Money Flow Trading Method along with Risk Management

Thank you for this post, I want to ask. If we have risk off, then we enter a trade, now many hours later, the risk off becomes risk on, but your position maybe has not move a lot to move the stop loss to $250 profit, so our trade moves +/- $600 against us, now there is say a news event, then we should not enter that second position till after the news and after it is risk off again?

HEADS UP - VERY IMPORTANT ARTICLE - CHINA - SELLING OF TREASURIES !!! - INCREDIBLE KNOWLEDGE HERE - VERY HAPPY TO HAVE FOUND IT !!!

http://seekingalpha.com/article/4039...trend-continue

Treasury Rates Up As China Sells Big - Will The Trend Continue?

Jan. 26, 2017 2:05 PM ET

https://staticseekingalpha1.a.ssl.fa...png?1362199805
Daniel R Moore
Follow(2,506 followers)
Portfolio strategy, bonds, oil & gas, long-term horizon

FinancialRelativity.com

Summary
According to the latest TIC data released by the US Treasury, US Treasuries owned by foreigners showed a decline of $335.8B from June through November of 2016.


Based on a review of the historical data dating back to 1967, there has never been selling pressure of this dollar magnitude from foreign entities in the US Treasury market.


From the beginning of July through November 2016, China sold $191.5B in U.S. Treasuries, which amounted to 57% of all net sales.


This article examines the implications for the large sell-off of Treasuries by foreign entities on the future direction of the Treasury rates.


I read an article on January 23rd, Hedge Funds Risk Treasuries Wipeout After Bearish Bets Soar, published by Bloomberg.com where analysts at JP Morgan Chase's Jay Barry says "fast money" speculative positions will be hurt badly as Treasuries (NYSEARCA:TLT) (NYSEARCA:SHY) (NYSEARCA:IEF) (NYSEARCA:IEI) (NYSEARCA:GOVT) decline in the intermediate future. The investment thesis is based on the fact that hedge fund short interest in the 5 year Treasury (NYSEARCA:SHV) (NYSEARCA:TBT) is currently at a very high level and the expectation is that these bets are almost always a contrarian indicator as they eventually are overwhelmed by Institutional investors who from a dollar volume standpoint far outweigh the hedge fund positions.


The market expectation in the article is logical, and has certainly worked as a trade position virtually without fail over the past 25 years, particularly when Treasuries rise for any length of time longer than 6 months. And if you look at the chart below which shows the Treasury yield curve change over the past 6 months, you are probably tempted to agree with the viewpoint based on the retracement rally in Treasury rates that began post the Fed rate hike in mid-December of 2016.
https://staticseekingalpha.a.ssl.fas...rId7_thumb.jpg
I currently am skeptical that the move higher in Treasury rates is even close to the market top at this point in time, at least until there are clear sign the "Trump Rally" is going to collapse.


In my market analysis, late year and early 2017 portfolio re-balancing did cause an Institutional bid in the Treasury market and a retracement rally up to the week before Trump's inauguration. However, the market is stubbornly remaining in the current 2.50% range on the 10 year, and appears poised to break higher as stocks move even higher post the Trump inauguration.


I make this bold statement, in contrast to JP Morgan's call, because the fundamental reason that pushed rates to the cyclically low levels experienced in early July of 2016 has now been broken and pushed into reverse, and the Trump election marked a watershed moment which sent the interest rate trend in the opposite direction. At the center of the trend reversal is China, and I share data in this article that show that US Treasury selling by China is the biggest contributing factor behind the large move in rates from July through mid December of 2016. I expect this trend to continue in the intermediate term with the driver for further upticks in US Treasury interest rates being the "Made in America" trade policy which is the centerpiece of the Trump administration, and possibly foreign policy conflicts.


Large Foreign Treasury Sell-off Drives 10 Year Rate Rise
Much of the press concerning recent interest rate increases tends to monotonously focus on "inflation expectations" and whether "economic growth" can support Fed rate hikes. Given the Federal Reserve mandate to fight inflation and encourage US full employment, the tendency is understandable. However, the Treasury bond market, particularly the long end of the curve, in my experience is much more supply and demand driven as opposed to expectation driven. The U.S. Treasury market is the fundamental basis for the size of the U.S. money supply, but additionally since 1971 it has become the collateral pool on which a large majority of international trade is backed and settled. As a result, supply and demand for Treasuries, both domestic and international, is a key factor determining the market rates for longer term Treasuries. Simply reviewing the growth and inflation characteristics of the US economy can be very misleading for someone making a decision about whether to invest in US Treasuries at any given time.


I make this long prelude because the data over the past 6 months, when the 10 year US Treasury note increased 88 basis points, is heavily correlated with one primary factor. That factor was not inflation or US economic growth expectations, although the press is keenly focused on telling the story as if these factors are the drivers. As you can see in the graph below, the primary factor has been selling of Treasuries in large quantities by foreign entities, both sovereign and enterprise. According to the latest TIC data released by the US Treasury, US Treasuries owned by foreigners showed a decline of $335.8B from June through November of 2016.
https://staticseekingalpha.a.ssl.fas...rId9_thumb.jpg
Based on my review of the historical data dating back to 1967, there has never been selling pressure in this dollar magnitude from foreign entities in the US Treasury market. In fact the closest comparable time period was November 1999 to March 2000 when foreign ownership declined by $199B. As a percentage of total ownership, the 2016 decline so far has been -5.66%, whereas the year 2000 decline was a much larger -18.6%. The big difference between the two time periods is that foreign entities currently own over 42% of publicly traded US debt, whereas in the year 2000 they owned only 30%. The US publicly traded debt in March 2000 was also far less at $3.56T versus $14.4T today, a whopping 4 fold increase in just 16 years.

In the year 2000 the 10-Year Treasury note, after rising from 5% to 6% in 1999 leading up to major foreign sales at the end of the year, continued higher to peak at 6.79% on 1/21/2000, before beginning a decline that lasted for many years. History shows that the stock market eventual peak later in the year 2000 and the ensuing multi-year economic slowdown chased money from domestic and international riskier assets back into US Treasuries as a safe haven.


Why should investors care about a seemingly trivial financial statistic like how quickly foreign entities are selling US Treasuries? - Because the figure is a key barometer for the future direction of the US financial market. Since the early 1970s, US debt purchases by foreigners have typically remained positive through time if looked at over a 5 month interval to smooth out short interval anomalies (See blue line in the chart below).
https://staticseekingalpha.a.ssl.fas...Id10_thumb.jpg
However, when foreign entities as a whole become net sellers of US Treasuries (See red line below 0%), there is a clear historical pattern of upward pressure on the Treasury yield curve and the 10 year T-Note (See the short cycle peak year and month in 10 year Treasury rates in red).

These time periods also very closely align with some of the most dramatic declines in the stock market, including 1969-70, 1973-74, 1981, 1987, 2000-02, and 2008.

In the second half of 2016 foreign ownership of US Treasuries broke down dramatically, and the 10 year rate has responded upward in line with the historical pattern. The big question for investors and the US financial system is whether the sell-off pattern will subside, or is it just the beginning of a worsening trend?


Who is selling US Treasuries in Big Way? - China
Given the high correlation between long-term Treasury (NASDAQ:VGSH) (NASDAQ:VGLT) (NYSEARCA:SCHR) (NYSEARCA:TBF) (NYSEARCA:ITE) (NYSEARCA:TLH) (NYSEARCA:EDV) (NASDAQ:PLW) rate movements up through time and the selling pattern of foreign entities, it is instructive to review what countries did the most selling of US Treasuries in the second half of 2016. Probably not a surprise to many investors reading this article, it is China. From the beginning of July through November 2016, China sold $191.5B in U.S. Treasuries, which amounted to 57% of all net sales. As a reference, Chinese entities owned $1.24T in UST's when they began selling. They sold 15.4% of their Treasury holdings in 5 months, a considerable change.
https://staticseekingalpha.a.ssl.fas...Id11_thumb.jpg
The remaining concentrated sellers were based in Belgium, a country which is a known proxy location for China US Treasury market activity. In other words, China's sales were likely even higher over the time period. Other major sellers were located in Japan and the U.K. One of the interesting aspects of the financial markets during this time period is that the US Dollar strengthened, while the currencies of China, Japan and the U.K. all weakened on a relative basis.
Typically I would expect a major financial account run on the US Treasury would bring about a dollar weakening scenario. However, the currency market responded to the growing positive short-term interest rate differential between these countries on the prospects for Fed interest rate hikes, leading to the dollar to get even stronger. Over this time period, the data show that private investors in the US primarily picked up the gap in the US Treasury financing needs, as the US continued to borrow at a rate of over $100B per month.


The $2.0T in excess reserves in the financial system created by the Fed QE during the Obama administration declined by over $145B over the time period and an additional $221B in the month of December. The major decline most likely reflects money being put to work by private institutions and investors to cover the US debt financing gap during the time period. The Excess Reserve backstop currently sitting in the US financial system may be tested to finance the Trump agenda very, very soon, particularly if as expected the virtuous flow of International funds into US fixed income markets continues to run dry.


Curious Timing - Over $65B in China US Treasury Sales in November
The data which shows large volume selling of US Treasuries gets even more interesting when you put the spotlight specifically on November 2016, the month Trump was elected. During November, the total sales of US Treasuries by foreign holders were $96.2B. Of that amount, China accounted for 69% of net sales as their Treasury ownership declined by $66B.
https://staticseekingalpha.a.ssl.fas...Id13_thumb.jpg
Japan also was a large net seller in November at $23B. However, Japan on a year over year basis did not significantly reduce its $1.1T in US Treasury holdings.
The timing of the high volume in Treasury sales by China is curious and is worth trying to understand further, particularly given the current impact on US Treasury yield curve and most likely the overall worldwide financial system if it continues.


Why is China Selling US Treasuries - And, Will the Selling Continue?
The long end of the US Treasury market is witnessing rates going up, and the fundamental reason is largely tied to foreign entities selling Treasuries in large quantity, particularly China. The question is, why now, and when will the trend stop or even reverse?

The Treasury selling trend began prior to the US election, so the explanations on why it is happening cannot with certainty be linked directly to Donald Trump's election. Most of the financial information I have reviewed tend to support the fact that a large part of the pre-election decline in China's Treasury holdings can be linked to financial account "error and omissions" outflows, typically a catch all category for "Capital Flight." There is also evidence of an increase in large dollar overseas acquisition activity by China state owned entities. A good example is the $43B acquisition of Sygenta by state owned entity ChemChina in 2016 which recently closed.
https://staticseekingalpha.a.ssl.fas...Id14_thumb.jpg
There is also the likely possibility that many companies that borrowed at low US dollar based interest rates to cover operations based in Yuan were inappropriately hedged as the dollar strengthened and the Yuan depreciated. This scenario has likely caused the need for many of these loans to be called and re-structured in Yuan to avoid further currency risk if the Yuan continues its downward move. There is clear data that point to debt repayment from interest rate arbitrage arrangements being a contributing factor to China reserve sales in 2015, but not in 2016.


10 Year Treasury Likely to Rise as Long as the Trump Rally Continues
All of the likely reasons that China would sell large quantities of US Treasuries since July of 2016, however, don't come close to explaining the spike in selling in November 2016. I currently categorize the latest selling by China as a pre-emptive message to the incoming Trump administration which might be worded as follows:
"We presently have the ability to move the interest rates on you government debt higher and our currency lower in the process, to the detriment of your goals as President. If you press us on Taiwan, island building in the South Pacific and our trade practices, your ability to finance your government and the functioning of your capital markets will become more and more difficult."



Sound far-fetched? If a better explanation exists, I welcome the data. I seriously doubt the Chinese sat in a room in Beijing and debated their expectations for US inflation and economic growth in their decision making process to hit the sell button on $66B in Treasuries in November of 2016.

I currently view the Treasury rate spike immediately after Trump's election as Round 1 of a longer term trend which will see US Treasury rates return to and possibly even over-shoot historical norms of 4% on the 10-Year Treasury. In the process there will be ups and downs, but the long-term cyclical trend down in Treasury rates from 1980 through 2016 is over as long as the Trump economic plan is being followed. As the Trump stated goal of "Making goods in America that are consumed in America" is implemented, the virtuous flow of international dollars to fund the US debt will decline on a relative basis. However, federal spending levels are likely to grow faster, not slower than the previous 4 years as entitlements continue to expand to cover aging Americans, infrastructure spending is on the table and defense spending needs are going up, not down.


Mix this likely scenario with tax cuts and you have a recipe for an increasingly large supply of US Treasuries against a dwindling demand pool. If the Fed intervenes as this scenario unfolds, and they will, I don't expect it will be as a buyer of US Treasuries…


Eventually the "Trump Rally" will look more like the "Trump Set-up"; but until this happens, the US Treasury yield curve will continue to lift higher across all maturities. In the current market, keeping Treasury duration short in your bond portfolio (NYSEARCA:FTSD) SHY) (NYSEARCA:TUZ) (NYSEARCA:SST) is the only rational investment choice in my opinion.


Daniel Moore is the author of the book Theory of Financial Relativity: Unlocking Market Mysteries that will Make You a Better Investor. All opinions and analyses shared in this article are expressly his own, and intended for information purposes only and not advice to buy or sell.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My bond exposure in low risk bonds is currently very short duration, but I am not short the Treasury market.

KeepCalmfx

Excellent question. I will think along with you to give the best answer.

So we enter a trade based on one of our 4 Trade Plans. We enter with Risk Off as we know the Trend of our trade. However before we can lower our STOP to lock in at least $250 US profit the trend short term reverses whether we have on 1 position or 2 positions.

So what we should do is let the Market whatever it does and for whatever reason most likely STOP US out at $1000 US Loss. That is it then we have taken the LOSS as part of trading Forex being 2% and within our 6% total risk by having 3 positions MAXIMUM on at any one time. I am giving more detail to help others reading this.

Now to your actual question ? OK here is the right thing to do in all cases. If as in this example you only have one position open then that position has no tie to your next position. That way new factors allow you to decide again FRESH if you are putting on another position.

If you know that a fundamental news event is coming then it is the same psychology to not trade until you know if the news will create a Risk On or Risk Off situation.

I also am now adding a NEW ELEMENT to our Strategy and the reason for that is what the Dow 30 did today which is continue up although it appears to be reversing now. We probably should use either the Resistance Level on a 15 Minute Chart and Perhaps Pivot Point and if it goes through then we do not put on any more trades until we see a clear reversal. That only applies in extraordinary situations as we have now with the confusion and change of government and the 24 hour Tweets which in no way is a political comment just recognizing the new reality.

Please reply and tell me if I have made it clear and any suggestions that you have are welcome. On the company name the first four words are "Forex Learning Edge Corporation" I will PM you the first word in the corporate name.


Benjaminis

Excellent USD/JPY Chart - With Notes

http://www.forexfactory.com/attachme...5&d=1485468066

Now I will paste here a post that I read just now about charts to complete my thoughts about comments on both sides of the discussion.

 

1. dukas_trader
2. | Joined Mar 2010 | Status: Member | 30 Posts | Online Now

Quoting WolGod
TRADERS FAIL BECAUSE THEY USE INDICATORS ABOUT PRICE ACTION. Past price action that means NOTHING. The only traders that make money using this crap are risk management specialists that use fibs (for discount) and do some news sentiment work. But reality is even they have no idea really and wont make much as they are too scared to trade a 5m chart. if you use the following stop. - fibs - stochs - macd - renko - gann - elliot wave - trendlines - any other lagging indicator anout PAST price action

you are joking, or?

so all trader that trade with the chart are also very stupid, because price chart is nothing more then past price action.

so with your theory you can only use macroeconomic features and economic news to trade in longterm, all other like charts you cant use for trading.....?

i have never heard someone dont use a chart, because it shows only past price action. and offcourse indicators are only price action showed in different kind - so nothing different like the chart, only different if you want so buy your calculating method.

From This Thread - http://www.forexfactory.com/showthre...08#post9487408


COMMENTS FROM BENJAMINIS: Here is the correct answer.

I have said many many times in a polite way that since most likely 75% of all Forex Traders base their plans around technical indicators that this is one and only one of the reasons, that they cannot be substantial winners or become professional Forex traders.

It is very important to use these indicators without any doubt. I could not trade without them. However they cannot be number one in the list of the five parts of successful Forex trading. Dukas Trader I see has been around here anyway since 2010 so he qualifies as having knowledge and experience trading Forex.

He also mentions news which we call fundamentals.

If a seasoned Forex Trader has Technical skills and fundamental knowledge there are still the THREE MOST IMPORTANT PARTS that She or He might or might not have. However if they do NOT have the DISCIPLINE then they cannot be successful at the level of a full time professional Forex trader such as myself.
I was not an overnight success as I started my profession during 2003.

The real reason that I only teach fellow Forex traders with a $50,000 US Dollars account is that way I can tell if they possibly have either the skills or the time to devote to learn how to trade Forex properly. That is why I asked the 12 Forex Traders that I taught to open a FXCM UK Demo Account.

Some of them dropped out very quickly. Others did not have the time to learn properly. One subscribed to my thread, then unsubscribed then subscribed then finally unsubscribed and then ignored me. I do not post this information to attack him just to make the point that he does not have the trader skills as an individual because of how he acted here.

My demo account approach always works to see if the person can be taught or not. At the other end of the scale we have KeepCalmfx who has great skills both in fundamentals and technicals and understands Risk Management and Money Flow. The most important thing that KeepCalmfx has is the work ethic and the DISCIPLINE and the integrity to be a winner trading Forex.

In this very difficult business that if approached properly can make you very very wealthy there is no short cuts to success.

The biggest problem as I see it that Forex Traders have is that they do not know any other way to trade and sometimes pays for courses or indicators always searching for the Holy Grail which does not exist. However the next best thing is to have "THE EDGE"

Then you have an opportunity if you first learn the right trading habits by trading and learning without the normal emotions of FEAR and GREED.

Risk Management that always works is the FINAL PROTECTION to not blow your Forex Trading account and on that note trading with two little capital guarantees failure. If you have the right tools and know what you are doing the MINIMUM funds that you need is $10,000 US Dollars. I have traded that and limit myself to no more than two open positions of 100 units. However today myself , I would NEVER trade Forex with less than $50,000 US Dollars as I teach here.

This has been a very long post however I think it really makes all the issues very clear as it does with the solution.

I would appreciate what you think about this summary of my thoughts on learning and winning and how to avoid failure.

Thank You


Benjaminis




[COLOR=#FFFFFF !important][COLOR=#FFFFFF !important]Mostrs fail because of no disci[/color][/color]


P.S. On Edit at 8:48 PM EST , I went back to the thread and saw that Hanover got into the discussion and so without further commentary here is a paste of his post. Good Evening.

 

1. Post 329
2. Cleanup
3. Quote
4. Jan 26, 8:13pm (28 min ago)

1. http://cdn.assets.forexfactory.net/n...ar18699_19.gif hanover
2. Joined Sep 2006 | Status: ... | 7,163 Posts | Online Now

As I said earlier in the thread, FF is the place where everybody knows more than everybody else.

The problem is that it's impossible to prove a negative, that "nobody can use analysis tool X profitably". Such a comment merely demonstrates both conceit and ignorance. The most that anybody can realistically say is "I haven't found a way to use it profitably".

 So it's impossible to profit using 'lagging' indicators? A fund manager that I employ uses (predominantly) lagging indicators. I've had money invested with him for 26 months. Every single month has been profitable. Evidence here. You think I've photoshopped the account statement? Enjoy your delusion, it doesn't change the result.

 So it's impossible to profit using fundamentals? I happen to know a gent who was ranked the second best trader in the world by Barclay Hedge, for the six year period 2008-2013. (I have a screenshot from the BH website that I can't post publicly, but if you're that fanatically skeptical that you must see it, contact me privately and I'll e-mail it to you). Guess what? He uses FA! He trades into and out of news. He also uses macro and sentiment analysis. The only TA he uses is to time his entries (and some exits) from prior areas of buying and selling. At one point he was the head of FX trading for a company that has over £250 million under management. He also has colleagues and students who likewise use FA, and are profitable.

 So 99.99% of traders fail? Then only 1 in 10,000 is successful. That's impossible to prove. I know at least 5 traders who are consistently profitable, and I'd estimate that, in my 10 years of FX, I've met and worked with no more than 70 traders. That means at least 7% are profitable, at least in the circles that I move in. Or perhaps we're just smarter over here in New Zealand, LOL. After all, our recently retired Prime Minister made much of his $50m fortune as a FX trader working for Merrill Lynch.

There's so much egotistical nonsense posted on trading forums, it's foolish to take anything you read seriously. If you're a failed trader, and it makes you feel better by telling the world that nobody else has more expertise and ability than you have, well, sorry to be harsh, but your beliefs and feelings have zero effect on the reality that's going on around you.

From Post 1513 - Our 4 Trade Plans

Here are our ONLY 4 Trade Plans until March 31, 2017.



Quoting mbleska
Screenshot1.png;2149784 Hi, I took a picture of trades I did last week and I added my comments about the possible problems (as mentioned in post 1420). I have learnt here that it is important to read news about what is going on in the world and try to make sense out of it (even though it takes a lot of time), then one is able to come up with a plan. The other thing is to stick to that plan and not being afraid of a loss. {image}

Actually mbleska , for the moment until you are able YOU do not have to take one minute of your time to come up with a plan.

We have until March 31, 2017 , 4 TRADE PLANS.
(1) Short US 30 - 100 units - STOP LOSS - $1000 US Dollars - Risk Reward at least 1 to 1 maybe as high as 1 to 3. Lower stops once you have minimum profit.

(2) Short USD/JPY - 100 units - STOP LOSS - $1000 US Dollars - Risk Reward at least 1 to 1 and LOWER STOPS to always lock in minimum profit of $250 US Dollars.

(3) LONG Gold - 100 Ounces - STOP LOSS - $1000 US Dollars - Risk Reward at least 1 to 1 and as High as 1 to 3.

(4) Long Silver - 5000 Ounces - STOP LOSS - S1000 US Dollars - Risk Reward at least 1 to 1 and as High as 1 to 3.

THAT IS IT !!! Just have the DISCIPLINE to do it !!!

AS FOR FEAR OF LOSS , FIRST LEARN ON YOUR $50,000 US Dollars FXCM UK Demo Account. Unless you are really really good now STOP trading Real Funds.

This is about learning good habits and getting confidence then you will trade much more effectively with your own funds and I strongly suggest a Minimum Trading Account of $10,000 US Dollars and then you can NEVER have on more than 20% of your capital or no more than 2 positions of 100 units at any one time.

From Post 1453 - Our Method

For New Readers From Post 1172 - Money Flow Method with Risk Management.

I post this again so there is NO DOUBT on How To Trade Forex and Earn Money and Protect Your Capital.

Once again , I try hard for everyone to understand all the parts that would guarantee your success if you have the necessary skills and DISCIPLINE. I can not guarantee that you do however I will know for sure by your Forex Trading results. It is up to you not myself as I have done my part and at least three of our Forex Traders are learning well. The three that are working on it and participating. IT IS THAT SIMPLE and that has too be clear so JUST DO IT !!!


Benjaminis

I first want to talk about having an EDGE. Fundamentals by themselves is not an EDGE. However using Money Flow between Asset Classes from here on I will include in my basket of 100% of what a winning Forex Trader needs. I will not refer to it as a fundamental anymore since new people coming to this thread put my method as including Money Flow as a fundamental which it actually is however not in the same way as most people understand Fundamentals.

This week we will get to see Non Farm Payroll (N F P) and as any experienced Fundamental Forex Trader knows it usually is a fantasy number created by the BLS however next to a FED rate announcement it is the one number that can move markets hundreds of PIPS in seconds and minutes.

Whatever the number Trillions of Fiat Currencies and other Asset Classes will start to change values as we "SEE" the Money Flow. That is why I call it my EDGE and once you know it and understand it well then it becomes your EDGE as well.

Here are the 5 important things that any Forex Trader that belongs to the minority of constant profitable Forex Traders , which I have named , The 5% Club needs to have. Of course in my opinion, I would think that very few Professional Forex Traders use the EDGE. Of course when you know about it then anyone can use it.

Each of the following five important things which I have given a weighting of 20% to each makes up what a profitable Forex Trader needs to have in order of IMPORTANCE.

(1) The ability of the Forex Trader to control their FEAR and their GREED and their EGO. Perhaps the last one is the most important of the three since the MARKET is always right. Using Money Flow puts you with the Market instead of against it as your Forex Account keeps losing the value in it.

The reason that I teach Forex Traders whether experienced or new to Forex trading with a $50,000 US Dollars Demo Account is because that is how I learned my trade starting during 2003. By learning to trade with $50,000 US Dollars in Demo Funds, then I had no FEAR or GREED. However after 3 years of Forex Demo Trading I surely had EGO since month in and month out my Return On Investment (ROI) was constantly over 10% a month or 120% a year.

(2) Money Flow. I have now explained why.

(3) Risk Management. That is next to Money Flow the KEY element of my Forex Trading since when you blow your account whether you are trading with too little capital as the majority of Retail Traders are or because of a Black Swan event such as Brexit or Europe banking issue such as we have in Italy at the moment or the Swiss Central Bank as they did a few years ago say one thing and then next moment announce a major change in their policy and 500 PIP movements happen in seconds. The absolute MINIMUM Forex Account that I would and could trade with would be $10,000 US Dollars. I would be glad to answer questions as to why although most will understand. What if you do not have $10,000 US Dollars trade with ? Prove to yourself that you have the skills and the knowledge to trade with profits then you will have no problems finding funds to trade Forex with. After my 3 years of Forex Demo Trading, I went out and found 6 clients that first deposited initially $50,000 US Dollars and within 3 months along with the profits that I was generating in my first three months of Forex trading from March 2006 to June 2006, I was managing well over $100,000 US Dollars.

(4) Technical Indicators which includes all parts of it whether Support and Resistance or Supply and Demand or Pivot Points. I use when I do daily trades the 5 Minute Charts along with the 15 Minute Charts and 30 Minute Charts to go along with the 4 Hour Charts. When you toss a rock in the river the first ripple is the 5 Minute Chart and then on to the 30 Minute and the two others. I use other indicators aside from the standard ones which are SAR and Fractal and Awesome Oscillator. The most important one that I look at when I enter into a Forex Trade is Support and Resistance so if I am going long or short I enter either at the TOP or BOTTOM of the Chart that I am using. Of course my Risk Management protects me from Human Errors or EGO.

(5) Fundamentals. I am fairly sure most of those reading my words today or whenever they read it might be surprised how a Forex Trader such as myself who posts a tremendous amount of research can list fundamentals as number (5) in order of importance. It is the research that allows me to clearly understand the difference between PERCEPTION (Markets) and REALITY (Research) Then I know what will most likely happen in the future and I am better prepared to deal with it.

I hope that this post of my daily Morning Thoughts answers some of your questions both for the 12 Forex Traders using the $50,000 US Funds Demo account with FXCM UK or anyone else. There is no reason that an experienced trader reading this thread or anyone else to not open a $50,000 US Dollars FXCM UK account so they can use the knowledge that we share here to learn new things and try them without having any FEAR of LOSS !!!

As always , I look forward to feedback and thoughts and anything that you care to share with us on our Thread.

Benjaminis

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

Snippet:
https://dweaay7e22a7h.cloudfront.net...en-650x360.jpg
https://dweaay7e22a7h.cloudfront.net...esRickards.jpg
BY JAMES RICKARDS

POSTED
JANUARY 26, 2017


Trump, Yellen and Systemic Risk

Investors are giddy now that the Dow’s broken through the mythical 20,000 mark. Many anticipate Trump’s economic agenda will spur the economy.

But the most decisive factor in the implementation of the Trump economic plan is the reaction of the Federal Reserve. While a Fed rate hike in December was basically a certainty, the path of rates in 2017 following the December hike will be critical to the success or failure of Trump’s plans.

The Fed can choose to be highly accommodative in the face of Trump’s larger deficits. In effect, the Fed will not anticipate inflation, but will wait until it actually emerges. Actual inflation is still below the Fed’s target inflation rate of 2%.

Since the Fed is targeting average inflation of 2%, it could allow inflation to run above 2% for a while, which would be consistent with 2% average inflation, given today’s lower level.

The Fed also seeks negative real rates as a kind of stimulus measure. Negative real rates exist when the rate of inflation is higher than the nominal interest rate. This condition can exist at any level of nominal rates. For example, inflation of 3% with nominal rates of 2.5% produces a negative real rate of 0.5%.
Likewise, inflation of 4% with nominal rates of 3.5% produces the same negative real rate of 0.5%. No doubt the Fed does not want inflation of 3.5%.

However, they can achieve negative real rates at any level by using financial repression to put a lid on nominal interest rates.

This is done by forcing banks to buy Treasury notes even if the Fed’s balance sheet is stretched. It amounts to a kind of “shadow QE” using the bank balance sheets to park bonds instead of the Fed’s balance sheet.

This kind of accommodation to higher deficits is also called “fiscal dominance,” an idea sketched by former Fed governor Rick Mishkin and his colleagues in academic literature. The idea is that Fed independence is mostly a mirage and the Fed will do what is needed to facilitate the fiscal wishes of Congress despite protests to the contrary.

Under fiscal dominance, low inflation is allowed to persist for an extended period of time. It will gradually erode the real value of the dollar and dollar-denominated Treasury debt. This is how the U.S. reduced its debt-to-GDP ratio from 1946 to 1970.


The problem with this “high pressure” approach is that inflation is not purely a monetary phenomenon, but it is also a behavioral phenomenon. Money printing alone does not produce inflation. The money printing must be combined with the willingness of individuals to borrow, spend and invest.

Such willingness is largely psychological — dependent on Keynes’ animal spirits. However, once expectations shift from deflationary to inflationary scenarios, they are hard to shift back again. This could lead to a situation in which inflation expectations shift from 1% to 3%, but then shift quickly to 5% or higher.

The Fed assumes they can dial-down inflationary expectations from, say, 3% to 2%. But that may be wishful thinking. Any effort to raise rates to deal with higher inflation expectations may have the opposite of the intended effect as consumers view higher rates as a validation that inflation is getting out of control.


This is exactly what happened in 1974–81. The Fed started out behind the curve and stayed there until sitting Fed Chairman Paul Volcker’s extreme measures in 1980–81.


Alternatively, the Fed could choose to lean into prospective inflation from Trump’s policies by aggressively raising rates in 2017. This policy would be based on Janet Yellen’s reading of the Phillips Curve and the well-accepted notion that monetary policy acts with a lag.

With unemployment at post-recession lows and initial claims for unemployment benefits at all-time lows, Yellen’s analysis is that inflationary pressures from increasing wage demands are just a matter of time. Since monetary tightening works with a six-to-twelve month lag, it’s important to raise rates now to keep ahead of that inflation.

Independent of the state of the labor markets today, the Fed is desperate to raise rates as much as possible. This should allow it to have some dry powder available for rate cuts in the next recession.


By Fed reckoning, the euphoria in the stock market after the election of Trump counts as an easing of financial conditions. Such easing is the perfect cover for an offsetting tightening by the Fed. The Fed will pursue a delicate balance between easing (from stocks) and tightening (from rates) that will allow it to achieve its rate normalization goal without putting the economy into a recession.

The last wild card in this mix is the dollar. A tightening cycle by the Fed will make the dollar stronger. This is deflationary because the U.S. is a net importer and a stronger dollar makes imported goods cheaper for U.S. consumers and other participants in the global supply chain.


The combination of a stronger dollar, imported deflation, and higher rates in an already weak economy could tip the U.S. into a recession.

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And some consideration must be given to the worst possible economic outcome: stagflation. That is the unhappy combination of higher inflation and low real growth or recession.


Trump’s big spending plans and animal spirits could produce the inflation while Yellen’s rate hike and tight money produce the recession. A version of this played out in the United States from 1976–81.


On top of the macroeconomic risks, systemic risk is as dangerous as ever. It could come to play a large and unexpected role in Trump’s economic plans. Too-big-to-fail banks are bigger than ever, have a larger percentage of the total assets of the banking system, and have much larger derivatives books.


In complex dynamic systems such as capital markets, risk is an exponential function of system scale. This means that the larger size of the system implies a future global liquidity crisis and market panic far larger than the Panic of 2008.



The ability of central banks to deal with a new liquidity crisis is highly constrained by low interest rates and bloated balance sheets, which have not been normalized since the last crisis. In the next panic, which could come at any time, central banks will turn to the IMF to provide needed liquidity.


That liquidity will take the form of the issuance of trillions of special drawing rights, SDRs (world money). This emergency SDR issuance will be highly inflationary, and effectively end the role of the U.S. dollar as the benchmark global reserve currency.


There are many potential catalysts that could trigger such a crisis, including a Chinese devaluation of the yuan, a banking crisis, failed gold deliveries, an emerging markets dollar-denominated debt crisis, a natural disaster, etc.


The catalyst for such a panic is irrelevant — what matters is the instability of the system as a whole.


When the catalyst is triggered and panic commences, impersonal dynamics take on a life of their own. These dynamics are indifferent to the political ideology or public policy of politicians.

A Trump administration could quickly be overwhelmed by a global liquidity crisis as the Bush administration was in 2007-08. In such a case, the global elites operating through the IMF, BIS and G20 will dictate solutions since they control the remaining liquidity levers, especially SDRs.


Trump could go along with the elite solution, which would involve cooperation with China, or he could fight the elites, in which case a new Great Depression could result.


Taking these various vectors into account, this is the most accurate assessment: The global economy is poised on a knife-edge between inflation and deflation.

The inflationary vector could dominate quickly, based on a combination of Trump deficits and Fed accommodation. Conversely, the deflationary vector could dominate based on fundamental factors such as a strong dollar, deleveraging, demographics and technology combined with premature Fed tightening.

Waiting in the wings is a systemic crisis, which could result in inflation (due to massive SDR issuance) or deflation (due to lack of a coordinated global response).

You should prepare for both.

Regards,
Jim Rickards
for The Daily Reckoning

https://dailyreckoning.com/heres-reform-fed/

Snippet:
Here's How to Reform the Fed


Leaving Fed head Janet Yellen and her goon Stanley Fischer in power would be “the height of folly,” thundered David Stockman after Trump’s election.
Trump should have demanded their resignations on Jan. 20, David continued — if he had any intention of “draining the swamp.”


If the bubble bursts, so be it, David wagged. Purge the system now, get it over with, have done… and rebuild American capitalism atop a foundation of granite.
It might be root canal in the short term, the pain acute. But it would be a dim memory by the time Trump’s up for re-election in four years and America’s Great Again.

Well… Jan. 20 came and went. No resignations. It’s now Jan. 25. Still no resignations. And we hate to break it to David — he means the best in the world, he really does — but there won’t be any resignations tomorrow or the next day.


It’s the status quo from here on in…

Trump tapped former Goldman guy Steve Mnuchin for Treasury secretary. Mnuchin was asked about the Fed’s independence at his Senate confirmation hearing last week.

Recall that candidate Trump accused Janet Yellen of keeping interest rates nailed to the floor to help elect Hillary. He essentially laughed off the Fed’s claim as an independent institution.

But here’s Mnuchin’s response to the question last week:
The Federal Reserve is organized with sufficient independence to conduct monetary policy and open market operations. I endorse the increased transparency we have seen from the Federal Reserve Board over recent years.

Draining the swamp?

“He does not want to make waves at this stage,” explained Lou Crandall, chief economist at Wrightson ICAP.
“He seems to be OK with the status quo,” adds Jeff Hauser of the Center for Economic and Policy Research in Washington.
“I think it will be very tough to change very much,” argues Paul Mortimer-Lee, economist at BNP Paribas.

Sorry, David.



But we admit it… we take a dim view of most “reform” anyway. It’s an ax that rarely strikes the root. And intentionally so. It’s designed to miss.

There was a reason why H.L. Mencken called reform “mainly a conspiracy of prehensile charlatans to mulct the American taxpayer.”

Getting nearer to the root — no, shattering the root into 6,000 pieces — the late libertarian Frank Chodorov said most reform is designed to “clean up the whorehouse,” while ‘keeping the business intact.”


For a more fitting analogy we seek in vain. But we file this one caveat: The whorehouse, for all its sin, at least does an honest trade. Can the same be said for the Federal Reserve?


Its very business is false. It manipulates interest rates that send false signals to markets. And so it inflates bubble after bubble. The latest one just floated past 20,000 today — the second-largest bubble of the past 100 years, as we showed yesterday.


The largest bubble was another Fed-inflated whopper — the tech boom of that late ’90s. It finally got a good hard dose of truth in 2000. The housing bubble, another Fed doozie, got its own in 2007–08.


When will this one get its own dose of truth? And how big? The truth sometimes hurts, you know.


Returning to reform…

If it’s reform you want, a modest proposal: No more setting, influencing or in any way monkeying short-term interest rates, long-term interest rates or any other interest rates. Let the market find its own level. High, low, wherever, and the devil takes the hindmost.


Return the Fed to its original purpose of providing liquidity to otherwise solvent banks in case of financial crisis. No “price stability,” no “full employment,” no more rigging markets.


Or… if it’s real reform you want, we offer this humble suggestion: Reform the whole thing out of existence and start from scratch with something honest.
Now that’s reform!


Regards,
Brian Maher
Managing Editor, The Daily Reckoning


Ed. Note: Readers who subscribe to receive The Daily Reckoning by email will get exclusive, forward-leaning commentary sent straight to their inboxes every day. What you’re reading here on our site is just a slice of the independent forecasts we issue daily. Simply click here to receive The Daily Reckoning. It costs you nothing — and promises to be the most informative and entertaining 15 minutes of your day.

Good day

Hope everyone is doing well.

Here is the charts so long.

Hi Benjamin

Thank you for the post, every time you explain something like you did above you mention something different or in state it in a different way as before then this picuture becomes more clearer each time. Thank you.

Good Morning KeepCalmfx

As you know my skills are comprehensive and I use and understand technical indicators.

Here is a chart produced by Bones on USD/JPY.

http://www.forexfactory.com/attachme...9&d=1485508767

When I suggest charts until I see and use them I am not able to determine their benefits at least in our shorter term trading so I would like you to take the imitative in deciding which charts would be helpful to most Forex traders including myself.

I await your input and what prompted me this morning to say that is the charts that I asked you to produce do not let me see something immediate since we know about the correlations so we just confirm what we already know.

In other words if I ask you to produce any type of charts I am giving you the final word on our need of it for what we need on a daily basis.

For sure the charts on Pivot Points and other types of charts with the indicators that we use are more effective in an immediate way.

Thanks for your efforts and work and now we have your efforts directed at what is most useful or what we need. The other charts are fine except not needed on a daily basis. I would suggest perhaps once a week on each Friday so now we have this Friday and next Friday when we have the new charts then we can compare both of them.


Thanks for all your efforts here on our thread.


Benjaminis

Morning Thoughts - Daily

I am very thankful to one of the most experienced and open and honest Forex traders and posters on Forex Factory.

I have been posting material here from a thread about discipline and it has been very informative for me personally since that is the way that I trade so reading other points of view helps me and lets me understand my method even better.

Here is the paste of the post of Hanover. As always please share your thoughts with us and add to our knowledge and understanding.

 

1. http://cdn.assets.forexfactory.net/n...ar18699_19.gif hanover
2. Joined Sep 2006 | Status: ... | 7,166 Posts | Online Now

Quoting simond2002
{quote} Love reading your posts Hanover but please make your font size bigger dude! need magnifying glass to see it
Went back and changed the font in my last couple of posts, hope that's better.
Quoting fighterdude
In my experience, trading is a complex exercise in "understanding"... once you truly "understand" whats going on at any given price/time, then you can profit from it... There are many different ways to gain an "understanding", we call these analysis methods, but ultimately its all detective work...
FWIW I agree with this. Gaining an understanding -- the hows and whys of price movement -- is the first step, and then devising strategies that apply that understanding. I think it's a case of achieving a suitable personal balance between having tight enough rules that make a disciplined approach possible, but somehow also being flexible enough to know when and how to apply the rules, and/or adapt them to cope with different market conditions. Some traders prefer a more mechanical approach, while for others it's more discretionary. At the end of the day, I don't think there are necessarily absolute rights or wrongs; all that matters is profit (and managing risk/drawdown). I recall reading Jack Schwager's New Market Wizards, and being impressed by the very different approaches and philosophies used by the millionaires; but what they all had in common was tight risk management, and willingness to embrace losses. In the preface, Schwager himself says something like "there are millions of different ways to trade profitably, but the irony is that they're all difficult to find". Another quote I recall from the book is that "a good trader keeps to his rules, but a great trader knows when to break them". Admittedly it's an old book (1992) and most of the interviewees were trading markets other than forex, but I think it's safe to say that the basic principles still apply.

As a programmer (my career since I left high school in 1979), I started out in forex wanting to write a fully automated profitable EA. Of course the idea of having your computer effortlessly generate a passive, exponentially growing income is the everybody's ultimate dream! To be programmable, the system would need to consist of strict mathematical rules. I attempted this for a few years, experimenting with many different TA-based systems and ideas, but I never quite got any of them to the point of consistent profitability. I'm sure that smarter folk have succeeded where I failed, but my failure sent me down a path where I've gradually become more discretionary in my approach. One thing's for sure: anybody who does have a genuinely profitable EA certainly isn't sharing it publicly, and for obvious reasons. Many retail EAs employ more risky MMs like wide or no SLs; averaging down; martingale variants; etc which suggests to me that it's very difficult to find a robust mathematical edge from mechanical TA alone. Also, abstract visual chart-based patterns, contextual analysis, and subjective judgment (assessing the quality of S/R, for example) can be fiendishly difficult to code, and often a mathematical approximation is the best that can be achieved; profit may be diluted by the approximation process. I've reached the (probably obvious) conclusion that no EA can ever trade with the intelligence of a human.

FWIW, I trade semi-automated nowadays. It's certainly not perfect and I'm always looking for ways to improve. Currently I have two EAs that have a vast number of settings, allowing a wide variety of entry, exit and MM options. One of them looks for user-defined PA at zones represented by rectangles that I've manually dropped onto the chart. That allows me to plot my own carefully selected S/R zones for entries and exits. Then I let the EA do my trading, accurately and unemotionally, while I sleep (I live in NZ, the UK/US sessions run into the night here). For me that allows some balance between (potentially) intelligent contextual entries, and then strict mechanical execution of both entry and exit. (Automated exits ensure that I don't take profit too quickly, one of my personal weaknesses). The second EA implements a trend following system; again, I can have it trade the strongest trending pairs, and vary many of the rules based on my own assessment of the trend strength, PA, S/R etc. Finally, I have a script that allows me to place manual entries, although it allows multi-tiered entries and exits and automates the necessary calculations. A lot of hard work has gone into all of this, and I don't intend to share it publicly....... well, not yet.

I mention this not because I think it's the 'right' approach, but merely as an example of how I've devised a system that allows me to utilise both my own nuanced analysis skills, and then delegate the more mundane trading tasks to the EA, both freeing up some sleep time for myself, and circumventing my personal weaknesses. But ultimately each individual has to find their own path.

Hi Benjamin

I agree with you, will post my charts with pivots and indicators daily and the line charts weekly.

Good Day

One more time thanks go to Hanover.

KeepCalmfx perhaps you can thank him for us as for the last few days I can only post on our thread and not send any PM to anyone. We know why don't we (SMILE)

Here is are GREAT RESOURCES, that we can use and explore.

I am off to breakfast soon so have fun posting and sharing and reviewing where we are this morning with Risk On or Risk Off and there is important DATA coming out at 8:30 AM EST that can move the markets as I think the markets are looking for a reason to go below 20,000 again.

Thanks.


Benjaminis

 

1. http://cdn.assets.forexfactory.net/n...ar18699_19.gif hanover
2. Joined Sep 2006 | Status: ... | 7,166 Posts | Online Now

Some links to material on fundamental analysis:

 Good posts by numbnuts, MCRotter, dancingphil; good explanations throughout these threads: jakeparkin ; numbnuts ; unknown4x ; skfx ; Razorjack.
All FF posts by skfx and numbnuts are a must read IMHO. The analysis/prognosis in these threads is of course historical, but they still provide insight into the thought processes that these folk use.

 Jarratt Davis gives some good pointers (especially in his earlier posts) at forex peace army. Also watch YouTube videos by fund managers Jarratt Davis (e.g. here** and here) and Chris Mathis, which will give you some insight into their approach to analysis.
[** this video is a very good intro to the basics]

 Babypips: basic FA explanation ; sentiment/COT explained ; news roundup.

 FXstreet: FA learning center links ; macroeconomics ; up-to-date analysis (ignore the advertisements).

 YouTube video by Ray Dalio on how the economic machine works (not specific to forex).

 Forex Factory: news updates ; calendar (expand individual news items to get an explanation of the data).

 I also keep up to date with summaries from BKforex (Boris Schlossberg, Kathy Lien) who send free summary e-mails: in addition to the BK Insights link provided by numbnuts in post #7, you can also download their weekly market reports.

 I also get weekly updates from Sam Eder and Justin Paolini at fxrenew (no need to pay for anything, just sign up for their free material).

 Some other good base sources of news: forexlive ; central_bank_news ; bloomberg_markets ; efxnews.

 Comprehensive list of economic indicators (thanks to Shabs19 for pointing me to this).

 Pundits' probabilities on future USD interest rate changes; AUD rate changes.

 Also found this (Oanda), this (DailyFX), this and this using Google (hundreds more links there also).


I will add to this list as I think of more sources.

@anybody else: please feel welcome to contribute also. Thanks in advance.

Thamks KeepCalmfx

You are the best.

http://economicprism.com/

Snippet:
Adventures in Currency Debasement
Posted on January 27, 2017 by MN Gordon
http://economicprism.com/wp-content/...xicoCityDF.jpgThe U.S. dollar, as measured by the dollar index, has generally gone up since mid-2014. The dollar index goes up when the U.S. dollar gains strength (value) against a basket of currencies, including the euro, yen, pound, and several others. Conversely, the dollar index goes down when the U.S. dollar loses value.

Between July 30, 2014 and December 28, 2016, the dollar’s value, as measured by the dollar index, increased from 79.78 to 103.30 – or 29 percent. Since then, the dollar index has dropped to about 100. In addition, President Trump has said that the dollar is “too strong” and Treasury Secretary Steven Mnuchin has called the dollar “excessively strong.”


President Trump wants a weaker dollar to help with his program of bringing manufacturing jobs back to the U.S. The rationale is simple enough. A weaker dollar should make U.S. exports more attractive on international markets. Similarly, a weaker dollar should make foreign imports more expensive for U.S. consumers so they’ll buy products Made in USA. Continue reading →


Benjaminis

http://www.acting-man.com/?p=48399


Donald and the Dollar
January 19, 2017 | Author Antonius Aquinas

[highlight=#0077B5 !important]in[/highlight][highlight=#0077B5 !important]Share[/highlight][highlight=transparent !important][highlight=transparent !important][COLOR=#4E4E4E !important]31[/color][/highlight][/highlight]



No Country Can be Made Great by Devaluation
John Connally, President Nixon’s Secretary of the Treasury, once remarked to the consternation of Europe’s financial elites over America’s inflationary monetary policy, that the dollar “is our currency, but your problem.” Times have certainly changed and it now appears that the dollar has become an American problem.

http://www.acting-man.com/blog/media...d-Connally.jpgRichard Nixon and his treasury secretary John Connally. The latter is today mainly remembered for his remark on the dollar, which presumably gave European finance ministers a few nightmares at the time. Nixon defaulted on the gold exchange standard in 1971, which effectively ended the Bretton Woods agreement and led to the whole world adopting a fiat money standard. Nixon’s announcement of the default stands to this day as a textbook example of government lies and hypocrisy, garnished with a more than generous helping of economic illiteracy. It seems unlikely that he realized that his actions on that day would give birth to the greatest credit bubble in history, but they did.

Photo via twitter.com

In a recent interview with the Wall Street Journal, the soon to be 45th President of the United States believes that the greenback’s strength – up some 25% against a broad basket of currencies since 2014 – is now “too strong,” “killing us,” and has hurt companies trying to compete overseas.*
A top Trump economics advisor, Anthony Scaramucci, reinforced his boss’ sentiment adding that “we must be careful of a rising dollar.” Apparently, making America great again does not include the nation’s monetary standard.
Trump’s belief that the dollar is too strong also shows a distinct lack of historical understanding. Every great nation and empire (which Trump promises to restore America to) had a sound monetary system.

http://www.acting-man.com/blog/media...l-1024x429.jpgDonald Trump probably sees a strong dollar as inimical to his protectionist program. Foreign trade is one area on which Trump is really out to lunch. Mercantilism and protectionism may be as popular as ever, but they are economic nonsense and an infringement of personal liberty to boot. Naturally, we are not confusing today’s managed trade arrangements with truly free trade – but neither currency devaluation, nor tariffs represent an improvement.

It is no coincidence that the pound sterling was the world’s “reserve currency” at the time when the British Empire was at its height. Debasement of it to finance Britain’s insane decision to enter World War I led, in large part, to the eventual loss of its empire.
If Trump truly seeks to restore American greatness at home and its prestige throughout the world, devaluation of the currency is not the way to go.

Victims and Beneficiaries
Nor does a weakened dollar benefit the middle class whom the president elect throughout the campaign has pledged to help. In fact, it has been the fall in the purchasing power of the dollar due to the inflationary policies of the Federal Reserve which have decimated the living standard of the middle class.
And, while the proposed Trumpian middle class tax cuts will help, just as important is a sound monetary system if Middle America is to become a creditor class once again.
Pensioners and retirees, another group that Trump has promised to help, would continue to see their financial condition decline under a policy to weaken the dollar. A fall in the purchasing power of money would devastate the income stream of pensions and social security payments.

http://www.acting-man.com/blog/media...k-1024x502.pngThe shrinking dollar: since the establishment of the Federal Reserve, it has lost 96% of its value. Since that figure is based on the government’s own highly dubious price inflation statistics, the loss was probably even greater. Not to put too fine a point to it: this is not the way to get richer – click to enlarge.

While a weaker dollar policy would hurt the middle class, retirees, and savers, it would benefit those who are largely responsible for the continued economic doldrums of America – banksters and the government. A weaker dollar would allow the government to continue to borrow and maintain its profligate spending.
Financial houses and bankers would receive credit at nearly zero cost, which would allow them to continue to blow bubbles in asset markets. Export firms, too, would benefit – at least for a while – but would more than likely face retribution from foreign governments and central banks which would retaliate with their own devaluations, potentially sparking currency wars.

Sound Money is the Only Solution
Talk of “currency manipulation,” “weakening the dollar,” “trade deals,” and the like do not address what lies at the heart of not only America, but the Western world’s economic problem – too much debt.
The reason why the West has been able to incur its current gargantuan level of debt is not because of a “weak” or a “strong” dollar, but because the dollar is a fiat currency not backed by any commodity.

http://www.acting-man.com/blog/media...t-1024x557.pngTotal US credit market debt (last update at year-end 2015: $63.5 trn.) – this is indeed the largest credit bubble in history. It was enabled by the adoption of a full-fledged fiat money standard after Nixon’s default on the Bretton Woods gold exchange clause – click to enlarge.

A true gold standard, where each currency unit represents either gold or silver, provides monetary discipline which prevents politicians and bankers from incurring ruinous levels of debt.
Since money is the lifeblood of an economy, any hope that one can be turned around without a stable monetary order is, to say the least, delusional. If president-elect Trump and his policy makers do not realize this, they will be severely disappointed in the years to come.

Conclusion
Sound money allows for the accumulation of savings and capital formation, the essential elements of the market economy and the only basis upon which real economic growth can occur.
More savings and capital are needed to boost production and create employment, not supposedly wiser and more competent international trade negotiators. Talk of currency devaluation is what is typically heard from banana republics, it should not be advocated by those who have aspirations of making their country great again.

References:

*Tyler Durden, “Dollar Tumbles After Trump Calls Currency ‘Too Strong,’ Slams Border-Adjustment Tax.” Zero Hedge. 17 January 2017.

Charts by St. Louis Federal Reserve Research

Chart and image captions by PT

Hi Benjamin, that is a pity. How long before you can pm again?
I did thank Hanover on one of is threads, "Q&A about my free indicators in Platform". Could not pm him.

Updated charts

Have a nice weekend everyone!

We are from Earth although I would love to visit Venus.

http://www.forexfactory.com/attachme...7&d=1485528693


Benjaminis

1. Post 358
2. Cleanup
3. Quote
4. Last Post: Jan 27, 8:11am (4 hr ago)

1. http://cdn.assets.forexfactory.net/n...ar551741_1.gif ifund
2. | New Member | Status: Junior Member | 5 Posts | Online Now

Lets discuss the points you raised a little bit:

The discipline we are talking here is being discipline all the time not now, tomorrow or this month, its literally all the time every move, every actions must be in accordance with the specific rule, that is the discipline that we are talking here, now if one has different interpretation then their is nothing I can do about it. Insufficient discipline is the same with lack of discipline.

Insufficient equity, in general I will agree that under capitalization can bring more psychological pressures to most traders causing to over leverage and over trade, but this is not applicable to all traders, because there are traders that makes money even with smaller equity.

Lack of business/economics/analytical background - Are you saying that you need to be an economic or analytical expert to be a successful trader or maybe you are just referring to traders that dont have the right education right from the start because we all know that majority of traders comes to this market not getting the right preparation and knowledge.

Unrealistic expectations - this part can be associated to lack of knowledge
Recklessness and other negative traits in trading can be associated to psychological unpreparedness of a trader

Peace!

 

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