Knowledge is Power

Mr .bruce

do you think that usd/jpy would break into the 105 again?

I am staying out of the market today !


Bruce

Have a ggod weekend Bruce and don't forget to start your engines at 5.15 EST Sunday.........................

The Kijyun-line could be a critical turning point.
Some more notes based on my Ichimoku analysis:

1. The 4H last candle is now completely below the Tenkan-line, suggesting that USD/JPY may have turned its direction of the trend from upward to downward, although no one knows if that is really the case at this moment.

2. It has not touched the Kijyun-line, 105.82 yet as of the Friday's close. So it may retest it in the coming Tokyo session on Monday if it can be broken lower or can be a strong support. The Kinjyun line on a daily chart is often regarded as the last fort for the bulls before it starts heading lower decisively.

3. Since the Tenkan-line is still above the Kijyn-line and the Kumo/Cloud, you could say that the trend is still upward. In this case, the pair could bounce off the Kijyun-line, and go back upward.

That said, I would be more cautious about making an entry at this price level as the pair is close to the one of the most critical turning points, the Kijyun-line on the daily chart.

If someone asks me if I'm bearish or bullish, I would say that I might be on the bearish side, thought I'm not sticking only to this view.

http://www.forexfactory.com/attachme...1&d=1214657669
Attached Thumbnailshttp://www.forexfactory.com/attachme...1&d=1214657669


#9418 Today 9:12am




http://www.forexfactory.com/images/icons/icon1.gif Worth Reading Every Word Just To Be Aware !!!
DOW down Nearly 20 Percent from Peak: Lessons from the Great Depression: Part XII. Is the DOW now Tracking with the California Housing Market?
Posted: 27 Jun 2008 02:21 AM CDT
I was watching CNBC on Wednesday morning and they were on a Fed watch with a countdown and all other bells and whistles. As the day went along, these talking heads were talking about good earnings here, the resilient American consumer, and all this other pointless Chihuahua yammering to keep people from asking the hard questions and letting folks realize that those spewing “investment advice” are nothing more than glorified sales people. Well it came as no shock to anyone that the Federal Reserve stood pat and did not move rates. In fact, according to the Fed inflation is only slightly out of whack:
“(Bloomberg) Higher headline rates of inflation have shown only a few tentative signs of embedding themselves in core inflation or in longer-term inflation expectations,” Fed Vice Chairman Donald Kohn said in a speech to a conference today in Frankfurt.”
So with this news which came in the afternoon, the market shot up nearly 100 points as delusional buyers jumped back into the shark tank. But as the day was winding down, the market gave back essentially all the gains to end the day with a push. So much for the Federal Reserve’s power. On Thursday, the gates were opened up and the raging bears came flying out. It was an odd day for the market. The housing sales numbers were better than forecasted and initial jobless claims came right at market expectations. Yet that inflation that is “tentative” came out when oil hit $140 a barrel and sent the market careening to the floor. Do you realize that the DOW is down 9.4% for the month? In fact, the DOW is having the worst month since the Great Depression:
http://www.doctorhousingbubble.com/w...6/dow-june.jpg
If that isn’t bad enough the DOW is down nearly 20% from last October:
http://www.doctorhousingbubble.com/w...6/dow-2590.jpg
Does anyone really still believe we are not in a recession? Come on now. And if you arrive at the conclusion that we are in a recession then you need to admit to yourself that the numbers being put out by the government simply do not coincide with reality. The problem that we now face is that we are in need of a paradigm shift. Those that are viewed at least by the overwhelming public as “experts”, the brokers, analysts, paid economists, agents, mortgage lenders, and pundits are to a large degree charlatans. The fact that we now stand with oil at $140 a barrel, the U.S. Dollar tanking, the housing market collapsing, is proof that their belief system is a farce.
It would now seem that we are using parallels from the Great Depression over and over:
“NEW YORK (MarketWatch) — U.S. stocks fell sharply Thursday with the blue-chip index enduring its worst June so far since 1930, and plunging to its lowest finish since Sept. 11, 2006, after getting slammed hard as crude soared to new highs and Goldman Sachs disparaged U.S. brokers and advised selling General Motors Corp.”
“(The Economist) Housing Dropping Like a Brick: House prices are falling even faster than during the Great Depression”
“(Washington Post) The measure marks Washington’s most ambitious response to a housing slump more severe than any since the Great Depression. More than 1.2 million homes have fallen into foreclosure, and home prices are plummeting. Yesterday, the Standard & Poor’s/Case-Shiller Home Price Index of 20 cities reported that home prices fell 15.3 percent in April versus a year ago, the steepest decline since the index was created eight years ago.”
Apparently this Great Depression talk is no longer just part of a historical series on this blog. I think given what is happening to the markets this month, it is important to remember a bit of history. Today we’ll look at the ever popular Frederick Lewis Allen and contrast how eerily similar market conditions are today. This is part XII in our Great Depression series:
1. Personal Story by a Lawyer from a Previous Asset Bubble. Can we Learn from the Past and How will the Housing Decline Impact You?
2. Lessons From the Great Depression: A Letter from a former Banking President Discussing the Bubble.
3. Florida Housing 1920s Redux: History repeating in Florida and Lessons from the Roaring 20s.
4. The Menace of Mortgage Debts: Lessons from the Great Depression Series: Part IV: Where do we go After the Housing Crash?
5. Business Devours its Young: Lessons from the Great Depression: Part V: Destroying the Working Class.
6. Crash! The Housing Market Free Fall and Client #10 Contagion.
7. Winston Smith and the Bailouts in Oceania: Lessons from the Great Depression Part VII.
8. Sheep Back to the Slaughter: Lessons from the Great Depression Part VIII: All the Change and Bear
Market Rallies.
9. A Bubble That Broke the World
10. The Sham of our Current Unemployment Numbers
11. Understanding the Impact of Asset Deflation and Consumer Inflation.
At a certain point can we drop the façade and accept that things are really bad? Then and only then, can we start confronting the brutal reality that we have a lot of cleaning up to do. Yet it would seem that the mistakes from the past are being repeated once again. Take a look at some of the things going on before the Crash of 1929:
“In view of what was about to happen, it is enlightening to recall how things looked at this juncture to the financial prophets, those gentlemen whose wizardly reputations were based upon their supposed ability to examine a set of graphs brought to them by a statistician and discover, from the relation of curve to curve and index to index, whether things were going to get better or worse.
Their opinions differed, of course; there never has been a moment when the best financial opinion was unanimous. In examining these opinions, and the outgivings of eminent bankers, it must furthermore be acknowledged that a bullish statement cannot always be taken at its face value: few men like to assume the responsibility of spreading alarm by making dire predictions, nor is a banker with unsold securities on his hands likely to say anything which will make it more difficult to dispose of them, unquiet as his private mind may be. Finally, one must admit that prophecy is at best the most hazardous of occupations. Nevertheless, the general state of financial opinion in October, 1929, makes an instructive contrast with that in February and March, 1928, when, as we have seen, the skies had not appeared any too bright.”
I realize that there were many sitting on the sidelines wondering, “this is absolutely insane and is completely wrong” yet kept their mouth shut because they didn’t want to be seen as a doom and gloomer or maybe their business simply did not allow open dissent. But ironically our most prestigious and old institution, Harvard was wrong again this week and was wrong during the Great Depression:
“But if ever such medals were actually awarded, a goodly number of leather ones would have to be distributed at same time. Not necessarily to the Harvard Economic Society although on October 19th, after having explained that business was “facing another period of readjustment,” it predicted that “if recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that Reserve System would take steps to ease the money market so check the movement.” The Harvard soothsayers proved themselves quite fallible: as late as October 26th, after the wide-open crack in the stock market, they delivered cheerful judgment that “despite its severity, we believe that slump in stock prices will prove an intermediate movement not the precursor of a business depression such as would entail prolonged further liquidation.” This judgment turned out, course, to be ludicrously wrong; but on the other hand the Harvard Economic Society was far from being really bullish.
Nor would Colonel Leonard P. Ayres of the Cleveland Trust Company get one of the leather medals. He almost qualified when, on October l5th, he delivered himself of the judgment that “there does not seem to be as yet much real evidence that the decline in stock prices is likely to forecast a serious recession in general business. Despite the slowing down in iron and steel production, in automobile output, and in building, the conditions which result in serious business depressions are not present.” But the skies, as Colonel Ayres saw them, were at least partly cloudy. “It seems probable,” he said, “that stocks have been passing not so much from the strong to the weak as from the smart to the dumb.”
Now let us contrast that with what the Joint Center for Housing Studies put out via the center director in September of 2006:
“The headline hints of catastrophe: a dot-com repeat, a bubble bursting, an economic apocalypse. Cassandra, though, can stop wailing: the expected price corrections mark a slowing in the rate of increase - not a precipitous decline. This will not spark a chain reaction that will devastate home owners, builders, and communities. Contradicting another gloomy seer, Chicken Little, the sky is not falling.”
Now you would think that this is enough but this week Harvard put out another study being overly optimistic on the state of housing. Looks like someone is being set up for another colossal forecast failure.
You know it is important to highlight that during the Great Crash of 1929, even in that horrific month of October there were burst of optimism in the market. It took 3 years before hitting the absolute bottom:
“The New York Times averages for fifty leading stocks had been almost cut in half, failing from a high of 311.90 in September to a low of 164.43 on November 13th; and the Times averages for twenty-five leading industrials had fared still worse, diving from 469.49 to 220.95.
The Big Bull Market was dead. Billions of dollars’ worth of profits-and paper profits-had disappeared. The grocer, the window-cleaner, and the seamstress had lost their capital. In every town there were families which had suddenly dropped ‘from showy affluence into debt. Investors who had dreamed of retiring to live on their fortunes now found themselves back once more at the very beginning of the long road to riches. Day by day the newspapers printed the grim reports of suicides.
Coolidge-Hoover Prosperity was not yet dead, but it was dying. Under the impact of the shock of panic, a multitude of ills which hitherto had passed unnoticed or had been offset by stock-market optimism began to beset the body economic, as poisons seep through the human system when a vital organ has ceased to function normally.
Although the liquidation of nearly three billion dollars of brokers’ loans contracted credit, and the Reserve Banks lowered the rediscount rate, and the way in which the larger banks and corporations of the country had survived the emergency without a single failure of large proportions offered real encouragement, nevertheless the poisons were there; overproduction of capital; overambitious (expansion of business concerns; overproduction of commodities under the stimulus of installment buying and buying with stock-market profits; the maintenance of an artificial price level for many commodities, the depressed condition of European trade.
No matter how many soothsayers of high finance proclaimed that all was well, no matter how earnestly the President set to work to repair the damage with soft words and White House conferences, a major depression was inevitably under way.
Nor was that all. Prosperity is more than an economic condition; it is a state of mind. The Big Bull Market had been more than the climax of a business cycle; it had been the climax of a cycle in American mass thinking and mass emotion. There was hardly a man or woman in the country whose attitude toward life had not been affected by it in some degree and was not now affected by the sudden and brutal shattering of hope. .With the Big Bull Market zone and prosperity going, Americans were soon to find themselves living in an altered world which called for new adjustments. new ideas, new habits of thought, and a new order of values. The psychological climate was changing; the ever-shifting currents of American life were turning into new channels.
The Post-war Decade had come to its close. An era had ended.”
Even though the DOW is down nearly 20% from its peak reached last year, there is still this general sentiment that things are winding down and all will be well. Do people realize that companies have written off about $391 billion in bad loans with some expectations looking at $1 trillion before things are done? What about those pesky option ARMs that are starring us directly in the face? We are quickly approaching the psychological end game. The farce will be up soon because there is simply too much debt floating out in the market. It was never sustainable. The cracks are already being seen in the credit default swap market and derivatives are swimming in a market of multiple trillions, which is so absurd, that once people realize that no one has the Midas touch, the market will start to evaporate.
Cover your assets folks and make sure you are invested wisely for 2008. This is the year when the rubber meets the road. This will happen no matter what the financial engineers have in their Pollyanna models.

Link:

http://www.doctorhousingbubble.com/d...ousing-market/



Last edited by Warren Forex, Today 9:22am Reason: To Add Link !

Cool thread. Warren where did you find kijyun-line. It looks interesting. I never heard it before. Can I add it into my Metastock? Do you have the formula of it?

Thanks in advance,
goldbug

It is not my chart or expertise. Look at the posts of today on the USD/JPY thread. The poster there will be able to help you with the information that you need.

Welcome to this thread !


Bruce

http://www.financialsense.com/Market/wrapup.htm

A Look at An Unsustainable Advance &
a Double Non-ConfirmationBY TIM W. WOOD

For weeks now one of the major topics in the news and amongst the politicians is the price of oil. The republicans want to begin more deep water drilling and open up parts of Alaska to drilling that has historically been protected. The democrats have introduced a bill to limit speculation to only those that are end-users of oil. It seems that the word speculator is becoming a four-letter word. I also hear talk of conspiracy and manipulation by the masters of the world.
First, let me state that I personally agree with opening up more drilling and that I do not support any limitations on the markets or speculators because the role of the speculator is essential to even have a market. If there were no speculators, there would not be a market. Think about it. When you take a long position in stocks, gold, bonds, soybeans, your 401k or anything else, are you not speculating that it will go up? By the same token if you short a particular instrument, are you not speculating that it will goe down? The bottom line is that if we are participants in any market we are speculators, and as a result, speculators make the market.
As for oil, between 1999 and 2001 major long-term cycle lows occurred in commodities. One after another the cycles in commodities hit bottom and turned up. As these cycles turned up, new trends slowly began to emerge. In the beginning there was very little interest in investing in commodities because they had been in bear markets and/or basically flat. Over time, these new trends began to attract more and more attention. As a result, more people began to jump on the bandwagon, which in turn strengthens the new trend, which in turn draws even more attention. When new trends are established the news is relatively quiet as to why this new trend has begun. But as that trend begins to strengthen, we begin to hear that it’s because of this reason or that, which in many cases merely serves as a justification for the price advance. If an advance can continue long enough it will begin to draw even more attention because the “speculators” all want a piece of the pie. It is at this stage of the game that people begin to crawl out of the woodworks to get on board and it is this rampant influx of speculation that ultimately drives a trend parabolic.
I have included a chart of crude oil going back to late 1994 below. I think that one would be hard pressed to say that this advance has not gone parabolic or vertical. Any parabolic advance is simply a result of irrational behavior that is driven by a high degree of market participants speculating in that market. This is the stage of the game where speculation runs wild. Everyone has bought into the belief that everything has now changed, that higher prices will prevail until the end of time, that this time is definitely different and that they must get on board in order to stake their claim. This is what I term the “all in phase.”

http://www.financialsense.com/Market...p_image002.gif

When I say “all in,” what I mean is that price will continue its parabolic advance until the allure of speculative profits have pulled in the masses. Then, once the mass inflow of speculation begins to fade, the momentum of the move begins to fade as well. It is at that point that the emotionally driven speculative parabolic advance peaks. Then without the massive inflow of new buyers, all of a sudden that price level can no longer be supported. It is at this point that prices collapse.
Now, this is not to say that there aren’t also underlying fundamental reasons behind a price advance because obviously there are. But, the underlying fundamentals are never significant enough to support a move when it goes into a vertical parabolic spike. Think about it; what has changed since 1999 to justify a 1,272 percent advance? That’s right, from $10.35 in 1999 to present is a 1,272 percent advance. Also, what has changed since the 2007 low at $49.90 to justify the 185 percent advance since then? This move is simply not sustainable and it will end like all other parabolic advances have ended in the past. Remember the housing bubble. Remember the Nasdaq bubble. Remember the sugar bubble in the early 1970’s. Remember reading about the tulip mania in 1636. It’s all the same. It’s all an emotionally driven allure for speculative profits.
At this stage of the game, I still cannot yet say that the advance in oil is over. For that I have to watch my indicators as well as for specific cyclical developments and structural breakdowns that have not yet occurred. But, I can without a doubt tell you that we are in a parabolic spike, that we should be nearing the “all in phase” and that a collapse in oil prices will follow. In the meantime, the key for me in identifying this top is to watch my ever so important Cycle Turn Indicator. Once this occurs along with the first sign of a cyclical top, I would not want any part of the long side on oil. In fact, once I see the right setup develop, oil might just be the best short sell since the Nasdaq decline between 2000 and into 2002.
As for the stock market, there were some who proclaimed that when the averages moved above their February highs that this signaled a so called “Dow theory buy signal.” I have maintained that this was incorrect and that from a Dow theory perspective, the bearish primary trend change that occurred on November 21, 2007 remained fully intact. My read of the Dow theory has obviously now been proven correct.

http://www.financialsense.com/Market...p_image004.gif

At present, we have two major Dow theory non-confirmations in place. One of these non-confirmations recently occurred when the Transports moved to new highs in early June, while the Industrials failed to confirm. This can be seen on the chart above and is noted in red. In the wake of this upside non-confirmation, the Industrials have now moved below their March closing low. But, with the Transports still above their corresponding secondary low point, which occurred in January, we now also have a longer-term downside non-confirmation in place, which is noted in green. Non-confirmations serve as warnings and with both an upside as well as a downside non-confirmation in place, we definitely have a tug of war going on between the bear and the bull. Nonetheless, according to Dow theory, once a trend is authoritatively established, as was the case on November 21, 2008, that trend must be considered to still be intact until it is reversed. To date, nothing has occurred to reverse the bearish primary trend that was established last November.
Tim W. Wood
Copyright 2008 All rights reserved.

Bruce

06/27/08 The Sting. A Great Hand for the Week of the ECB and NFP: Analysis by Terry Crawley. Hello traders, thank you for joining the table; what a great hand got dealt at the close of the trading week, I will have to wait until Sunday/Monday to play it but it could be well worth the wait. I'm looking at a pair of Aces, win/win, and here's why.
Three weeks ago we saw the eur/usd get dramatically weaker after the head of the Fed, Mr B, stated unofficially that the worst of the economic crisis was behind us, and that inflation was the concern of the FOMC members. From his comments the glass was now half full, and not half empty. Two days after that we heard the head of the ECB, Mr T, state that on the 3rd July the market could expect a rate hike from the ECB. As a consequence we saw the eur/usd get dramatically stronger, and back to where it was pre-Mr B's hot air blast two days before.
The market then went on to buy the dollar in the belief that the upcoming FOMC rate meeting, and statement that follows it, would be a little more bullish on the dollar than it actually turned out to be, and that whatever they had missed that Mr B had seen the month before would be revealed. The manure hit the wall at a fast rate of knots when on Wednesday there was no rabbit getting pulled from the Fed's hat; no outlook for growth, and maybe worse, no inflation to have to tackle. So whatever Mr B saw that urged him to comment on publicly seemed more now like manipulation of the media; it was a good sound-bite, and achieved what the FOMC members could not do at their meeting.
http://www.thelfb-forex.com/uploaded...he%20Sting.jpgNow, back to my aces that I am holding from the Market's deal on Friday. Mr T, the head of the ECB and not the 'A Team' member, has done exactly the same as Mr B in that expectancy of things to come has been set. In the early part of this week we will likely see euro appreciation, as trade desks get aligned for the upcoming rate increase that he has spoken of. This is where I play my aces. I am looking at the fact that the ECB may not raise, I will play euro long until Tuesday evening, I will dominate with my aces and will go all-in on long euro for two trading sessions. I will sell if I get profitable and go to cash on Tuesday night. From Wednesday I will be looking for intra-day selling opportunities as the markets start to question the fact that the ECB will be hard pressed to raise rates, outside of Mr T's hot air there would be no expectancy at all of a rate increase. This may be a stroke of genius from the ECB; they are going to be hard pressed to raise rates with such small forward growth numbers, and although their one mandate is price stability (inflation fighting) the Euro-Zone Exporters, Banks, Consumers, and Manufacturers are lobbying for a rate cut. All is not rosy in Euroland. By not raising rates the euro will fall dramatically in reaction to the expectancy that has built, the dollar will gain in value, oil will likely pull back, exporters will sigh with relief, bankers will start to lend at what will then be seen as cheap rates, consumers will be very thankful that their credit lines did not increase, and commodity prices may pull back (weaker euro = stronger dollar, stronger dollar = weaker commodity prices).
Technically we are at the top of the 4 hour range, and right now there is only a little way to go before major technical numbers are hit as resistance. Holding the 1.5750 area as support will be a key sign, the full details are in the members Alert page of how we are going to play this. Just bear in mind that my aces are coming in under the radar, they will be hard to beat, and I have a theory that Mr T's hot air may have been staged. Did you notice that Mr Webber, number two at the ECB and head of the German Bundesbank, did not flinch at all when Mr T blurted out his rate hike nonsense? If it were not staged I am sure we may have seen a raised eyebrow from Mr Webber; but nothing, and that has given me a read on the fact that my hand I'm holding may well be good enough.
Converse Arugment; if the ECB do raise rates, and my aces get beaten by a pair of two's on the flop, that match Mr T's two and eight that he was holding, how high can the euro go? The ECB have told us that this will be one increase and done, if you believe the nonsense from the last conference, growth is not at a pace that rate increases are needed, the Euro-zone is struggling to find a balance between services, manufacture and agriculture now, each member state want different things, and the Irish voters just rejected the treaty; all is not as calm as it may seem. So how far can the euro appreciate? If they do raise I will be ready to sell the news, as the second part of the 'buy the rumor and sell the news' trading theory. I just cannot see too much above 1.6000, if it even gets there.
This could be re-made as a movie; The Sting II, starrting Mr T and Mr B. (Redford and Newman are no doubt better looking, but these two new actors may just have pulled this off. Instead of the Betting Shop front, we have the International Money Markets).

Link:

http://www.thelfb-forex.com/content....7/08_The_Sting._


Bruce

I just found this posted on another thread on Forex Factory !

Please Read Every One Of The 45 Points ! How many Apply to You either Positive or Negative ? Enjoy !!!

45 WAYS TO AVOID LOSING MONEY TRADING FOREX
by Jimmy Young, CTA

Who is Jimmy Young?

Retired proven professional Bank FOREX trader with over 20 years of hands-on FOREX trading experience.


1) Knowledge Deficiency – Most new FOREX traders don’t take the time to learn what drives currency rates (primarily fundamentals).

2) Overtrading - Trading often with tight stops and tiny profit targets will only make the broker rich. The desire to “just” make a few hundred dollars a day by locking in tiny profits whenever possible is a losing strategy.

3) Over leveraged - Leverage is a two way street. The brokers want you to use high leverage because that means more spread income because your position size determines the amount of spread income; the bigger the position the more spread income the broker earns.

4) Relying on Others – Real traders play a lone hand; they make their own decisions and don’t rely on others to make their trading decisions for them; there is no halfway; either trade for yourself or have someone else trade for you.

5) Stop Losses – Putting tight stop losses with retail brokers is a recipe for disaster. When you put on a trade commit to a reasonable stop loss limit that allows your trade a fair chance to develop.

6) Demo Accounts – Broker demo accounts are a shill game of sorts; they’re not as time sensitive as real accounts and therefore give the impression that time sensitive trading systems, such as short-term moving average crossovers can be consistently profitably traded; once you start dealing with real money, reality is quick to set in.

7) Trading During Off Hours – Bank FX traders, option traders, and hedge funds have a huge advantage during off hours; they can push the currencies around when no volume is going through and the end game is new traders get fleeced trying to trade signals. There is only one signal during off hours – stay out.

8) Trading a Currency, Not a Pair – Being right about a currency is half a trade; success or failure depends upon being right about the second currency that makes up the pair.

9) No Trading Plan - 'Make money' is not a trading plan. A trading plan is a blueprint for trading success; it spells out what you see your edge as being; if you don’t have an edge, you don’t have a plan, and likely you’ll wind up a statistic (part of the 95% of new traders that lose and quit).

10) Trading Against Prevailing Trend – There is a huge difference between buying cheaply on the way down and buying cheaply. What was a low price quickly becomes a high price when you’re trading against the trend.

11) Exiting Trades Poorly – If you put on a trade and it’s not working make sure you exit properly; don’t compound the damage. If you’re in a winning trade, don’t talk yourself out of the position because you’re bored or want to relieve stress; stress is a natural part of trading; get used to it.

12) Trading Too Short-term – If your profit target is less than 20 points don’t do the trade; the spread you pay to enter the trade makes the odds way against you when you go for these tiny profits.

13) Picking Tops and Bottoms - Looking for bargains works well at the supermarket but not trading foreign exchange; try to trade in the direction the price is going and your results will improve.

14) Being Too Smart – The most successful traders I know are high school graduates. They keep it simple and don’t look beyond the obvious; their results are excellent.

15) Not Trading Around News Time – Most of the big moves occur around news time. The volume is high and the moves are real; there is no better time to trade fundamentally or technically than when news is released; this is when the real money adjusts their positions and as a result the price changes reflect serious currency flow (compared to quiet times when Bank traders rule the market with their customer order flow).

16) Ignore Technical Condition – Determining whether the market is over-extended long or over-extended short is a key determinant of near time price action. Spike moves often occur when the market is all one way.

17) Emotional Trading – When you don’t pre-plan your trades essentially it’s a thought and not an idea; thoughts are emotions and a very poor basis for doing trades. Do people generally say intelligent things when they are upset and emotional? I don’t think so.

18) Lack of Confidence – Confidence only comes from successful trading. If you lose money early in your trading career it’s very difficult to gain true confidence. The trick is don’t go off half-cocked. Learn the business before you trade.

19) Lack of Courage to Take a Loss – There is nothing macho or gutsy about riding a loss, just stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Getting married to a bad position ruins lots of traders. The thing to remember is the market does crazy things often, so don’t get married to any one trade. It’s just a trade. One good trade will not make you a trading success; rather it’s monthly and annual performance that defines a good trader.

20) Not Focusing on the Trade at Hand– There is no room for fantasizing in successful trading. Counting up and mentally spending profits you haven’t made yet is mental masturbation and does you no good. Same with worrying about a loss that hasn’t happened yet. Focus on your position and have a reasonable stop loss in place at the time you do the trade. Then be like an astronaut – sit back and enjoy the ride. No sense worrying because you have no real control. The market will do what it wants to do.

21) Interpreting FOREX News Incorrectly – Fact is the press only has a very superficial understanding of the news they are reporting and tend to focus on one element and miss the point. Learn to read the source documents and understand it for real.

22) Lucky or Good – Your account balance changes don’t tell you the whole story about your trading. Fact is if you are taking a lot of risk and making money you will eventually crash and burn. Look at the individual trade details. Focus on your big loses and losing streaks. Ask yourself this, "If I had a couple of consecutive losing streaks or a couple of consecutive big losses, how would my account balance look?" Generally, traders making money without big daily losses have the best chance of sustaining positive performance. The others are accidents waiting to happen.

23) Too Many Charity Trades – When you make money on a well thought out trade don’t give back half on a whim. Invest your profits from good trades on the next good trade.

24) Courage Under Fire – When a policeman breaks down the door to a drug dealer's apartment he is scared but he does it anyway. When a fireman climbs onto the roof of a burning building he is scared but does it anyway, and gets the job done. Same with trading. It’s ok to be scared but you have to pull the trigger. No trigger – no trades – no profits – no trader.

25) Quality Trading Time – I suggest 3 hours a day of quality, focused trading time. That’s about all your brain allows. When you are trading, be 100% focused. Half way is bullshit - it doesn’t work. Don’t even think that time spent in front of the computer watching the rates has any correlation to profitability - it doesn’t. Spend less time but when you're trading, be 100% focused on trading.

26) Rationalizing – Killer. Absolute Killer. Put your trade on and let it run. If it hits your reasonable pre-determined stop, you're out. Think of yourself as a prizefighter. You just got knocked out. Moving your stop is like getting up after being crushed with a knockout blow. It’s pointless. Things will only get worse. Don’t ignore the obvious. You're wrong – get out. Come back the next day and try again. A small loss will not hurt you - a catastrophic loss will.

27) Mixing Apples and Oranges – Have you ever done this? You see the EURUSD trading higher so you buy GBPUSD because it “hasn’t moved yet”. That’s a mistake. Most of the time the reason the GBPUSD hasn’t moved yet is because it's already overbought or some 4:30am UK news was bearish. Don’t mix apples and oranges. If EURUSD looks bid, buy EURUSD.

28) Avoiding the Hard Trades – Bank FX traders have an axiom "the harder the trade is to do the better the trade". This I learned from experience. When I needed to buy EURUSD and it was hard to get them, that’s when it’s necessary to pay up and get the business done. When it’s easy to get them, then sit back and wait for better levels. So if you are trying to get into a trade, or more importantly get out of a trade, don’t putz around for a few points - get your business done.

29) Too Much Detail – If your trading more than 2 indicators then you need to clean house. Having many indicators stifles trading and finds reasons not to trade. A setup and a trigger is all you need.

30) Giving Up Too Easy – Your first trade of the day may not be your best but certainly it’s no reason to quit. I have a preset daily trading limit and I use it. You can’t make money by making excuses. Getting trades wrong is natural and should be expected.

31) Jumping the Gun – Don’t be penny wise and dollar foolish. Wait for your trade signal to be clear. Put on your trade and give it a decent size stop loss so that you don’t get knocked out by random noise.

32) Afraid to Take a Loss - trading is not personal, it’s business. Don’t think that a poor trade is a reflection on you. It could be you're just ahead of your time or a commercial order hits the market and temporarily creates a small unexpected move. Again, place your stop beforehand and NEVER increase your pre-determined risk. If it’s going bad, it will probably get worse. I think that’s Newton's “body in motion tends to stay in motion…”

33) Over-Relying on Risk Reward – There is zero advantage in risk reward. If you put a 20 point stop and a 60 point profit your chances are probably 3-1 that you will lose. Actually with the spread its more like 4 to 1 (from entry point if it goes down 17 points you lose, or up 63 - you win; 17/63 is close to 4-1).

34) Trading for Wrong Reasons – Because the EURUSD is going up is not in itself a reason to buy. Buying EURUSD because it's not moving much is even worse. You’re paying the toll (spread) without even a hint that you will get a directional move. If you are bored, don’t trade; the reason you're bored is there is no trade to do in the first place.

35) Rumors – Rumors are rumors almost 100% of the time. Think about where in the motion you heard the rumor. If EURUSD is up 50 points in last 15 minutes and the rumor is dollar negative, well - then you missed it. Whenever you in motion with the trade, determine where you are entering.

36) Trading Short-term Moving Average Crossovers – This is the money sucker of the century. When the shorter term moving average cross the longer term moving average, it only means that the average price in the short run is equal to the average price in the longer run. For the life of me, I cannot understand why this is bullish or bearish. Easy to set up on software, complete with lights, bells and whistles, and good for the seller getting thousands for the software but in terms of creating profit - it’s a zero.

37) Stochastic – Another money sucker. Personally I think this indicator is used backwards. When it first signals an overdone condition, that’s when I think the big spike in the “overdone” currency pair occurs. To be overbought means strong and oversold means weak. Try buying on the first sign of overbought and selling on the first sign of oversold. You’ll be with the trend and likely have identified a move with plenty of juice left.

38) Wrong Broker – A lot of FOREX brokers are horrible. Get a good one. Read forums and chats in several different places to get an unbiased opinion.

39) Simulated Results – Watch out for “black box” systems. These are trading systems that don’t divulge how the trade signals are generated. Great majority of them are absolute garbage. They show you a track record of extraordinary results but think about it. If you could build a trading system with half a dozen filters using the benefit of hindsight, couldn’t you too come up with a great system. Of course going forward is an entirely different story. High-speed number crunching capabilities allows for building great hindsight trading systems, so BEWARE.

40) Inconsistency – Every business (FOREX trading included) requires a business plan (trading plan). Unless you have taken the time to write down a set of rules that you can and will follow, it’s likely your trading will remain unfocused and directionless. Make a plan, have rules, follow them. Set goals that are realistic and you will achieve them.

41) Master of None – Focus on one currency for technical trading. Each currency has a unique way of trading and unless you get intimate with it, you will never truly understand its underlying idiosyncrasies. Don’t spread yourself too thin – focus, master one currency at a time.

42) Thinking Long Term – Don’t do it. Stay in the moment. Especially if you’re a day trader. It doesn’t matter what happens next week or next month. If you are trading with 30 to 50 point stops, restrict your thought process to what’s happening right now. That is not to stay the long-term trend is not important. It is to say the long-term trend will not always help you when your trading a significantly shorter time frame.

43) Overconfidence – Trading is simple but not easy. Statistics show 95% failure rate of those attempting to become traders. If you're doing well, don’t take your success for granted. Always be on the lookout for ways to improve what you are already doing.

44) Getting Pumped Up – The trick is to maintain an even keel. When you are in a trade, you want to think exactly as you would if you didn’t have a trade on. To do this requires a relaxed disposition. This is not a football game. Don’t get psyched up. Relax and try to enjoy it.

45) Staying in the Game– I don’t recommend demo trading because traders learn bad habits when trading with play money. I also don’t think “letting it all hang out” right away is wise either. Start off doing trades and taking risk that is relatively small but still makes a difference to you if you win or lose. About a quarter to a third of what you expect to reach as your trading matures is reasonable.

http://www.actionforex.com/action-in...2008062851141/

Snippet:

The Week Ahead
The US markets will be shortened by national holiday on Friday but the coming week is jam packed with highly important events that could shake the markets. Firstly the markets would likely be building up for a rate hike from ECB on Thursday, in particular in Jun Flash CPI estimate in Eurozone does accelerate to 3.9% yoy as expected. Markets are expecting a 25bps rate hike from ECB based on recent hawkish comments from Trichet and other officials. Even though recent growth and sentiments indicator showed that economy in the Eurozone is slowing quicker than expected, skyrocketing oil and food prices and induced inflation will likely be used as the main bullet for ECB to raise rate. However, note that firstly, Trichet may signal in the post meeting conference that the hike is a one-off event and that may trigger some profit taking in Euro long positions. Secondly, should ECB keep rates on hold, the common currency will be punished hard. So after all, there are some downside risks in the Euro this week, in particular, if the possibility of reversal in EUR/JPY crosses on risk aversion is taking into considerations. Other important data from Eurozone include PMIs, unemployment and retail sales.
From US, main focus will be on Thursday's Non-Farm Payroll report (a day earlier than usual since Friday's a US market holiday) which is expected to show consecutive sixth months of contraction in the job market in Jun. Unemployment rate is expected to ease back from 5.5% to 5.4%. Other important economic data from US include ISM manufacturing and manufacturing indices. Note that the case for a Sep hike is marginal. In other words, the bias of greenback could flip flop again as the expectation is changed up every piece of upcoming tier one economic data.
Sterling enjoyed a strong rebound against dollar last week but will face the test of manufacturing and services PMI in this week.
From Japan, main focus will be on the quarterly tankan survey, which is expected to show sharp deterioration in manufacturers' sentiment. The tankan usually has close correlation to GDP growth in Japan and will be a leading indicator of nearly flat growth in Q2.
Swiss CPI is expected to accelerate to above 3% to 3.1% yoy in Jun.
From Canada, main focus is on Apr GDP which is expected to rebound by growing 0.3% mom.
RBA is widely expected to be on hold at 7.25% this week. May retail sales will be watched.


Bruce

http://www.financialsense.com/fsu/ed...2008/0627.html


All Snippets:

USFed Blinks: Propaganda & Bluffs

by Jim Willie, CB. Editor, Hat Trick Letter | June 27, 2008

Print
For the last couple weeks, my attention has been given to the amusement and desperation behind propaganda, bluffs, and the utter desperation of the USFederal Reserve in the orchestrated rumors of a new position wherein they would soon or eventually raise the official interest rate in order to combat the horrendous price inflation brought about by the falling crippled USDollar. What utter nonsense! To hear that the investment community actually accepted and embraced this notion was laughable on its face, and served as continued evidence that the loose collection of investors, speculators, and observers simply cannot wake up reality despite the events that began last August 2007 when the mortgage debacle ripped the banking system wide open with gaping wounds. The USFed needs to arrest the falling USDollar, no doubt. But it cannot. The USFed needs to stem the price inflation, no doubt. But it cannot. This parasite central banker organization has its own track record of inflation boom & bust, complete with profound destruction. The USFed does not control the shallow and ineffective USGovt policies on ethanol, trade sanctions, geopolitical isolation, crackdown on oil speculators, and delay for actual mortgage bailout programs. The USGovt collectively is responsible for the chronic budget deficits and huge USTreasury Bond sales every year. The USMilitary is the largest single non-govt user of gasoline, diesel, and jet fuel in the world, yet nobody seems to point a finger at endless war as another reason why the crude oil price is high.
The US Federal Reserve oversees the sequences of credit explosions, fails in its rational regulation, orders hidden subsidies to Wall Street banks, justifies the colossal inflation permitted, and under-writes the last bubble bust with more liquidity. It fails to comprehend that the sequence has gutted the national economy. The ongoing drama must be watched closely. The USFed on Wednesday was laid bare in its legless weakness and incapacity. They revealed they are in a corner, trapped, stuck in an unresolvable dilemma. Its propaganda was stripped. Its bluffs were called and they blinked. Its desperation is vividly and tragically clear. Enough on these guys, these charlatans, these improperly revered destructive parasites on the body economic!
STARK MARKET RESPONSE TO THE USFED
The effect on four key markets was pronounced and loud since Wednesday, when the USFed sheepishly blinked in profound weakness. Its bluff is over now. The euro currency jumped up sharply in a reversal, now at 157.30 or so. The 2-year USTreasury Bill yield fell down sharply in a reversal, now at 2.70% or so. The gold & silver prices jumped up sharply in reversals, now at 913 and 17.3 or so. Anyone who cannot see in basic terms what happened in response is not awake, plainly put! On June 25, everything changed and reality entered the room again!
The stage is set for the next two to four months for a broader banking system deterioration, most likely the bankrupt collapse of a few big banks, and a good chance of lost control of portions of the credit derivative complex. A big broad powerful liquidation sequence is coming soon for the biggest of bloated money center and investment banks. They have tried in vain to sell most of their overpriced mortgage bonds and related financial securities. They cannot find truly stupid parties anymore to buy them. Past rescues are all showing big losses for participants. The bonds lack true price discovery. In many cases no market exists for them, such as with the Collateralized Debt Obligations that leverage mortgage bond in reckless fashion. In an increasing number of cases, many of the mortgage securities cannot be properly associated with ‘perfected titles’ to the actual properties. The big banks might soon choose to dump the bonds on the market in a race to be first, BEFORE class actions are taken by the public to block the foreclosure process. They can and are blocking their own foreclosure, dispossession, and eviction, as they properly and legally demand for the banks or financial agencies to produce perfected property title. In many cases, the banks cannot. In its haste during the Go-Go years of 2003 through 2006, the Wall Street bond dealers, purveyors of fraud, conmen to the pension funds and insurance firms, did not bother to file the documents and connect the asset backed bonds with the properties that backed up the securities. They were concerned about fast bond sales and ripe fees earned. Now they are vulnerable to class action and civil disobedience, which will possibly accelerate disorder and chaos. Enough on these guys, these untouchable conmen felons, these destructive parasites on the body economic!
The official Federal Open Market Committee statement said, “Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.” Their statement actually stated that the USEconomy was continuing to grow, although slowly. One must wonder what statistics they are reading. Perhaps these clueless guys believe the $165 billion in handouts to US households will sustain the economy. In my view such handouts are very similar to Third World Nations delivering handouts of rice and beans to the impoverished citizens. The next ugly resemblance will be dead cars used as lawn ornaments.
Four specific reactions occurred after the USFed took no action, did not raise the official FedFunds rate, mentioned ongoing housing weakness, and basically tipped its hand that it cannot conceivably raise rates as long as the housing market, financial markets, and USEconomy remain so weak. They actually cited weakness, but understated the actual weakness. The economic stagflation underway is powerful, and like nothing seen in seven decades. Even Greenspan expects a recession to last for a much longer time in a break from past patterns. Let’s proceed with four key markets, as reality entered the room. The next phase is almost ready. The spring deception is now completed, a closed chapter. The next bank bond gigantic losses are soon to come. The next selloff retest of the USDollar critical support is coming soon. The next gold & silver runup toward the critical resistance levels of 1030 and 21.50 is coming next. Prepare for fireworks running from July 4th all the way into the autumn in steady fashion, with some assured climaxes in two to four months.
THE EURO JUMPS IN REVERSAL
Even the EuroCB is guilty of phony messages disseminated. It was bluster! They perhaps should raise their official interest rate, but they will not. They too must contend with rising price inflation, but they too are stymied by housing declines, economic slowdowns, and banking crises also. In the past few weeks, they have been displaying a position of bravado, as the Germans defiantly claim they might hike their official interest rate soon, further straining the USDollar, as they work to manage and protect the economy across the European Union. If they really cared about inflation, they would halt the 12% annual euro money growth. It is all talk, gamesmanship, in a grand struggle to wrest banking leadership from the reckless corrupt Americans who continue out of control. On Wednesday in Europe, the EuroCB head Jean Claude Trichet was on the defensive. He found himself dismissing the notion that the ECB would install three separate rate hikes before December. He tried to make the case that the ECB would perhaps order just one rate hike. They will not hike at all. They will be forced to deal with a growing conflict within the European Monetary Union, covered in the Hat Trick Letter in recent monthly reports. The southern nations are crippled by housing declines, mortgage disasters, and associated economic harsh slowdowns. They need lower interest rates, but the Germans who run the EuroCB refuse to budge. A potential breakdown of the EMU and euro looms.
The euro currency had been weakened in the last few weeks by accepted beliefs in the propaganda, that the USFed would next cut its official short-term interest rate. That would have narrowed the differential between the 4.0% official Euro Central Bank rate and the 2.0% official USFed rate. As stated in my article last week, neither central bank will be hiking interest rates in the foreseeable future, not with economic weakness, housing vulnerability, and bank crisis continuing to wreak havoc. The euro had been down to slightly flat on Wednesday in trading. When the news broke on the USFed statement to do nothing, and to paint the picture of helplessness on defense of the USDollar as engrained policy, the euro jumped up. It is now 150 basis points higher. The Goldman Sachs statement pushed the euro higher still, highlighting the US bank weakness. The contrived USDollar bounce is officially done, cooked, stick a fork in it. A more complete analysis will appear in the July Hat Trick Letter in a couple weeks. For now, just view the tremendous single day movement in the euro. The opposite occurred in the USDollar DX index, weighted by over 50% in the euro.
http://www.financialsense.com/fsu/ed...es/0627.h1.jpg
THE SHORT-TERM USTREASURYS JUMP
In the last few weeks, the 2-year USTreasury Bill yield has climbed rather suddenly. The bond traders accepted the notion of an eventual USFed rate tightening, in response to painful price inflation. They overlooked the weakness in housing, economic slowdown, and worsening bank balance sheets, all of which render impossible any official rate cut. Sure, the Germans and Americans are at odds and in conflict. Each has talked tough on price inflation, stealing from each other the mantle of leadership. But despite the rhetoric and bravado, the facts remain. The two economies of Europe and the Untied States cannot possibly tolerate a rate tightening episode. To order higher rates would push both economies over the edge into a downward spiral. To accept the notion of rate hikes is an exercise in embarrassing naivete at best, and reckless stupidity at worst. In the ensuing minutes following the USFed public announcement, the short end of the USTreasurys rallied. The USTBill yields are showing more clearly the economic slowdown and ongoing endless recession. The gap between the 2-year TBill yield and the FedFunds 2.0% target has been reduced. They realized the jig was up. The USFed blinked as the gold longs and dollar shorts called their bluff successfully. Below is the bond principal chart in minute ticks. The 2-year TBill yield had been flirting above the 3.0% level. After the announcement, it fell sharply toward 2.8% and stands at 2.7% now. The short-term USTreasurys are screaming recession again. Consistent with such loud cries is the associated painful notion that the USFed will almost certainly LOWER the official FedFunds rate reluctantly. Give them a few months. With the next official rate cuts, all USFed leadership, all USFed credibility, and all USDollar integrity will be thrown out the window.
http://www.financialsense.com/fsu/ed...es/0627.h2.jpg
GOLD JUMPS IN REVERSAL
The gold price has been doing repeated tests of the critical support. At least three or four such successful tests have been completed. The uptrend in the gold price remains clearly evident, very firm in its support, as it prepares for the next summer and autumn fireworks. The silly notion of a USDollar rebound led by USFed vigilance to price inflation is now cast aside like last month’s Sunday newspaper. Recycle both the newspaper and the failed propaganda that has become like a rancid sugarcoating upon the financial markets, endlessly repeated deceptions heaped upon the public. The housing weakness will spur continued inflationary responses to deal with it. Any mortgage rescue platform program will be extraordinarily packed with inflation medicine. Gold will respond. The USEconomic weakness will spur continued inflationary responses to deal with it. Any further USFed stimulus and rescue packages will be extraordinarily packed with inflation medicine. Gold will respond. The bank crisis and upcoming bank failures will spur The USEconomic weakness will spur continued inflationary responses to deal with it. Panic will soon enter the financial markets and banking world. Gold will respond. Not a single bank run by depositors has occurred, at least not yet. There will be many. The reversal on Wednesday, continuing into Thursday, was plain as day. For believers in real money, and advocates of sound money, the gold response was reassuring and soothing, not to mention promising.
http://www.financialsense.com/fsu/ed...es/0627.h3.jpg
Some credibility had been accepted within the FedFunds futures market in the last few weeks, that a rate hike or series of rate hikes would come before the end of the year. This is patently nonsense. The financial markets in the Untied States have swallowed the notion of bank system recovery, mortgage market stability, and immunity of the USEconomy from the housing decline. All three notions are absurd on their face, with much worse distress and losses to come in the near future. The USTreasury Bonds on the short end are finally reflecting the USEconomic recession that is growing worse by the month. The news on housing was terrible this week, as the Case Shiller housing price index over 20 cities fell 2.0% in April, registering a hefty 15.3% decline in the last full year. Also, the consumer confidence index by the Conference Board fell hard to 50.4 in June from 58.0 in May. The June reading is the lowest in its history. The next bank failure will put the final nail in the Rate Hike Coffin, dispelling any doubt. The inevitability of a General Motors bankruptcy has begun to take root. Perhaps Ford Motors will go bust also. Car sales, SUV sales, and truck sales are down badly. The entire car industry supply chain is suffering. Claims of growth in the USEconomy by USFed Chairman Bernanke defy reality.
GOLDMAN SACHS PAINTS THE PICTURE
Some clear indications are coming to light. The Wall Street firms are both banding together and at odds with each other. First a preface. The Bear Stearns kill job engineered by JPMorgan has numerous stories behind the public face story told. Some of my views have been shared. Here is more. Bear Stearns did not participate in the LongTerm Capital Mgmt emergency bailout rescue in 1998. They were punished ten years later. Furthermore, when the USFed opened the Bear Stearns books in March, they found a giant position that was short the USDollar. They found a giant position that was betting on a higher gold price. So Bear Stearns was killed, with the liquidation of their gold position responsible for a huge gold price drop, aided by the cover of their US$ position. See the mid-March gold price and US$ action. The Wall Street firms took notice of the message. If they bet against the US$ and bet in favor of gold, they would not have any further access to the USFed discount window or lending facilities. So now the Wall Street firms might be helping each other to stand up. If one fails, they all might fail and go bust. That is why the Lehman Brothers story and the Merrill Lynch story are so important. They are being propped up. Enter Citigroup. My guess is that a huge amount of mortgage bonds are to be sold soon by Citigroup, and maybe another big bank, in the initial stage of a bond liquidation scheme and exercise. Citigroup is busted, and will portray their bankruptcy as a restructuring procedure, complete with liquidation. We will have to wait to see what remains.
Goldman Sachs on Thursday downgraded Citigroup with a short stock recommendation. Why would they do that? They put Citi on their ‘Americas Conviction Sell’ list, which just has to evoke laughter for its name. They expect another gigantic bond loss to be admitted by Citi, more cash to be raised as they sell capital and undermine stock equity value, and even more dividend cuts. Up to May, the total amount of cash they raised by selling off capital to foreign entities was a robust $42 billion, thus undermining US control of the biggest US bank. One can only speculate. Perhaps GSax finally has a big short position in place against Citi, and wants the public to climb aboard the selling parade. Perhaps GSax has inside word of the big Citigroup bond liquidation fire sale upcoming. People need to remember that GSax is not a charitable organization. They make money by legitimate trades, but also by lying, cheating, and sometimes stealing, all legally. Just to prove that GSax remains a corrupt information source, they downgraded the entire brokerage sector from ‘Attractive’ to ‘Neutral’ in laughable style. The US brokerage industry is fast approaching extinction. Check their bond and stock issuance lately. Their ugly position matches the US banks, which on average are insolvent. Sanford Bernstein analyst Brad Hintz forecasted a $3.5 billion Q2 writedown for Merrill Lynch, matched by Bank of America analyst Michael Hecht. The Goldman Sachs analyst Richard Ramsden said just a week ago that the US banks must produce $65 billion more capital to cope with the destruction to their balance sheets before the peak of the crisis sometime in 2009. So have we seen the worst yet? No way! Once again, they are not raising capital. They are raising cash. They are selling capital in the form of stock equity and long-term debt. As they do so, control of the banks goes into foreign hands more so.
STRANGE TIDBITS
Yet another excellent quote came from Art Cashin of UBS, from the New York Stock Exchange floor. Two weeks ago he responded to the crude oil mania when he said, “Goldilocks is thinking about a career change. She is considering a new job renting out and operating a drill rig.” Today he said simply, “The Fed cuts before it raises,” which surprised the anchors on the financial advertisement public address system known as CNBC. Even Ron Insana, yesterday afternoon said, “The Fed offered nothing for everyone.” The smart guys out there have figured out the helpless and desperate situation that the USFed finds itself. It cannot raise rates, since that would harm the stock market, further cripple the mortgage and housing markets, and worsen the rapidly advancing USEconomic recession. Sure, it needs to raise rates in order to defend the USDollar, but the US$ is not defensible. It has been totally ruined by three decades of mismanagement, corruption, pork projects, sacred war budgets, socialist programs like Medicare, and reckless creation of bubbles in serial fashion.
Yet another shadowy story came to light (for those who know how to flash the spotlight), certainly not mentioned by the intrepid lapdog US financial press networks. Lehman Brothers and the London Stock Exchange announced plans to set up a pan-European trading platform steeped in darkness (click here). The joint venture is called Baikal, named after the world’s deepest fresh water lake in western Siberia within Russia. It is known as the ‘Blue Eye of Siberia’ in exotic terms. It is famous for holding a volume of water larger than all the North American Great Lakes combined. At 1637 meters (5371 feet), Lake Baikal is the deepest lake in the world, and the largest freshwater lake in the world by volume, holding approximately 20% of the total surface fresh water on earth. How appropriate! The new Dark Pool Trading Platform will offer access to securities across 14 European countries, featuring computer driven trading schemes. The claim is to address complexity of order execution, but the real intention is to minimize market impact and avoid the scrutiny of public disclosure. Wall Street and London firms, as in investment banks, large money center banks, and hedge funds, are anxious to dump huge positions without attention. Those who claim the US and London financial markets have transparency are dead wrong! Those who claim they have price discovery that seeks equilibrium are dead wrong!
A bizarre story was just told to me by a friend from Philadelphia. On a daily basis, his wife travels the New Jersey Transit Train line as many commuters do, from Philly to New York City. In the last month alone, three suicides have taken place, almost never heard of before. Some men without hope jumped in front of the train. Each time the usual 2-hour trip by train suffered delays, including today. The delay added 2-1/2 hours, making the commute over four hours. The entire NJ Transit line was interrupted, which included the Amtrak Metroliner and Keystone Service. People trying to avoid cars, gasoline, and its nightmare face a different nightmare. Contrast this story to a recent analysis that points to how many US citizens earning under $25k in annual income will be forced to stop driving altogether. In typical overextended US style, over 30% of them have more than one car. The perceived right of Americans to drive will slowly endure a transition toward the privilege to drive. Japan has made its investment in electric cars and hybrids for well over ten years. The Untied States made its investment in Sport Utility Vehicles piglets, Hummer true hogs, and light trucks. The US has not made any meaningful investment in commuter railways, and especially not high speed railways like Japan, London, and Europe. The US is horrendously mismanaged and corrupt. The 60% share of new vehicle sales that were from SUV and light trucks will be cut in half in the next year. Shocks to the US landscape will be ongoing, regular, and severe. Expect shocks to become routine.
The strange new world is emerging, with more onerous extensions of the Fascist Business Model. My view is that the financial markets will declare the shock filled status as normal very soon. Panic will slowly seep into the environment. This late summer or early autumn, some really nasty bank failures are assured. GOLD WILL REACT VERY STRONGLY, AS WILL SILVER. The next USDollar decline is coming soon, right on schedule for those who ignore the propaganda, nonsense, and blatant deception promulgated by Wall Street. Has anyone noticed that the Dow Jones Industrial index has fallen below critical long-term support, but the S&P500 index is near critical long-term support levels??? Each is falling badly. This occurs while gold rises!!! The criminal prosecution has begun finally. They started with the small fries at Bear Stearns. Look for these little guys to roll over, to turn state’s evidence, and to attempt to bring down some executives for criminal fraud felonies. The process is very early here. Bad publicity like CFO or CEO indictments akin to WorldCom, Enron, and Tyco lies in the future. Gold will respond.



Bruce

Hello All,

i have a few questions and i hope some of you can answer them or provide links where i can read more into the subject. i have no experience in trading. if u would recommend a book, i would probably read it, after i examine if its worth the time, or not if its too overloaded.

1) So there is the carry trade, people borrowing money in one currency investing it in another country, therefore changing it to the domestic currency, as in the yen, which is an issue right now.

- what carry trades do exists, in wich amounts of money, i read something about the yen in the trillions. are there other currencies, how big is the impact?

- what happens with the money, where does it go? I believe in stockmarket, since i realized some traders mention if the dow goes down, the carry unwinds. are there other indicators (markets) they show that the carry unwinds.



2) I read in some posts in the thread about bonds, and also the link from Warren, but i dont get it, its too complex for my experience and knowledge i gathered by now.

- why does the yield go up, when someone is selling bonds. arent there more people willing to bye them back because 1. they are cheaper and 2. they earn more b/c of the higher yield?

- what happens when the government is issuing bonds, how often do they do that, what will they accomplish with it, does this have another influence on some market other than borrowing money for gov. expenditures?

- why are there 2-Y, 10-Y, 30-Y bonds? What is the impact of issued bonds 10 years ago, that would be bought back?

- why has china so much of them?

- what are bond prices an indicator for? i read something on reuters, that if the bond yield from us-bonds is lower than that from jp-bonds, it has some impact, but i dont remember exactly what they were talking about.



I know these are a lot of questions and if you just post links it would be fine, but i dont want wikipedia entrys or similar sites, because they cover the issue on a to broad view and with unnecessary details with year dates and whatever but without implications or coherencies in regards of trading.

thanks in advance

Thanks Bruce.

Is this thread dead ??

Here are the final results of my trades at FX Solutions !!!

Summary as follows;

Total Trades - 300

Losses - 4

Wins - 296

Winning Percentage - 98%

Total Net Profit - $20,885.39 US Dollars

Comments - The USD/JPY never got over 109.00 but did go below 106.00

The Trend was always down and still is. Within the Trend were changes between perceptions and realities. As long as you trade with the Trend which for me is the 30 to 60 day Trend based solely on the Fundamentals. I use the Technicals to decide where to short USD/JPY.

My method works for me and like I said before I started trading this FX Solutions Demo Account, the actual results that I acheived were the ones that I said that I would.

I recently closed an arrangement to manage $500,000 US Dollars in Real Funds and I start trading them on July 15, 2008.

The reason that I have not posted here in two weeks is due to the fact that on the USD/JPY Thread, I posted information there in it's entirety and Twee as was correct suspended me for breaking Rule 1 !

I have no problem with that as he has been more than fair with me and I have great respect for Twee and his job here.

I hope everyone continues to do well and anything that I can do to help you improve your FX trading will be my pleasure.


Bruce

P.S. My PDF File of All The FX Trades could not be posted because of the following;

rptIndividualCustomerBruceEndOfDemoTrading.pdf:
Your file of 2.26 MB bytes exceeds the forum's limit of 1.91 MB for this filetype.

I just generated a PDF file of my Fx trades for the period of trading from the date of June 26, 2008 to July 11, 2008.

That way you can see my last trades done. The FX trades to June 25, 2008 were already posted on this thread. I just added the generated FX Solutions report from June 9, 2008 to June 25, 2008. You now can review all of my 300 FX Demo trades in case you are interested to see how I made over 20% in Demo Net Profits in a month of trading.

Any comments or questions are welcome !!!

excellent JOB!

Let us discuss the Yen Carry Trade. Last year when the Yen had a ZIRP rate of 0% and the US Dollar FED discount rate was 5.25% investors would borrow the Yen and buy the US Dollar. As long as things were quiet and stable they made profits on the spread between the two discount rates. As the Dow kept going up and up, then they used their US Dollars to buy US Stocks. There are also Carry trades in other currencies but I am only discussing the USD/JPY since that is what I mainly trade now in my trading plan.

Starting in August 2007 to present day as the spread narrowed from 5.25% to the NOW 2.0% VS the Yen discount rate of .50% you can see the benefit in the spread is now only 1.5% VS the then 5.25%

The KEY is the Dow going Down and Down and Down.

The Carry trade in USD/JPY at one time last year might have been as high as Three Trillion US Dollars ? Whatever the amount then it is a lot less now. Perhaps about One Trillion Five Hundred Million.

Whenever the Dow goes down just like before where the borrowed Yen got US Dollars which then were invested into the US Stock market for additional profits other than just the spread profit now the REVERSE is TRUE as the USD/JPY Carry trade continues to unwind. The investors SELL the Dow and other US based Stock exchanges and with the proceeds from the sales in US Dollars, they BUY back the Yen that they originally borrowed and the Yen goes UP in value or in the case of the USD/JPY Currency Pair, USD/JPY heads to 100 and NOT 110 like some Technical Traders seem to think it will.

The Fundamentals DETERMINE it as the Dow keeps going down !!!

Is that clear now ? Dear Technical FX Traders !!!

Now on to your US Bonds question.

I use the Bond Yield as an indicator in my trading FX. I mainly watch the US Bonds of 2 Years Maturity and 10 Year Maturity. You can get that always by watching CNBC as I trade USD/JPY.

Say the US Government, well actually the FED arranges to Issue One Billion US Dollars by printing 2 Year Bonds which are then sold to investors.

Now there is ANOTHER Billion Dollars created and in the overall money supply.

Now different parties buy and sell these 2 Year US Bonds as well as others but again let us focus on the 2 Year and 10 Year ones.

When there is confusion or other uncertainties in the markets more people BUY the shorter end US Bonds so in the case of the 2 Year US Bonds as it is bought more than sold the PRICE of the 2 Year US Bond goes UP and inversely the YIELD goes DOWN.

The Money could be flowing out of Gold and Oil and The Yen and the US Stock market and going mostly into US Bonds. There are actually 30 Day US Bonds as well and others such as 5 Year and 30 Year but my focus is on the ones that I follow.

What does knowing the YIELD's of the 2 Year US Bonds and the 10 Year US Bonds tell you ?

It SHOWS you were the MONEY is flowing. Go With The Flow !

When calm has returned then the money is going out of the 2 Year US Bonds and others such as when the FED mislead the markets and suggested that they might RAISE rates over 2.0% and so The 2 Year and other US Bonds were sold and the price went down and the Yield on the 2 Year US Bonds went OVER 3.0% briefly as expectations were of increases in the discount rate set by the PRIVATE FED !!!

The money Flowed into Gold and Oil as Inflation again was on the Front Burner.

Now with PANIC in the US Markets the YIELD on the 2 Year US Bonds is around 2.40% as money flows out of the Dow and into the safety of 2 Year US Bonds. However as The US Dollar Index goes below 72.00 the Price of Oil goes UP and UP as does Gold.

Knowing, understanding and watching these things can only improve your FX trading.

Again, Technicals are IMPORTANT to know Good Entry Points and Exit Points and to understand the PRESENT Pyschology of the markets as to Perception and Reality. The FUNDAMENTALS drive the markets and always will.

You NEED a EDGE by knowing the REAL FUNDAMENTALS not the ones that the so called experts tell you about. They get it right about 50% of the time. I get it right by my independent research about 80% of the time.

That is my EDGE and why most months I make profits of OVER 20% a month for myself and my clients.

If you or others have additional questions or comments then please post them on this thread.

My finger is numb now and I am off for breakfast in Happy Montreal !!!


Bruce

Good to see that you have reappeared, my life was becoming.......

300 Trades 4 misses and a net profit of 20.8 %, I am glad that you reached your goal, which you set yourself.

For the past month my figures were:

140 Trades 1 miss and a net profit of 63 %.

No indicators, no technicals, no fundamentals, just pure mathematics.

Max possible drawdown 5 %

Do I do this consistently ?, the answer is yes I do, well most months are just below the above figure.

Will I post a copy of my Account, without question no.

Will I show you how I do it , the answer is a very defintely no.

However I will give you a tip I don't trade currencies, just pure GOLD.

Good luck with your 500 000 USD Client. Before you begin on Tuesday consider an OFFSHORE ACCOUNT, you could stash the money there no problem.

it is nice to see that someone is doing very well using only mathematics, because it is what I am developing for months now.. and I believe it is possible. I have very good results but I am looking now for different character systems now to diversify in case one of the systems fail.. so you don't put all the eggs in one basket. Mainly two different types of systems... one for trending markets and one for ranging markets... and different timeframes.