Money Flow Trading Method along with Risk Management

https://www.forexfactory.com/printth...20091&page=236

VI. The 12 Private Banks That Form the Federal Reserve
The Board of Governors may sit atop the Federal Reserve, working closely with the federal government as an executive agency. However, an enormous number of duties, powers, and day to day activities, are squarely in the hands of the 12 Federal Reserve district banks–all private banks with minimal connection to the federal government. These 12 banks each head one of the 12 Federal Reserve System districts, often with multiple branch offices. They are responsible for managing commercial banking in their districts (including the various Federal Reserve member banks), storing currency, processing payments, and generally acting as “bankers’ banks” by providing banking services to other commercial banks in their districts. (see The Structure and Functions of the Federal Reserve, available at https://www.federalreserveeducation....-and-functions).

These districts are also, somewhat counterintuitively, not limited by State borders. Instead, the Federal Reserve Act mandated that they “shall be apportioned with due regard to the convenience and customary course of business and shall not necessarily be coterminous with any State or States.” (The Federal Reserve Act, Section 2, available at https://www.federalreserve.gov/aboutthefed/section2.htm) They are all privately owned by members. However, there are no laws (that we found) requiring disclosure or confidentiality of the ownership interests, and finding that information is an opaque process at best.


However, at a time of unprecedented central bank meddling and manipulation in all rates (and equity) markets, many believe that the longer-dated curve is no longer indicative of anything but noise, especially at a time when the long-end is directly being bought by central banks (or sold by Chinese reserve managers depending on how much Trump's trade war escalates) thus distorting any "signal" value it may have. In its place, a more accurate "signal" has emerged in the short-end of the curve, as manifested by the Overnight Index Swap, or OIS, futures market.

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Authored by Tom Luongo,
“Brace Yourself Arthur as Corporate America tries to sell us its wretched things!” (Turns on TV)
— The Tick

Bitcoin has been on fire since April began. It’s been an impressive move so far. And no one has a good reason why.

https://zh-prod-1cc738ca-7d3b-4a72-b...66702837_0.jpg

So I’m asking a simple question. Is Bitcoin’s rally part of the post-Fed safe haven rally we’ve seen across asset classes? Or is it just an overdue long probe mixed with some short-covering?

At Money and Markets I make the argument that is was simply time for a rally which was set up by a strong Q1 close.
Bitcoin and the rest of the cryptocurrency market have been mired in a bear market for fifteen months now since the spectacular bubble of 2017 burst. And that’s enough time for the market to become unbalanced enough that it needed a counter-trend correction.

All it was looking for was a catalyst.

To me, political turmoil is creeping up around the world. So, the idea of people quietly accumulating Bitcoin below $4000 doesn’t seem outrageous given how much our financial lives are now tracked.

With all of the uncertainty surrounding Brexit, an imploding German economy, U.S. foreign policy insanity and upcoming European Parliamentary elections, there has to be a political component to Bitcoin’s big pop since it drifted higher over the weekend.

Looking at the daily chart it’s obvious that there was a big spurt of activity on the breakout days which pushed the price through $4100 and up close to $5300.

https://zh-prod-1cc738ca-7d3b-4a72-b...n-4-8-2019.png

And now we’re looking at a low-volume meander higher as bulls won’t give up the dream.

But back to the broader question. We’ve seen a titanic set of moves in all safe-havenassets. German Bunds carry negative yield out to 10 years. (10 YEARS!). President Trump has nominated an outsider and personal friend, Herman Cain, to the FOMC board, nominally to frighten the Fed into cutting rates at the next meeting.

He wants more QE and lower rates, mistakenly thinking this will be inflationary and good for his “Best Economy Evahr!”

But it won’t be. QE is deflationary. It signals a frightened central bank that doesn’t believe credit markets are healthy enough to operate without support.
Markets are already struggling with valuations. It’s why we’re seeing multi-sigma moves in the Dow, U.S. Treasuries and major currencies while the central banks try to keep a lid on volatility.

Brexit threatens to upend the smooth flow of capital between Europe and the City of London. If no deal is reached by Friday and the U.K. leaves the EU on WTO terms there will be retaliation by the EU for that outcome.

They will trash the pound. They will impose the harshest tariffs they can and deny travelers, supplies and the rest.

There will be a reckoning.
It’s a bluff in the long run, but a very real threat in the short run. Their economies are too linked to separate violently. And Germany is too weak to keep it all from coming unglued.

What the EU fears is having to react to new market forces. A U.K. trading on WTO terms would pressure them to lower tariffs.

It would rather subsume everyone else than reform itself.
Hence, no movement on trade talks with the U.S. Harsh treatment of the U.K. over Brexit, if not outright assault. No reform possible for Italy. More TARGET 2 imbalances, Bail-in rules for banks, Article 7 censuring of Hungary and Poland.


The list goes on.
When you look at it that way smart people preparing for chaos simply makes sense.

We have precedence for this. A lot of the Bitcoin’s transactional volume during the 2017 bull market came from Europe. Capital controls have been inhibiting cross-border flows since the 2011 debt crisis.

Gold and bonds are confiscated across borders within the EU.
Oh the tragic irony, people can move freely but not money.

Bitcoin’s very nature invites this behavior. In times of extreme stress Bitcoin functions as a safe haven asset. And it doesn’t take much to move the price.

So, one big European whale could set off a 25% relief rally during the chaos surrounding Brexit. And once he’s done buying, the natural rhythms of markets take over.

I’m not convinced this move is anything more than that, however. I don’t think this is the new bull market.

The real test is this week and the strength of any push towards $6000. If that fizzles, then we’ll see Bitcoin relax back towards $4000.


And a lot of that will depend on what happens this week with Brexit.

* * *
To support more work like this and get access to exclusive commentary, stock picks and analysis tailored to your needs join my more than 235 Patrons on Patreon and see if I have what it takes to help you navigate a world going slowly mad.

Good Morning Benjaminis, due to some family matter, I could not phone you yesterday, but

G-D willing, I would call you today after 7.00.

I am waiting for your expert explanation for my Post# 6462 & 6463. Thanks,

Good Morning Everyone

Please watch this short video. It has nothing to do with religion. It has too do with Forex trading. Why would that be ? After you spend the few minutes to watch the video that explains where we are today you will understand yourself better and by extension understand about trading on PERCEPTIONS and the REALITY.

Please post your thoughts here so we can continue our discussions. Thank You.


Benjamin

did i miss your answer??

https://seekingalpha.com/article/425...d-upside-ahead

When we speak on the telephone tonight after 7:00 PM , I will answer your questions and we will discuss everything that we need to.


Benjamin

THANKS.

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Authored by Christopher Whalen via The American Conservative,
The Federal Reserve is out of control, acting in ways and with powers that were never explicitly granted by Congress...



https://zh-prod-1cc738ca-7d3b-4a72-b...09_5-38-30.jpg


Last week, President Donald Trump set the economics community aflame by suggesting that he will appoint businessman and presidential aspirant Herman Cain to the Federal Reserve Board. Even more than political economist Stephen Moore, the critics maintain, Cain represents a threat to the cabal that has controlled the central bank for decades.


Why? Because Cain is a successful executive who founded a real business, took risks, and created jobs, things most academic economists will never ever do.

Media outlets and other allied constituencies have howled with rage at the prospect of President Trump “packing the Fed,” a distant reference to attempts by President Franklin D. Roosevelt to pack the Supreme Court in the 1930s. Those worried about the independence of the Federal Reserve Board should reconsider. Independence from what exactly?


While the Fed is meant to be independent from the executive branch on a day-to-day basis, it is certainly not independent of Congress or the law. Yet the Fed in recent years has shown a troubling tendency to deviate from its legal mandate and make up new authorities to fit the changing economic situation. Case in point: the dubious notion that we should seek a 2 percent rate of inflation.


Anybody who cares to read the 1978 Humphrey Hawkins law will know that the Fed is directed by Congress to seek full employment and then zero inflation. Not 2 percent, but zero. Yet going back a decade and more, the Fed, led by luminaries such as Janet Yellen and Ben Bernanke, has advanced a policy of actively embracing inflation. And neither Bernanke nor Yellen bothered to consult Congress when they decided to discard their legal responsibilities.


Quantitative easing, to take another example, represents a vast inflation of the financial markets and housing, yet Fed officials actually appear in public and talk about the conundrum presented by “low inflation.” The inflation in home prices that occurred during and after the Fed’s purchase of trillions in securities has permanently raised the price of housing in many parts of the country, preventing millions from purchasing homes. Yellen confesses to be “perplexed” by the dearth of home purchases by young families, but she is the cause of the malady.


Not only are these pro-inflation policies in violation of the letter of the Humphrey Hawkins law, but they have contributed to increased volatility in the financial markets. The third and frequently forgotten mandate in the Humphrey Hawkins law commands the Fed to employ policies that will produce “stable interest rates.” But the economists have long since stopped talking about this.


The basic problem with the Fed today is that it has gradually fashioned a new set of rules for itself, particularly since 2008, on which Congress has never been consulted. In the same way that economists use their imaginations to concoct new theories about economic behavior, the Fed board has apparently decided to take up legislative powers as well. Is the Fed meant to be free of any real-world restraint on its actions.


As Alex Pollock of the R Street Institute writes in American Banker:
One may wonder whether Fed independence is a technical or a political question. It is political. The nature and behavior of money is always political, no matter how much technical effort at measuring and modeling economic factors there may be. For example, the Fed over the last decade systematically took money away from savers and gave it to leveraged speculators by enforcing negative real interest rates. Taking money from some people to give it to others is a political act. That is why the Fed, like every other part of the government, should exist in a network of checks and balances and accountability.


The biggest problem facing the financial markets today is that the folks at the Fed have no appreciation for how their policies are affecting the real economy. Ten years of inflation, open market manipulation, and other experiments have left the U.S. burdened with trillions of dollars in new public and private debt.

The December market break was a direct result of the fact that Fed officials do not really understand the real-world consequences of their actions.

Take another example: U.S. financial institutions are facing years of lower profits as funding costs for banks normalize thanks to Fed manipulation. Yet asset returns for banks and investors will remain suppressed by “extraordinary” monetary policy. Are these massive distortions in the financial markets authorized by Congress? No they are not.

When investors in bank stocks have to watch the net interest income for the industry contract, one wonders what our friends on the Federal Reserve Board will say.

Moreover, the Fed’s decision to use excess reserves and repurchase agreements to manage short-term interest rates amounts to the nationalization of heretofore private markets. Is this authorized by Congress? No it is not. Instead the Fed is extending its government-sponsored monopoly over the short-term money markets with little regard for the rights of private investors and financial institutions.


We should be worried about Fed independence, but not because the central bank is somehow suffering under the tyranny of the executive branch. Rather the Federal Reserve is out of control, acting in ways and with powers that were never granted to it. Quantitative easing, “Operation Twist,” and the explicit 2 percent inflation target are just three example of how the Federal Reserve Board is operating outside of its legal authority.


It’s high time that President Trump put some new faces at the Fed and started asking questions about what policies it follows and why.


COMMENTS FROM BENJAMIN: Ladies & Gentlemen, Boys & Girls

How is it possible that an intelligent well educated group of American citizens and Politicians from The House of Representatives and the Senate and many Presidents since December 23, 1913 when The FEDERAL RESERVE was created in the death of night 2 days before Christmas , 1913.

How stupid are humans and why are there so many ignorant sheeps around. Trust in yourself and G-D not in authority that should have no authority over you. They have NO AUTHORITY OVER ME...

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Having for years lingered in the fringes of economics as its carnival attraction (which, considering the recent track record of the dismal science isn't saying much), MMT, aka Modern Monetary Theory, aka the "Magic Money Tree", aka "The Free Lunch theory of economics" has exploded on the scene as politicians on the left saw it as a perfect platform upon which to build virtually unlimited promises in hopes of getting elected (see the Green New Deal).

https://zh-prod-1cc738ca-7d3b-4a72-b...ends%20MMT.jpg


In fact, interest in MMT has swept not only across the broader population but increasingly the world's top legacy institutions, such as the IMF, with none other than the IMF's chief economist addressing the disciples of the theory on Tuesday, warning not to expect a free lunch.


"Fiscal policy is a very important part of the tool kit for policy makers,” Gita Gopinath told reporters at a press conference Tuesday in Washington, following the IMF's release of its latest, and weakest since the financial crisis, global economic outlook. "That said, there is no free lunch. There are limits to how much countries can spend."

Incidentally she is not the first to use "free lunch" to describe the fundamental fallacies in the theory who core doctrines are summarized in the chart below.

https://zh-prod-1cc738ca-7d3b-4a72-b...%20summary.jpg


Over the past week, some of the best known Wall Street strategists have also opined on MMT, starting with Goldman's chief economist, Jan Hatzius, who in a Monday paper said that, without endorsing MMT in its entirety, said that "we think its proponents make a couple of points that are both correct and important." One of them, he said, is that countries like the U.S. and Japan can’t go broke because they print their own money. No, they can't: they can just end up as hyperinflationary basket cases such as Weimar, Zimbabwe and Venezuela, all of which imploded under the weight of their own currency... literally, as at one point it took several wheelbarrows to purchase a roll of toilet paper in Caracas.


Confirming that even conventional economists are completely cluless, Hatzius then said that in recent decades, it’s been buildups of corporate or household debt rather than public borrowing that triggered financial crises, echoing an MMT argument that when governments run deficits, they’re typically allowing private actors to accumulate assets. "We are therefore more reassured by the U.S. private sector surplus than we are concerned by the public sector deficit," Hatzius said, while completely ignoring that when governments are the ones doing the spending, the fall outs are even worse, and include a collapse in productivity, widespread corruption and, of course, socialism.


Goldman aside - whose bizarre quasi-infatuation with MMT may be a harbinger that helicopter money is on its way with the benefit of Goldman's seal of approval, a far more accurate, and comprehensive criticism of MMT came Bank of America Merrill Lynch’s head of global economic research, Ethan Harris, who also acknowledged the case for MMT-type policies "during a period of severely depressed demand", i.e. QE, but far more on point, he also said that applied more broadly, the theory amounts to a recipe for hyperinflation.


In previewing his takedown of MMT, Harris writes that one of the striking things about the recent economic policy debate is the proliferation of "free lunch" views of monetary and fiscal policy, and - as a conventional economist - Harris pushes back "against left-leaning" free lunch arguments, noting that "the rising popularity of free lunch narratives makes it very hard to address the budget deficit and suggests rising political pressure on the Fed. In other words, despite all the angst about recession risks the bigger risk in the next few years could be an overheating economy and rising bond yields."


Said otherwise, to those who believe the world will end in fire, i.e. hyperinflation, not in ice - to loosely paraphrase Robert Frost - and are buying up gold hand over fist just for that eventuality, then MMT, and Fed Chair Alexandra-Ocasio Jones, is just what the doctor ordered.

Below we present the key points from Harris' criticism of MMT, which he dubs "money for nothin', checks for free."
Until recently Modern Monetary Theory (MMT) had a relatively narrow audience, but more recently it has attracted political attention because it can be used as a justification for money-financed deficit spending. As with many economic theories, it has some important truths that are stretched when they enter the political realm.


The literature is quite diverse, but we would boil it down as follows. The starting point is a simple fact: if a country controls its own currency it can always pay its bills by issuing new money. Does that mean no limits on spending or money growth? No, if the money-financed government deficit starts to create inflation, then the money can be sopped up by either cutting spending or raising taxes.

In the MMT world money growth does not directly cause inflation. Rather inflation is caused by a combination of monopoly power in the economy and the economy hitting "full employment."(*) Moreover, drawing on Keynes, MMTers believe that the economy typically suffers from insufficient demand, thus the inflation threshold will only be reached once the government is running significant deficits. The Fed's job in all of this is to keep interest rates low and stable and leave it to fiscal authorities to prevent inflation. Indeed, by some accounts, the "natural rate of interest" on money should be zero.


Perhaps the most important take away from this is that, in theory at least, MMT can be used to justify both big tax cuts and big spending increases. In practice, however, Harris counters that given the strong Keynesian component of the theory "it has been mainly used to justify the latter."

With that said, Harris then slams the "Mainly Muddled Thoughts" of MMT, saying that he has "serious reservations about MMT" for the following select reasons:
First the good news. During a period of severely depressed demand and zero policy rates, money-financed deficits make a lot of sense. Indeed, this is essentially what the US did in response to the Great Recession, combining large budget deficits with large Quantitative Easing (QE) programs. Critics argued that this "debasing the currency" could trigger runaway inflation.(*) We strongly disagreed: QE was a way to add a small extra kick to monetary policy, helping stimulate sectors that are sensitive to long-term interest rates. In our view, currency debasement was a red herring as long as the Fed and other central banks had a credible commitment to their inflation targets.


Now the bad news. As you would imagine: a theory that argues for both zero interest rates and large budget deficits seems a bit too good to be true. Consider the current Fed exit from zero rates and a big balance sheet. As the economy recovers and inflation forces start to build, zero interest rates and an ever expanding balance sheet no longer were appropriate. Had the Fed been under political control and refused tighten monetary policy, today we would be experiencing a massive overheating of the economy. MMTers would argue: "don't worry politicians will do the dirty work of containing inflation." Really? If the Fed wants to contain inflation, it must either stop flooding the economy with reserves or pay interest on reserves so that banks will be willing to hold them. One way or another, the government has to pay interest on its debt. In other words, the free lunch thinking on MMT only applies when the economy is deeply depressed.

There are, to Harris, several other problems with MMT, the first of which is history showing that "full employment" is not a zero unemployment rate: "
As the Great Inflation of the 1970s illustrates, pushing the unemployment rate below its non-zero "natural" rate can cause a massive inflation acceleration. Second, it is wishful thinking to believe that fiscal authorities have either the will or the ability to control inflation. Looking ahead, with the US economy at full employment now is not the time to add even more fuel to the fire."

Harris then identifies a "final problem" with MMT in that it creates an excuse for more or less permanently shifting resources from the private sector to the public sector. That, to anyone who is not a hard-core socialist or statist, is the 9th circle of hell:
Imagine how ossified the labor market would become if the government created enough good-paying jobs to lower the U-6 to zero? There would be a dramatic drop in incentives to retrain or move to more vibrant parts of the country. There is a trade-off between economic efficiency and cushioning the blow of unemployment.


For anyone who wants to see this in practice, just take a flight to Caracas.

In summary, the Bank of America economist notes that while MMT helps make the case for money-financed deficits during unusually dire periods such as the Great Depression and the Great Recession, its inherent, if few truths, "tend to be severely stretched when these theories enter the political realm." Just see the Green New Deal which AOC wants to introduce at a time when the unemployment rate is 3.8%


But more importantly, and perhaps the reason why David Rosenberg sees the Fed launching helicopter money (which is also another name for MMT), in a few years, Harris warns that the growing free lunch crowd has important implications for the medium term policy and economic outlook:
"With both sides of the political spectrum touting free lunch theories, it is hard to see a serious attempt to reduce the budget deficit any time soon. Over the long term this points to higher borrowing costs. Meanwhile, political pressure on the Fed to stop fighting "phantom inflation" will grow and could become more bi-partisan like in the 1980s when Chair Volcker declared war on double-digit inflation."


The upshot to all this idiocy, which was started with QE, which many see, correctly, as socialism for the 1%, and now demand socialism for the 99%, is that despite all the talk about recession risk, serious overheating and higher bond yields could be the bigger risk in the next couple years.

What this means practically? Should MMT gain even more traction - and it will as most democrats plans to use it as their platform in order to promise virtually everything voters could ever want - then buy gold... lots of gold.

good Morning Mr. Bruce, it is working NOW. Could you plz reply my PMs., or you want me to upload all my questions here in public?? plz advise & update your status. are you doing trading or just quit??. waiting for your reply. take care.

It appears Bruce has left the scene. He tried his best to keep this thread engaging but as we all know, not many retail traders care to fully understand the fundamentals in global economies trading when it comes to trading spot fx. It's sad I did not have access to a thread like this when I was trading spot. For over 7 yrs I traded fundamental events based on simply momentum in currency strength. I would not trade any other way (manually).

Adios

Hi Adios( VEEFX ), are you back from vacations. Yes it is said that Bruce has left the thread, but he answered my last PM.

Just for my curiosity, why do not you start Spot trading again?? Take care.

I am back from my cruise. I left spot FX due to lack of trust within the retail FX industry (broker, market structure, lack of centralized exchange, transparency, MT4 platform, TE/myFXBook, fake broker accounts/reps on forums and pretty much everything in-between. When my unregulated broker disconnected my automated trading after being two months of extreme profitability, they would routine disable by connectivity. Got sick of it so decided to move to regulated Futures.

So technically this thread is no more??? where is Mr BenjaminIs ??

He is probably soaking in sun on a beach somewhere in Turks and Caicos. What did you expect bro? He is 75+yrs old and keeping this thread alive for past 2 yrs with no active participation. He did what he could. Start standing up on your own feet and implement what you learnt thus far (in demo). Trading is a solitary journey so expect no one to hand-hold your trades. That is just how it is unfortunately... just my 2 cents. I could be wrong and he might return back here but we would never know and waiting for someone is never a good strategy imo (speaking from experience)

unsubscribing from this thread.... good luck brother

EDIT: If I ever return to spotfx and re-energize by old automation, I have several great ideas from this thread that I would love to implement but who knows where i will be in the future lol

Hi Adios, thanks for your comments, I am not waiting for anyone, for anything, but I was/am curious about his health. After all he is
My Mentor, I learnt a lot from him. Age does not matter, health is more important, that’s why we call it, health is wealth. Lol. Unsubscribe
would be last option. Take care.

Hello

Please call me at 514 247 0775 Thanks


Benjamin

Hi Bruce, good to see you back, I am at work now, but I would give you a call in the evening time. Take care.