click here to receive your FREE report.

http://deviantinvestor.com/9106/in-a...nt+Investor%29

In A Better World
Posted on August 2, 2017 by Gary Christenson
In a [highlight=transparent !important]better world[/highlight] we might expect:

1. Individuals, corporations, and governments spend no more than their income.
2. “Honest” money is used by all, has intrinsic value, retains its purchasing power and is not counterfeited by individuals or [highlight=transparent !important]bankers[/highlight].
3. Governments and bankers support and encourage “honest” money.

Alas, we live in this world and must realize that:
Meet Hundreds Of Eastern European Beauties Online In An Instant

 

1. Debt has increased rapidly for the past century. Example: U.S. national debt has expanded from roughly $3 billion to $20 trillion.
2. [highlight=transparent !important]Currencies[/highlight] are IOU’s issued by central [highlight=transparent !important]banks[/highlight] who promote ever-increasing [highlight=transparent !important]currency[/highlight] in circulation, expanding debt, and continual devaluations in purchasing power.
3. The “fiat-currency-game” will continue until it implodes.

THE PROBLEM SHOWN IN ONE GRAPH:
http://deviantinvestor.com/wp-conten...ord-image.jpeg
Another Perspective on Official National Debt Increases Since 1913:

http://deviantinvestor.com/wp-conten...d-image-1.jpeg
The economic world runs on debt and credit. Dollars are created as debt, so expect more debt, lots more debt. From the St. Louis Federal Reserve:
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However, gold and silver protect purchasing power.
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The stock market is another way to protect purchasing power.
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Central banks and commercial banks create more dollars, yen, euros, and pounds, thereby diluting the value of all existing fiat currencies. [highlight=transparent !important]Consequently[/highlight] consumers must protect their purchasing power.
The government and central banking “borrow and spend” business supports and benefits the financial and political elite, so it will continue. For perspective on [highlight=transparent !important]central bank[/highlight] “printing,” of their currencies from “thin air” consider this graph:
http://deviantinvestor.com/wp-conten...d-image-6.jpeg
How do you protect your purchasing power? Stocks, bonds, real estate, silver, gold, and many others.

The problem with stocks – they are dangerously high.
From SovereignMan: “It’s Better to Turn Cautious Too Soon”
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The problem with bonds: Bonds yield next to nothing and pay in currenciesguaranteed to depreciate in value. Waiting for a friendly central banker to bail out your investment works for the elite, but not for most individuals.
The problems with gold and silver: They are mostly anonymous, safe, retain their value over centuries, are not simultaneously another party’s liability, and cannot be counterfeited by central banks or governments.
Some might see these characteristics as benefits, not problems!

Western central bankers believe gold and silver are threats to their fiat currencies. They want everyone locked into their unbacked debt based fiat currency schemes that benefit the financial and political elite. Tough luck for the rest of us.
The rise of cryptocurrencies indicates, among other things, dissatisfaction with fiat currencies.
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In summary, the global financial system, based on “dishonest” fiatcurrencies is dangerous and unstable. Potential wars with North Korea, Russia and China will aggravate an already dangerous economic structure. Existing wars in Syria, Iraq, Afghanistan and elsewhere have been [highlight=transparent !important]costly[/highlight] in terms of soldier deaths, excessive expenses, and unpayable debt. Centralbanks and governments want more debt, more currency in circulation, and higher prices, so … expect more wars.
The [highlight=transparent !important]consequence[/highlight] of massive and unpayable debt, out of control spending, and central bank “printing” of currencies is inevitable destruction of thecurrencies.
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The western central bank answer: Levitate stocks, boost bonds, near zero interest rates, “war on cash,” and more debt. Note the current parallels with[highlight=transparent !important]crashes[/highlight] in 2000 and 2007.
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The Asian answer involves acquisition of gold, lots of gold. Why have western vaults shipped another 1,000 metric tons of gold bullion to Asia in 2015?

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We have been warned!

Gary Christenson
The Deviant Investor