Money Flow Trading Method along with Risk Management

From my Post 1889 of February 6, 2017 in order in two posts give to TooSlow and others reading here the answers to their questions. If you have any more questions that you need answers too then just post them here. Thank You and have a GREAT FOREX TRADING WEEK !!!

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

The Spider's Den Thread Is An Excellent Professional Thread.

http://www.forexfactory.com/showthre...14#post9553114

I just came across this posting by Commercial Member , Ocean Orca.

I share it here now for review and discussion.


Benjaminis

 

1. Ocean Orca
2. | Commercial Member | Joined Jan 2014 | 226 Posts

Are You a System Trader or Discretionary Trader?

https://admiralmarkets.com/analytics...tionary-trader - Your capital is at risk

Dear Traders,
Have you ever wondered whether you are a system trader or a discretionary trader? And more importantly, how do you as a trader actually find out which style suits you better?

This article promises to help traders find their own path, story and answers. A short quiz at the end will also help you decide whether you are more of a discretionary trader or system trader.

What is a System trader?
A system trader is a trader who follows precise rules. The trading plan is robust and has covered (almost) all aspects in a set of predefined rules. The system could be executed both automated and manually.

Automated trading, also known as algorithmic trading, is of course a well known example of system trading but creating and choosing an automated trading system is not a simple task (more on a fractal based system coming soon).

The main task for the system trader is to follow the rules, period. This is true regardless of whether the execution is manually or automated. In most cases, there is no second-guessing or re-analysing.
Simply said, if the trader deviates from the trading plan, then they are breaking the system rules.

How does it compare to a Discretionary trader?
A discretionary trader is a trader that analyses first and acts second. Their goal is dissect the market structure before setting up a specific plan tailor adjusted to the specific circumstances of the moment.

For instance, when I complete my Fibonacci and wave analysis at Admiral Markets, I am using a discretionary trading system for tackling three US Dollar pairs in the Forex market.

The trading plan should specify how the analysis is performed, which indicators and tools are used, and how entries are made. But it also allows more space for making decision on a case-by-case basis.ilters are frequently used to skip trade setups that are determined as weak. Here below is a video how to design a trading system based on discretionary methods.

System trader vs Discretionary trader. Unique advantages of each style
Both system trading and discretionary trading are well-known methods for tackling the Forex and financial markets but they have different advantages and capabilities.


Here's an overview of some the pros and cons:

......... read more here:
https://admiralmarkets.com/analytics...tionary-trader - Your capital is at risk

SNIPPET:
System trader vs Discretionary trader. Unique advantages of each style
Both system trading and discretionary trading are well-known methods for tackling the Forex and financial markets but they have different advantages and capabilities.

Here's an overview of some the pros and cons but feel free to add your own thoughts in the comment section at the bottom.
System trader pros:

1. Traders can focus on execution without overthinking the analytical part of trading.
2. Traders can quickly measure whether the system itself is profitable (40 trades gives a good first impression)

System trader cons:

1. Less opportunity to use the market structure, Elliott Wave theory and patterns for trading decisions.
2. Traders can over focus on optimizing a Forex trading strategy, on finding the best entries, and skipping the required testing on the timing of exits.

Discretionary trader pros:

1. Traders have more flexibility when tackling the Forex and financial markets and can adjust their trading plan to the market structure of the day or week.
2. Traders can focus on the opportunities that offer the best value in terms of reward to risk ratio versus win percentage.

Discretionary trader cons:

1. Traders might be less decisive when action is needed to take entries. They might keep analysing which could lead to paralysis of analysis.
2. Traders might feel less confident during the setup and second doubt their analysis and trade plan.

https://lh5.googleusercontent.com/QV...kaaMJf_q-NqRlU
Which style is better for you? How to choose?

This is the ultimate question because both styles are perfectly fine. It is, however, vital that you choose a style that suits you and fits your trading personality.

This is partly a process of discovery and building up experience. Traders need to try out both styles by actually ( demo) trading to understand which one matches best.


Furthermore, the preference can change substantially over time. This is a natural process so do not be alarmed. For instance, as a full-time employee, you might prefer a rules based system but during your retirement you might start to prefer discretionary trading.


There are a couple of clues that could help you out with a first orientation.

Question 1: what is your experience?
A beginning trader is probably best advised to start with a rules based system. There are many decisions that need to be made during discretionary trading and often beginners miss the experience to take trading decisions with confidence due to lack of experience. Building up experience has its ups and downs but as a rule of thumb, discretionary trading often does get easier with more experience.


Question 2: how much time do you have to analyse the charts?
A trader with more time on their hand can analyse the charts in more detail and more depth, thus allowing discretionary trading to thrive. A trader with little spare time to analyse the financial markets could be better off with system trading.

Question 3: do you often change your mind? Or never?
People who often or never change their minds might struggle with discretionary trading. Of course, this is just a rough guideline. Yet there is a lot of validity to the idea that discretionary trading requires a healthy balance of both confidence and critical thinking. Discretionary traders cannot change their opinion each and every minute but they cannot blindly stick to a trade forever, either.

Question 4: do you like solving puzzles?
Discretionary trading is like being a detective and solving a mystery or puzzle. These traders need to take into account various bits of information before deciding whether they want to trade and how they want to trade (the plan). System traders are more reactionary focused and are not so keen on enjoying the labor of analysing.


Of course, there is nothing wrong with applying both styles at the same time. Just make sure to track and evaluate them.


If you are looking for system trading, then please join our free Zero to Hero course at the bottom or our live webinars. Soon I will also share more information how traders can build an automated trading system based on fractals.

If you are looking for discretionary trading, then we invite you to our analytical page and online webinars, too.

Cheers and safe trading,
Chris Svorcik
Senior Analyst
Admiral Markets

COMMENTS FROM BENJAMINIS: What we have here is THE EDGE - MONEY FLOW TRADING and our INSURANCE is Risk Management or sometimes called "MM" Money Management.

The results that we SHOW in LIVE TRADING TIME should remove any doubts. I wonder if TooSlow still has any doubts ?

https://dailyreckoning.com/death-dol...20Notification

Death of the Dollar: A New World Money
Since the creation of the international monetary system, the divide over financial and monetary policy has always been present. With the evolutionary rise in power of a new world money, everything has changed.


Understanding the history, construction and evolution of this new world money system will allow you to better position yourself for the future.

The U.S dollar has been the world’s reserve currency for decades since World War II. The dollar has been synonymous with strength, stability and general confidence in the United States Government.

That is all in question now.

Studying the real history of the special drawing rights (SDR), what some have coined as new world money, will allow you to understand exactly why the evolution of the international currency matters even more today.


“Good as Gold”
Following the conclusion of World War II, the United States held an estimated 60% of all of the world’s gold reserves officially on record. As one of the few regions that was geographically isolated from being a physical battleground, war-inflicted countries had high demand for U.S goods and services that were continuing to produce at high levels without major disruption.

The massive flow of capital both in and out of the United States in the 1940s left considerable fear of dollar shortages in order to account for demand.

As European countries began to rebuild, so did their gold and dollar reserves. Once the European continent and other developed countries began re-instituting their national currency institutions, an overwhelming demand to convert dollars back to gold began.

The U.S status as “good as gold” was no longer as hot on demand as the ultimate reserve currency. The international demand hit critical mass and pressure mounted for a diplomatic resolution.


The IMF: Aftermath of WWII
Developed at a United Nations gathering in Bretton Woods, New Hampshire in 1944 the international community sought to build a new monetary system.

The gathering was officially titled the United Nations Monetary and Financial Conference. The outcome would bring about the creation of International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF). These institutions were the first of their kind.

The IBRD would later develop under the World Bank Group of organizations which would be responsible for developing poverty reduction programs. The World Bank primarily functions as an institution that offers loans to developing countries and a variety of infrastructure based projects in the developing world.

At the time the organization was built up with 44 member state countries. Respectively, every participating member put forward constructive efforts to build a method for economic cooperation in order to not only save succeeding generations from the scourge of war but to avoid another Great Depression of the 1930s that devastated the global economy.


At the time of its creation the IMF was established in order to maintain stability and effectiveness of the international monetary system. The IMF was directed by the participating member states to ensure a secure system of exchange rates and ultimately facilitate countries in having international financial transactions with one another.

Tradition
The IMF maintains a history of selecting executive leadership of European nationality. The organization was a de facto European rebuilding and restructuring facility upon its creation at the conclusion of World War II. The European continent was in economic disarray and required significant coordinated effort to emerge from the deep divide created. As an institution created primarily by western member states, it became a mechanism for the west – by the west in many ways.


Monetary policy and financial discrepancy was, then, at the forefront of IMF focus in redeveloping Europe. That would quickly evolve as the IMF began to reach into the financial dealings of nearly every major economy around the world.

Since that time, the modern age of the IMF has held tight to its tradition of promoting Europeans to lead as Managing Directors of the Fund. Recently, scandal has flooded the leadership ranks of the Fund.

The former head of the IMF, Dominique Strauss-Kahn, was forced in 2011 to resign after a major required him to step down.

Currently, Christine Lagarde, another French national holds the title of Managing Director. Lagarde is the fifth French head of the organization and the first female to hold such a role. She has also face considerable legal backlash and eventually was convicted in French courts on charges of misusing public funds.

Examining its counterpart, the World Bank is currently under leadership of its 12th American leader. American nationals have unanimously held the Presidency role at the World Bank since the Bretton Woods inception.

Both organizations are headquartered in Washington, D.C and are within several blocks of the White House. The traditions held of both the IMF and the World Bank will later prove to be critical in the shaping of this new world money.

As the spread of the fiat currency system continued, it took leadership finesse to not only sell the system being proposed – but to impose a system to rival the dominance of the U.S dollar in the future. World money was not the end goal, it was a byproduct of leadership understanding and member state desires for separating from the U.S dollar.


Soviet Opposition
At the time, the United States controlled nearly two thirds of all of the official gold reserves in the world.

Under these conditions, the U.S dollar and gold would be the standards at which the world would flock toward for security and stability.
https://dailyreckoning.com/wp-conten...tton-Woods.jpgDuring the Bretton Woods gatherings, the former Soviet Union was present and had representatives in attendance but would decline ratification of the final conclusions from the meetings.


The USSR would charge that the institutions creation were simply, “branches of Wall Street.”


A later Soviet Foreign Ministry memorandum discovered from December 1945 revealed the central sentiments of the gathering by summarizing,
“It is known that the Americans made credits to Britain conditional on joining the Fund… [A]s the government of the USA did not offer the USSR a credit… our membership in these organizations could be read as our weakness, as a forced step taken under the pressure of the USA Our negative attitude toward membership in the Fund and the Bank would show our independent position in this matter.”


Ben Steil, author of “The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order,” even theorizes that the Soviet Union saw the gathering as a point to instruct a senior U.S. Treasury official who was deemed a Soviet spy, Harry Dexter White to undermine efforts of major British economists.


The Soviets viewed the gathering at the Mt. Washington Hotel in Bretton Woods as the U.S positioning itself to take over from Great Britain’s history of dominance as a global financial power and to officially lament the dollar as the major global reserve currency.


The USSR was not entirely isolated from the international community, however. The Soviets maintained firm engagements at the United Nations where the remained a permanent voting member of the Security Council – allowing them veto power on any international action to be taken by the body.


The Chinese would later take the understanding of the Soviet empire and apply it when navigating world money to come.


Triffin’s Dilemma 1961
Robert Triffin was a Belgian economist that was an academic and professor at Yale and Berkeley College. He is widely celebrated as a gold, international monetary system and overall currency expert.

Within his writing from 1961 on Gold and the Dollar Crisis: The Future of Convertibility, the IMF received its greatest pushback on the value systems inherent flaw, commonly known as the Triffin Dilemma. What Triffin theorized was that as long as the U.S dollar remained the leader in foreign exchange reserve assets, the world would continuously elevate trade and finance that comes with a growing supply of dollars.

The increase in stock of dollars would, in effect, require a constant deficit in the U.S balance of payments. What Triffin believed was that along with continued deficits, the pressure on the U.S dollar would shake confidence and disrupt the Bretton Woods established monetary systems in place.

This would continue to place considerable pressure on the overall value of the U.S dollar.


Throughout the 1960s and 1970s, the Vietnam War raged on which caused the United States to build up considerable trade deficits, causing the dollar to be seen as overvalued. Those governments who held dollars believed they had to offload, diversify or attain gold in reserves.


The theory highlighted a clear division of interests between domestic and international objectives in the global economy. Those official holders of U.S dollars would continue to have a concern that the value of their reserves would (or could) decrease in comparison to the value of gold.


Group of 10 Meeting 1966
https://dailyreckoning.com/wp-conten...e-Magazine.jpgThe “Group of Ten” that consisted of the Ministers and Governors of the countries participating in the IMF issued an official request for international collaborative research on improvements needed to the international monetary system. By 1966 the IMF produced a report on behalf of guidance from its 4th Managing Director, Pierre-Paul Schweitzer.

Schweitzer was a French national who even survived internment in a Nazi concentration camp. Under his leadership the IMF produced a now infamous annual report that highlighted the “Need for Reserves.” He understood well the need for monetary funds outside of a centralized system.

The report concluded that:
“Countries would use reserves in the form of automatic drawing rights in the same way as they now use existing drawing facilities in the Fund, i.e., by purchasing foreign currency from the Fund in exchange for their own.”


It went on to set the foundation that, “Drawing rights are thus effectively transferred from the drawing country to the drawee country; the currencies purchased are used directly, or after conversion, for the settlement of international transactions.”



Keynes and Visions of World Money
John Maynard Keynes, a British economist, developed his own type of international currency after elaborating in his notable works in The Means to Prosperity (1933) and his proposal for the creation of an International Clearing Union (1944). Keynes developed a conceptual theory of expanding the global integration of a single international monetary policy.


Keynes took it a step further. His proposal was for a new supranational currency, which he titled bancor, that the celebrated economist later devised should be used as international standard. He wrote:
“We need an instrument of international currency having general acceptability between nations… We need an orderly and agreed upon method of determining the relative exchange values of national currency units… We need a quantum of international currency which is governed by the actual current [liquidity] requirements of world commerce, and is capable of deliberate expansion. We need a method by which the surplus credit balances arising from international trade, which the recipient does not wish to employ can be set to work…”
Sourced via IMF reform on Keynes Plan

What Keynes developed was what some consider the original groundwork for SDR’s. His idea of bancor may have been more cosmopolitan, but the theoretical commodity at least had a proposed backing that included gold.


In comparison, what would later become SDRs are constructed purely of confidence in the system.
While Keynes might have had commodities integrated in support of his fictitious currency, the SDR does not even offer to make such arrangements in the future.


September 1967
Finance ministers gathered in Rio de Janeiro to discuss bookkeeping issues in September 1967. The creation of the Special Drawing Rights was officially outlined. The terminology of “special drawing rights” were given as an alternative to “reserve drawing rights” after the French leadership of the organization insisted that the SDR unit would be observed as a loan from the IMF, not a currency unit.


This SDR would be offered as a direct substitute for supplementary gold and dollar reserves held by government organizations, primarily central banks.

After continued French opposition to currency unit status and pressure toward creating an autonomous IMF “loan unit,” the SDR would be implemented for repayment purposes, and not have associated inflationary fluctuations. This distinction would be highly disputed and shape the eventual direction of new world money.


U.S Reaction
The U.S Treasury Secretary in 1967, Henry Fowler, remarked, “”This is the most ambitious and significant effort in the area of international monetary affairs since Bretton Woods.”


Even the U.S Federal Reserve Chairman William McChesney Martin, who rarely made public statements or positive reaction called the agreement for SDRs a true “milestone” for the United States.


By 1968, a year later, Chairman Martin testified before the United States Senate Committee on Foreign Relations noting that,
“Establishment of the system of Special Drawing Rights in the International Monetary Fund will mean that the growth of international monetary reserves will for the first time be subject to rational international decision. The need for establishing such a system arises from vital interests in maximum employment, production, and trade. All countries want their reserves to grow over time, with the growth of international trade and payments, but the supply of existing kinds of reserve assets, including gold, clearly will not be enough to meet this need.”


The Fed had officially made its argument to the U.S government in full, following the international efforts, to back the SDR and have the U.S be an active participant in the monetary system.

This new world money not only had a name, now it had value given from the strongest economic authority.


New World Money Emerges 1969
Meeting on October 2, 1969 the “Group of 10” would officially agreement to support the creation and applications of the SDRs. The unanimous vote was met with caution from all sides, as the U.S viewed the European block as a threat and consequently the Europeans (in particular the French) were hesitant about the influence of the U.S dollar.


News of the drawing rights vote never managed to make it to front headline news. The New York Times ran the story on page 78 and devoted a meager 10 lines to the landmark deal.


The new world money at the time of its creation was set at an equivalent to 0.888671 SDR for a gram of fine gold. At that time, the exact figure just so happened to also be the amount of gold that could be purchased with one U.S dollar.


This world money would officially equal the amount of foreign exchange reserves for which a member country was allowed to contribute. The SDR could only be held and utilized by member countries, the IMF (which applied it as a unit of reserve accounts in holding), and specifically designated organizations (like the World Bank).


As one academic study concluded:
https://dailyreckoning.com/wp-conten...n-Jan-1970.jpg“Even in 1967, Otmar Emminger the Vice President of the German Bundesbank asked whether the SDR “is a zebra a white horse with black stripes or black horse with white stripes” (Eichengreen, 2011). Emminger doubted that the implications of establishing an alternative to the Triffin Dilemma would make any difference to the status quo.”


Economist Jim Rickards reviews, “So the U.S ran trade deficits, the world got dollars and global trade flourished. But if you run deficits long enough, you go broke. That was Triffin’s dilemma.”


“Any system based on dollars would eventually cause the dollar to collapse because there would either be too many dollars or not enough gold at fixed prices to keep the game going.”


“This paradox between dollar deficits and dollar confidence was unsustainable.”
In the chart listed you will find the first allocation of special drawing rights listed out with the top ten net contributors to the mechanism from January 1, 1970.

The underdeveloped countries that contributed had allocations of SRD’s that totaled $275 million, or about one half of the amount allocated to the U.S in the first year.

The benefits of this so-called “paper gold” would be monopolized by the victors of WWII and the primarily western member states. The SDR would be applied to emerging markets as a tool of the developed world, for the developed world.


Nixon Nix’s The Gold Standard
As the United States continued attempts to repair its trade and budget deficits, the world began to lose confidence in the reserve status of the almighty dollar.

The U.S would not be able to repair, in appropriate timing, its deficit problem. It did quite the opposite. Contending with massive spending during the Vietnam War and surrounding Southeastern Asian countries,it only deteriorated further. The hit took its toll on Fort Knox with continued demand as Switzerland, France and Spain drained U.S. gold supplies.


While SDRs did exist in theory at the time, they were not applied in practice.

Nixon would see this as a golden opportunity.


In a surprise interview that aired on national TV, Nixon addressed the nation (and the world). In what many deem as Richard Nixon officially removing the U.S from the gold standard what he actually did was merely set up the beginning of the end for the commodity link to the dollar.


On August 15, 1971 Nixon officially ordered all conversions of U.S dollars to gold to be “temporarily suspended.” The expectation was that the U.S, after establishing new standards and exchange transactions, would return to some element of the gold standard once new appreciation values of paper money to gold were established.


Nixon told the nation that, “the speculators have been waging an all-out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy–and the American economy is by far the strongest in the world. That would never come to fruition.” He went on to elaborate “I am determined that the American dollar must never again be a hostage in the hands of international speculators.”


The IMF would note in 1972 that, “These moves set in motion a process of appreciation of most major currencies against the dollar in the weeks following August 15.” What would really take place is a large accumulation of dollars in official holding books.


The IMF would gather on December 18, 1971 after widespread concern about the prolonged economic anxiety over floating exchange rates.

What led to be known as the Smithsonian Agreement would bring about the realignment of the U.S dollar in terms of gold and the SDR. While the SDR would remain unchanged, it proved to set the groundwork as the platform in which the international monetary system would flock to at times of mounting financial turmoil and uncertainty.


The Age of Fiat Currency
By March of 1973 the major world currencies would begin to float against one another. What this meant was that member states were no longer able, or accepting, gold as a proper form of conversion.
https://dailyreckoning.com/wp-conten...allocation.jpg
Managing Director Jacques de Larosière signing document authorizing SDR allocation


The collapse of the Bretton Woods system had arrived. With it, members of the IMF would be able to select whatever appropriate exchange rate (outside of gold) and float its exchange against another currency, or “basket of currencies.”


Fiat money, at its core is paper money that has value purely because a government deems it currency. In principle, the strength of a currency relies on the strength of the government and economy that is attributed to the paper based currency tender.


In the chart above, you can see that the increased of foreign exchange reserves tripled in value over the two decades following the major influence of SDRs and fiat currency. Gold had met its match. Fiat had emerged.
https://dailyreckoning.com/wp-conten...ual-Report.jpg
As one research report from the Federal Reserve Bank of St. Louis concluded in 1974 at the finalization of the international gold standard, “SDRs can be expected ultimately to replace gold as a primary international reserve asset. The U.S. phase-out of gold as a monetary instrument contributes to that objective.” By 1975 the original Bretton Woods system would be a dead relic of the past.


The IMF would subsequently offer its first issuance of SDRs from 1970-1972 that was the equivalent of SDR 9.3 billion. Then, nearly 7 years later make its next efforts issuing SDR 12.1 billion from 1979-1981.


After nearly thirty years of building SDR reserves, the IMF sprung the fiat currency into real action again amidst the global financial crisis.

While at the G-20 Leaders’ Summit held in London, newly elected President Obama rallied his fellow G-20 leaders for a general SDR allocation of $250 billion to aid what the U.S Treasury Department identified as “a serious capital drain and the contagion risk facing emerging market and developing countries. The action was an exceptional measure taken to address the consequences of the global economic and financial crisis and to support global recovery.”


The actions cumulatively would total a reserve amount allocated at SDR 204.1 billion. That brought the IMF into another realm. It had offered more than ten times the combined issuance prior and SDR’s were now a common term amongst the global elite.


It was the first significant world money move taken in the modern era of the IMF to triage a financial crisis.
World Money “Basket Weights”
https://dailyreckoning.com/wp-conten...ney-Basket.jpgThe IMF deemed the SDR values a “basket of weights” that since 1973 made up the overall consistency of the allocated funds.

What this meant in practice was that the IMF board and leadership would determine every five years the values of select major currencies that would construct the SDR “weight.”

The method of valuation is determined by a 70 percent majority of the total voting power, which consists of a majority of western and developed states.
Within the basket, the financial indicators are distributed in agreed upon equal shares of official reserves denominated in the member’s (or monetary union’s) currency.

The history of SDR valuation includes:

1. 1978 The IMF world money basket had 16 contributing members to the SDR.
2. 1980 The Funds five largest members reduced the basket to 5 currencies which comprised the basket of U.S. dollar, German mark, French franc, Japanese yen and British pound.
3. 1999 The Deutsche mark and French franc were replaced to include the Euro as part of the weighted currency basket. This reduced the currency basket from 5 to 4 participants.

Chart via IMF History 2001


China and Artisanal Money
After the fall of the Berlin Wall and the gradual inclusion of former Soviet Republics, both Russia and China began to soften to the western dominated institutions like the IMF. Following the global financial crash of 2008, China and other emerging economies began to take leadership roles within the international order.


In 2010, the International Monetary and Financial Committee (IMFC) along with the Ministers from the G20 countries instructed the IMF to construct a criteria system that would allow for expanding the composition of the SDR basket.


China saw this as opportunity.
The Chinese government officially moved to be accepted into the IMF’s new world money basket but after review by the IMF Executive Board in November 2010, the inadequacies found in the yuan did not meet the criteria to be in the SDR. It would not give up.


Central banks across the globe had blown their balance sheets to astronomical figures in order to combat the crisis of 2008. The Fed had lead the global charge by injecting trillions of dollars into the U.S economy, but the concern was whether it could do it again.

Jim Rickards, a U.S government advisor and currency wars expert, offers his analysis, “They won’t be able to respond the same way when the next crisis strikes, which I expect sooner rather than later. They’re out of powder.


The only financial institution with a balance sheet clean enough to respond to the crisis will be the IMF. The IMF acts like the ‘central bank of the world.’ It will have to issue massive amounts of SDRs to hold the international monetary system together.”


Whether it was acting based on this understanding or simply trying to integrate the world’s second largest economy, the IMF knew it could not afford to ignore the yuan. In the IMF’s November 2015 review its Executive Board decided to make a move and integrate the yuan officially into the world money basket.


Effective October 1, 2016 the yuan was officially added as a currency measurement to the SDR. Andrew Tweedie, the Director of the IMF’s Finance Department remarked at the time that, “the inclusion of the RMB in the SDR basket enhances the attractiveness of the RMB as an international reserve asset.

This will help with the diversification of global reserve assets.”

Nomi Prins, a former managing director on Wall Street and bestselling author, explores this and offered her take on the financial revelations in the international monetary system. Prins’ is currently working on her latest book Artisans of Money which explores the coordinated relationships of central banks and the global power stakes that have risen of these world-changing events.


Nomi reveals her insights into this artisanal money reporting that, “the Federal Reserve not only overstepped the boundaries of its stated mandate, it galvanized years of similar policies from the G7 countries to the detriment of their own economies and citizens. The IMF repeatedly warned of the dangers of what I call, artisans money policy as did the People’s Bank of China.”


Prins’ has spent time completing research in China and offers, “China was able to push itself into inclusion within the SDR basket, thereby lifting its status as an economic and financial super power and by extension a diplomatic and military one. The IMF’s SDR is a catalog of this shift to diffuse a US and dollar and Fed cornered reserve currency system.”


World Money and the World Bank
The international community saw Chinese willingness to international inclusion as a new window for world money both in practice and in theory. If China was to be a part of the basket, then western institutions would see how far they could stretch.


The World Bank, an institution continuously under American leadership, decided to test the waters even before the inclusion. In August 2016, the World Bank received unprecedented approval from the People’s Bank of China (PBOC) to enter into the Chinese domestic market of with bonds denominated in SDR’s. It would be the first step toward launching the SDR bond market in the world’s second-largest economy.


The World Bank would inject 2 billion SDRs (the equivalent to $2.8 billion) in China’s interbank market. Only a month later China would host the G20 summit in Hangzhou with IMF members watching its every move.


The internationalization of the new world money as a global currency reserve had and officially elevated the IMF to the forefront of a globalized world. One in which the U.S dollar and the financial largesse of the Federal Reserve was fading.



The Future of World Money
As global trade continues to meander in massive up and down swings, stocks enter new bubble territory and the creeping return of volatility in market many see financial turmoil on the horizon.


A President Donald J. Trump in the White House further highlights this economic agenda and places greater emphasis on what a potential economic collapse looks like. Trump has referenced China as a currency manipulator on Twitter and in multiple public forums.

This will not bode well for a currency basket that requires cooperation from the dollar and the yuan.

Bin Zhao, a senior economist at PriceWaterhouseCooper China told a state-run Chinese editorial paper that following Trump’s currency stance, “China thus has a great opportunity to make a big leap to reform its exchange rate mechanism, to ultimately become a “floating” currency and pave the way for a higher level of internationalisation.”


What this translates to is that China is seeking to make a stronger play on diversifying its currency reserves away from the dollar. It also means that the general public will see a greater impact on trading, currency and multinational influence. Globalism might be treated by some as a four letter word but what it means for the international monetary system is a diversification away from the U.S dollar.



While the general public cannot purchase SDR bonds due to the nature of the currency basket being applied by IMF member states to make loans or tender repayments, it still matters. SDR-denominated bonds will be a big target of multinational and regional based organizations seeking to diversify away from the U.S dollar and other major currency reserves.



The SDR offers governments and central banks the ability to buy and sell these reserves. While it has been used in the past during times of crisis, it could begin to be a move to be used in times of building a “financial war chest.”


Jim Rickards believes that, “The major mechanisms around the world, the balance sheets for the multinational corporations, the funds for major multilateral institutions, global capital markets and even the price of oil will all eventually be denominated in SDRs.”


This new world money may not be overtaking the dollar today, and China might not have the economic capacity to overcome the U.S position in the currency basket – but the positioning of the IMF and the SDR should bring major consideration.


The more powerful the institution, the more powerful the influence.

It is a fool’s errand to believe that the dollar’s value is only set by market forces alone. Confidence is key. In particular, confidence is where world money could offer a complex rival in the future.


Remaining vigilant and mindful of the special drawing rights and the influence of new world money on the dollar will leave you better prepared for the future.
Thanks for reading,
Craig Wilson, @craig_wilson7
for 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.
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COMMENTS FROM BENJAMINIS: I guarantee you that most of those that come here daily to read our thread are better informed than many others that are involved in the financial markets on a daily basis. KNOWLEDGE IS POWER , if understood and used.

Thanks KeenPips for the excellent charts on EUR/USD

EURUSD Weekly Technical Outlook

The main trend on the pair is downwards, but the recent price action has largely been corrective. On the weekly time frame, price retraced 50% of the swing low of December 2016 created from the October 2016 peak. And all the significant technicals on both the weekly and daily time frames support a further bearish move. On the weekly time frame, a bearish candlestick was formed on the weekly time frame although it was somewhat hindered by some bullish resistance. A much likely target of a further bearish move is the immediate support zone, around 1.0453.
Attached Image (click to enlarge)
http://www.forexfactory.com/attachme...1&d=1486936205


On the H4 time frame, price action has been operating in an ascending channel, which it has broken to the downside. This portends for further bearish move of the pair during the week, although there may be a retesting of the lower channel (magenta colour) line before a further bearish drive.
Attached Image (click to enlarge)
http://www.forexfactory.com/attachme...1&d=1486936223

I may be wrong. Trade safe and prosper.

KP
Simplicity of system + Consistent efficiency

Hello Forex Traders

Start your engines as we head to the land of the Rising Sun.

The KEY is the US Dollar Index. One of the OTHER KEYS is we need Risk Off for a reversal in the Equity Markets.

5 Minute Chart on US Dollar Index from Finviz.

http://finviz.com/futures_charts.ashx?t=DX&p=m5

5 Minute Chart on US 30 (DJIA) Dow 30

http://finviz.com/futures_charts.ashx?t=YM&p=m5

5 Minute Chart on USD/JPY

http://finviz.com/forex_charts.ashx?t=USDJPY&tf=m5

5 Minute Chart on 10 Year US Bonds

http://finviz.com/futures_charts.ashx?t=ZN&p=m5

5 Minute Chart on Gold

http://finviz.com/futures_charts.ashx?t=GC&p=m5

NOTE: As US 10 Year Bonds GO UP in PRICE because they are bought then we usually have Risk Off. So if the SPX500 and the Dow 30 sell off starting on Monday at 9:30 AM Eastern Standard Time then money will move to more safe haven assets such as USD/JPY and USD/CHF.

Gold would also see money flow there as long as the US Dollar Index goes down in most cases yet not always.

If anyone reading this does not understand or has a question or some comments then please post them on the thread and when I read it I will answer.


Benjaminis

https://www.theburningplatform.com/2...y/#more-143121

Doug Casey on Why Debt Is Not Money

Guest Post by Doug Casey
Gold’s main use, contrary to the belief of some, isn’t in jewelry or dentistry—although those uses are important. Its main use has almost always been as money. But gold’s ancillary uses are growing in importance because, given its physical characteristics, it’s a high-tech metal. It’s one of the most resistant to chemical reaction, one of the most ductile, the most malleable of all the elements, and it’s an exceptional electrical conductor.

There are lots of other advantages to gold as money. It’s by far the most private kind of money; gold coins, unlike paper currency, don’t even carry serial numbers. That makes it truly untraceable. At current prices, it’s more portable than cash, even in the form of $100 bills. It doesn’t retain traces of drugs, as does currency, which makes it less liable to arbitrary confiscation. Although efforts have been made to counterfeit gold bars, with tungsten filler and such, it’s much easier to authenticate than currency.


Until quite recently, 90% of the world’s people were either flat-out prohibited from owning gold (Russia, China, and the rest of the ex-communist world) or simply too poor to consider it (most Indians and other residents of the Third World). But these people are now allowed to own gold and have a fast-increasing ability to buy it. And they’re rapidly doing so. Their cultures have long histories with the metal and recent histories of living in a police state; they understand the value of real money. Although common people are now the biggest gold buyers, their governments and central banks are accumulating it as well.

I expect that gold will soon become the preferred medium of exchange for many. Early adopters will include dealers in drugs, armaments, and other prescribed merchandise; these folks are very security-conscious. They will be joined by all manner of people who just want to do business below the government radar. And in the years to come, paper currency is gradually going to be eliminated by governments in favor of debit cards, credit cards, and other media of electronic transfer. Governments prefer these things, for obvious reasons. People, therefore, are going to need a private way to trade when paper cash is unavailable.

It’s not just that cash will be harder to come by and harder to use. People won’t want to hold it as inflation gets serious; as U.S. dollars are increasingly viewed as hot potatoes, people around the world will gradually go to gold. In 100 or so countries, the dollar is already the de facto currency for large purchases and long-term saving. What will people in these countries do as the dollar starts losing value rapidly? They won’t go back to their local currencies; their only reasonable alternative is gold. All these things will add to demand for the metal. This is good news for those who own gold in size now.
Almost everybody, even gold bugs, has far too little gold. Most people have no gold at all. Pity the poor fools. Gold is going to be reinstituted as money within our lifetimes, simply out of necessity. But that can only happen at higher prices, since only about six billion ounces exist above ground in the entire world.


Debt
Now that we’ve defined what money is, let me further define what money is not: debt. All U.S. dollars, which is to say Federal Reserve Notes, are debt. They are neither redeemable for anything by their issuer, nor is there a limit on how many can be created. They represent only a vague claim against the “good faith and credit” of the United States government, which is to say the government’s ability to extract taxes from its subjects. But Uncle Sam has shown himself to be remarkably lacking in good faith and is currently embarked on a course to destroy his credit.

The dollar is literally an “IOU nothing.” It’s true that your grocer and your barber have to accept the dollar because of “legal tender” laws, and because they currently wouldn’t know what else to take in payment. But that’s not true of foreigners, who own something like six trillion dollars.

Paper money is an excellent means for governments to tax people indirectly, surreptitiously, through inflation. That’s one reason central bankers love paper money, but also, phony economic theories, like those of John Maynard Keynes, hold that the government not only can but should meddle with the economy, and the ability to print paper money gives them a means to do that.

In today’s world, not only do people around the world take it for granted that paper is money, but that it should be so.

But it’s all nonsense. After the current system collapses, as every paper money system in the past has collapsed, some form of money will have to replace it, and it’s almost certainly going to be gold.

You know, in the 19th century, the “paper money” you carried in your wallet was called banknotes. Why? Because they actually were notes from your bank representing a specified amount of real money on deposit. People carried these things because they were much more convenient for large amounts of money than chests of gold. Dollars today say “Federal Reserve Note,” not “XYZ Bank Note,” on the back, because they aren’t redeemable for anything besides more Federal Reserve notes. That’s why today’s paper money substitutes are called fiat currencies; they have zero intrinsic value and are not redeemable for anything, but are accepted because the government will put you in jail if you don’t. It’s a fiat accomplished by force, not real value recognized by those who accept the notes.

Hundreds of years ago, people accepted bank notes because they knew the reputations of the banks issuing them (when you traveled, you went to a reputable local bank, which knew the reputation of the bank that issued your notes, and the local bank could issue you new notes in local currency, etc.). There was no central authority to certify these notes. But today, people don’t think that way. They think it takes a government to assure the value of money.

Of course, anyone in Zimbabwe can tell you a government’s guarantee is not necessarily worth anything. A collapse of the dollar – the world’s de facto reserve currency – could spark such a change in that way of thinking.

Gold is also the only asset class that is not also simultaneously someone else’s liability. And in a world as financially unstable as today’s, you just don’t want to hold on to someone else’s liabilities any more than you have to. Especially if that’s a liability of an entity like the U.S. government.

Other currencies are no better; most are worse, and many of them are backed largely by dollars.

Governments, however, are not the only ones who think that debt is money. It seems that many people who get a bunch of credit cards, enabling them to spend beyond their means, imagine that they have money. And they also think that owning the debt of others – like government bonds – means they have money. A bank deposit isn’t really cash; it’s a debt of the bank. There are about three trillion dollars in money market funds; 100% of that money is invested in the short-term debt of banks, corporations, and governments. I would be very leery of these things. Debt is not always repaid. Money, however, simply “is.” That distinction is lost on almost everyone. Don’t be among them.

So you should own gold because it’s money, because of its security, and because it’s an excellent speculation. If you think of your gold as cash, and the dollar as a merely temporarily fashionable means of exchange, you’ll find yourself loading your portfolio with much more gold and gold proxies. That will protect you against the very rapid loss of value the dollar faces in years to come. Inflation is going to truly get out of control.

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

Submitted by Adam Taggart via PeakProseprity.com,


Danielle DiMartino Booth, former analyst at the Federal Reserve Bank of Dallas, has just released the book Fed Up: An Insider's Take On Why The Federal Reserve Is Bad For America.

In it, Danielle describes how the Federal Reserve is controlled by 1,000 PhD economists and run by an unelected West Coast radical with no direct business experience. The Fed continues to enable Congress to grow our nation’s ballooning debt and avoid making hard choices, despite the high psychological and monetary costs. And our addiction to the "heroin" of low interest rates is pushing our economy towards yet another collapse.


This reckless monetary policy pursued by the Fed has resulted in the rich elite becoming markedly richer, while savers and retirees are being absolutely gutted. All while risking a coming conflagration in the bond markets that will destroy a painful percentage of the world's financial wealth:
On The Ticking Bond Market Time-Bomb
That’s the trillion-dollar question. We didn’t used to call it that did we? We used to call it the million-dollar question. But it's now the trillion-dollar question. The punditry up there will tell you that The Fed has been in tightening mode since the taper began several years ago, but I say hooey to that. What we have today is absolute fungibility with central bank purchases on a global basis. You're talking about something upwards of $200 billion every single month.

What the global bond market now revolves around, and relies upon, is the assumption that somebody somewhere will be conducting quantitative easing. As long as they do that, we're operating in a bond market that is assuming that every single bond purchased by a central bank globally has been expired permanently.

You’re taking supply out of the system, which is the only thing that could get you to justify where bond yields are and, therefore the mirror image of that, where bond prices are, which is at record highs or close to record highs. That I think is at the crux of central bankers’ global dilemma. The first central bank that even hints that they are going to reduce the size of the balance sheet or even worse, sell off a single bond, it is game over at that point for the world bond market.


On The Ticking Pension Time-Bomb
The problem with pensions is that the sins are compounding over time. They are piling up. Every single fiscal year that goes into the history books with a 6%+ gap between what was assumed versus what was returned piles on to the next year of equal, if not worse, relative underperformance.

You’re talking about having to make up for all of that lost time, but in spades -- at multiples of what the current rate of return assumptions are. Going forward, on an ongoing basis for years to come. Which is highly unrealistic when you are staring down the barrel of an almost 40-year bull market in bonds and the second longest bull market in US history. The assumptions are simply Herculean in magnitude and impossible to achieve. That’s why you’re seeing rate of return assumptions begin to come down.

This is all good, fine and well until you completely square the circle and understand that every time a municipality or a state pension plan reduces their rate of return assumptions, some entity, whether it be the state, the school district, some entity has to write a bigger check in order to make up for the cash flow that is no longer being assumed in by the actuaries via rate of return investments. It doesn’t work. You can’t do it for very long when you’re not bringing money in as a state municipality.

https://www.sec.gov/answers/mfmmkt.htm


Money Market Funds
A money market fund is a type of mutual fund that has relatively low risks compared to other mutual funds and most other investments and historically has had lower returns. Money market funds invest in high quality, short-term debt securities and pay dividends that generally reflect short-term interest rates. Many investors use money market funds to store cash or as an alternative to investing in the stock market.


There are many kinds of money market funds, including ones that invest primarily in government securities, tax-exempt municipal securities, or corporate and bank debt securities. In addition, money market funds are often structured to cater to different types of investors. Some funds are intended for retail investors, while other funds that typically require high minimum investments are intended for institutional investors. The rules governing money market funds vary based on the type of money market fund.


Government and retail money market funds try to keep their net asset value (NAV) at a stable $1.00 per share using special pricing and valuation conventions. Institutional prime money market funds must allow their NAV to float based on the current market value of the securities in their portfolios.


Money market funds, like all mutual funds, are redeemable on demand. Registered open-end companies (the legal term for mutual funds) may not suspend the right of redemption and must pay redemption proceeds within seven days, except in certain emergencies or for such other periods as the Commission may by order permit for the protection of security holders of the company. In addition, in certain circumstances, non-government money market funds can charge fees on redemptions (liquidity fees) and can suspend redemptions temporarily (redemption gates). Government money market funds can voluntarily opt into using these tools when certain circumstances occur, if the ability to do so is disclosed in the fund prospectus. Finally, a money market fund can also permanently suspend redemptions in certain circumstances if a fund’s board of directors decides to liquidate the fund.


Before investing in a money market fund, you should carefully read all of the fund’s available information, including its prospectus (or summary prospectus, if the fund has one), and its most recent shareholder report.

Money market funds are regulated primarily under the Investment Company Act of 1940 and the rules adopted under that Act, particularly Rule 2a-7 under the Act. Unlike a “money market deposit account” at a bank, money market funds are not federally insured.

https://www.sec.gov/images/oieadisclaimer2009.gif


https://www.stlouisfed.org/on-the-ec...et-fund-assets


New SEC Rules Cause Shift in Money Market Fund Assets
Tuesday, September 06, 2016


By David C. Wheelock, Vice President and Deputy Director of Research
Interest rates on various money market securities have risen noticeably in recent weeks, relative to the yields on short-term U.S. government securities. For example, the difference between the three-month Libor rate (measured in U.S. dollars) and the yield on three-month U.S. Treasury bills recently posted its high for the year.

1
Similarly, since early July, rates on financial commercial paper have seen notable increases relative to yields on U.S. government securities. The figure below illustrates the recent increase in private interest rates relative to yields on Treasury bills through plotting three rates since Jan. 1:

1. The three-month Libor rate
2. An average rate on three-month commercial paper issued by financial institutions
3. The market yield on three-month U.S. Treasury bills

Market analysts widely attribute the recent increase in money market yield spreads to new rules issued by the Securities and Exchange Commission for institutional prime money market mutual funds that invest in private money market instruments or securities issued by municipalities.

2
The rules, which take effect in October, will require the affected funds to price their shares at floating net asset value, rather than the traditional $1 per share, and permit the funds’ boards of directors to temporarily suspend withdrawals or impose withdrawal fees in the event that a fund’s liquid assets fall below a certain threshold.

3
The new rules are intended to avoid sudden large withdrawals from money funds like those seen in 2008 during the financial crisis. However, analysts suggest that the rules will also reduce the supply of short-term loans for financial institutions and other private money market borrowers, and possibly raise their market yields, as prime money market mutual funds attract less investment inflows.


Industry data indicate that, since the new rules were announced in 2014, investors have been moving funds from the prime money market funds into government-only money market funds, which invest solely in U.S. Treasuries and are not subject to the new rules.

4
The recent increases in the spreads between private money market rates, such as Libor, and the yields on Treasury bills suggest that the new rules are having a greater impact on markets as their implementation date gets closer.

Of course, the ultimate impact of the new rules on the supply and cost of short-term loans for private borrowers will become clear only when the rules are in place and investors have become accustomed to them.

Notes and References
1 Libor (the London Interbank Offered Rate) is one measure of the cost of unsecured borrowing between banks.
2 Examples of private money market instruments include commercial paper and bank certificates of deposit. Shares in institutional money market funds are held primarily by investment companies, pension plans and businesses. The new rules do not apply to retail money market funds, which are held by individual investors.
3 For more information, see “SEC Adopts Money Market Fund Reform Rules.” Securities and Exchange Commission, July 23, 2014.
4 According to one report, during the 11 months ending on July 31, the assets of institutional money funds that invest in private or municipal securities declined by 35 percent while the assets of money funds that invest solely in U.S. government securities rose by 41 percent. See Stynes, Tess. “Number of U.S. Prime Money-Market Funds to Drop as Rules Change,” The Wall Street Journal, Aug. 24, 2016.
Additional Resources

1. On the Economy: Chasing Returns Has a High Cost for Investors
2. On the Economy: Mutual Fund Flows and Investor Behavior
3. On the Economy: Consumer Debt Is on the Rise

Posted In Financial | Tagged david wheelock, money market, sec, treasury bills, treasuries, libor, interest rates
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COMMENTS FROM BENJAMINIS: THIS HAS BEEN A MOST IMPORTANT CHANGE IN THE RULES BY THE SEC. What they have done is to effectively FORCE or to be kinder encourage money NOT TO BE PARKED INTO MONEY MARKET FUNDS because NOW THERE is No More GUARANTEE of NAV (Net Asset Value) guaranteed at $1,00 per share.

That is what almost collapsed the FINANCIAL MARKETS during 2008 and what TARP was really all about as NAV fell below $1.00 for a short while and accordingly NO MONEY WAS SAFE.

The effect of the change is now to allow MONEY MARKET FUNDS to be used to PURCHASE SHORT TERM US BONDS.

Bottom Line ... How convenient as MONEY has almost stopped flowing into the USA as China and Japan and now Saudi Arabia have stopped buying the US BONDS so now they have solved that problem short term by allowing the Citizens and Corporations in the USA to buy these bonds. The SEC and FED are just about out of bullets and now that we have a NEW Sherriff in Town along with his POSSE ... WATCH OUT BELOW as no person including the President can stop the end of this massive world Ponzi Game that will unfortunately destroy many lives.

http://news.goldseek.com/GoldSeek/1486938712.php


The Inevitability of Economic Collapse

Published: Sunday, 12 February 2017

By David Haggith
While I haven’t had the privilege of divine revelation, I do try to look at the forces that are in play that have the power to move nations economically. Two dominant countervailing forces right now are those who have George Soros nearly in tears — who make up the anti-global revolution — and then all the globalists like Soros who are panicking that their new world order is being shredded accompanied by all the raging anarchists that Soros can sponsor as his mercenaries.

There is some certainty here: globalists will not give up after decades of massaging and manipulating and cajoling the world in their pluralistic, globalist direction and so will wage battles everywhere they find people or candidates resisting their agenda. At the same time, those who are sick of globalism have risen up in Brexit and with Trump as their champion, and are not about to lie back down. So, conflict is certain for several years to come. That was an easy prediction for me to make earlier, and we’re seeing it play out daily now that Trump is in 0ffice as president.

Internal conflict tends to get in the way of commerce and so is likely to have economic impact. Within this milieu of daily conflict we have an economic structure in the US (and similarly in most of the rest of the world) that is so riddled with flaws that have not been fixed (and have even been made far worse) that it’s collapse is inevitable even without conflict knocking up against it.

A list of economic flaws that are too big not to fail

1. Banks that were too big to fail are now much bigger than they were in 2008 and 2009. While banks may be a little more solvent at the moment, if failure comes, the risk to the overall economy is far worse than in 2008 and 2009.
2. Banksters who destroyed the global economy were almost all rewarded with much larger bonuses, instead of thrown in jail, so they remain at large to wreck things again and even are enticed to strike again because it all worked out so well the first time; but we don’t know where and at what time their corruption will cause their failure. What we do know, is that corruption drifts that way.
3. Bailing out banks created exactly the “moral hazard” that many people warned about in 2009. As a result, one thing we do know is that bailed-out banks continued their derivative investments that caused many of the 2008 and 2009 failures. In fact, they increased their involvement in this perilous and poorly understood area of investment to such new heights that the number of derivatives in 2009 looks like an large city seen from earth-orbiting altitude — a mere spot compared to all that can be seen now.
4. Goldman Sachs, the most evil of all the companies that helped cause the global economic collapse, now has three high-level positions in the Trump administration, versus the one that it had in the Obama admin. It, in essence now oversees the whole US financial system — the Fed, the National Economic Council, and the Treasury.
5. Thanks to the revoking of Glass-Steagall, Banks are still allowed to invest in risky assets like stocks, and the Federal Reserve has even talked about investing directly in stocks as its next recovery plan, even though the revoking of Glass-Steagall played a major role in setting the US up for the Great Recession.
6. Trump plans to roll back Dodd-Frank (Glass-Steagall’s half-hearted replacement). That means there will be no correction to this serious economic aberration for a long time. Because the Fed can print infinite amounts of money at its own discretion and give it to banks or maybe even start investing it directly, there is no legal limit to how much the Fed and its member bank’s can manipulate the stock market … so long as the keep overall inflation (which doesn’t count stocks) and jobs under control. So, for economic recovery, we’re returning to the old tricks of banking deregulation to loosen up credit; we’ve all seen how beautifully banks policed themselves, as Alan Greenspan assured us they would.
7. Likewise, we are returning to trickle-down economics, and are about to trump it up higher than under Reagan or GW Bush. We’ve had many years of trickle-down economics over the past thirty years, and clearly it has diminished the middle class and shifted wealth to the top one percent to where our market economy is now weaker because it was a well-off middle class that constituted that market. We’ve learned nothing!
8. The erosion of the middle class — the chasm that has widened between the rich and all the rest — is leading us into class warfare. So, while we have a cultural war starting between liberals and conservatives, immigrants and natives, and a simultaneous political-economic war between globalists and nationalists, we also have an economic war starting between the rich and the poor. So many different, major, overlapping divisions creating conflict assure growing civil unrest for a long time to come with no clear path out. It looks more like an angry mob than a major battle between two factions.
9. The national debt, which was completely absurd at $10,000,000,000,000 by the end of the Bush administration, has now doubled to $20,000,000,000,000, thanks to the Obama administration create a tough starting position for the next round of “recovery.”
10. Trump’s infrastructure stimulus plan and military buildup are, so far, estimated to add somewhere between $5 trillion and $10 trillion to that debt over a decade. That means we’ll likely continue Obama’s $1 trillion annual deficit. Thus, we fully plan to continue the immoral game of spending all of the next generation’s money to buy the things we need, build up our military and to fund our generous welfare to immigrants and other nations. We’ve learned nothing! We’re at a bad starting position, and our answer is to make it worse for everyone ahead.
11. Corporate debt has also increased to stratospheric levels, and that debt was a big part of what was keeping stock prices rising as companies created market demand for their own shares by buying them back, which also reduces supply to drive up prices.
12. The stock market, which I believe is already a bubble, is ballooning in speculation of Trump’s grand credit card (not because earnings have greatly improved, for those calculations look more jury-rigged than ever).
13. Housing prices are back up to the same insane levels they reached in 2007 in most of the US, which could only be supported by loose terms of credit back then. The move back up to those prices has mostly been accomplished by resorting again to looser terms of credit. So, we’re back in a housing bubble because real wages are no better now than they were then. (We learned nothing!)
14. Banks continued to issue adjustable-rate mortgages, which we experienced as being safe when home values are rising, but devastating time bombs if home values fall so that people cannot refinance their way out of them when the interest increase hits.
15. Home values have just started declining in several key markets, particularly at the top end, meaning some of those adjustable-rate mortgages bombs may be nearing their final ticks.
16. Interest on all of that debt (housing, corporate, government) remains at historically low levels, but started rising at an historically rapid rate in the last few months, even without the Fed moving its targets, due in part to anticipation of the financing Trump will have to do to carry out his infrastructure plans.

That’s just domestically. Internationally, two of the oldest and largest banks in Europe keep teetering on the edge of collapse. All of Italy’s banks are structurally unsound because they continue to carry the bad debt from the 2008-2009 financial collapse because they cannot afford to write it off.

Greece is still walking the fine edge of bankruptcy. Spain, Portugal and Ireland look marginal at best.


Trends determine ends


These are all problems that are major trends. They are also all structural economic flaws that existed prior to 2007 and that contributed to the economic collapse that started in 2007 and became known by 2008 as the Great Recession. Nothing (or, at best, very little) has been done about them. Nothing is even being talked about being done about them in any serious way. Therefore, nothing is going to be done about them. In fact, all of these flaws are worse today than they were in 2008!


That means they will continue to grow until they erupt in turmoil again. Exactly when I’m not as certain because the election changed things. Trumps stimulus plans on the national credit are so huge they are bound to create some temporary lift. So for the very short term Trump’s policies may boost the economy, but mid-term and longer, Trump and his cabinetful of bankster-barons are not going to be able to stop these numerous trends from crushing us. Trump has expressed no plans to solve any of these overwhelming structural flaws that are trending against us, some of which are past solving (like the national debt). It is questionable he and his cabinet even recognize many of these problems or believe they are important. So, the situation toward the latter part of this year looks worse socially and, in years to come, looks much worse financially and socially.


That is because, ultimately, Trumps short-term stimulus will make some of the items on this list worse. Huge tax breaks for the rich will give some temporary economic boost if they ever make it through congress, but they will also create much greater economic disparity as the cost. That means more political conflict as the gap between the rich and the poor widens more quickly than we’ve ever seen before. The boost, if it happens, will also come at the cost of much more national debt. If interest continues to rise, as it is doing now, that debt will not just be unpayable (as it already is) but will become unserviceable. So, the lon-term economic damage will be significant as it has been after all previous periods of trickle-down economics, marching us toward more debt and stagnation under the service of that debt, because service of the debt soaks up so much of our economic fuel.


The cabinetful of bankster-barons will not likely start putting banksters in jail. They will even less likely break up banks that are too big to fail. They will not put the Fed out of business or the nation back onto the gold standard. They will not likely put Hillary in jail. None of that is going to happen. Or, at least, very little of it.


As it turns out, the first major wave of the Epocalypse that I predicted for 2016 turned out to be political — a revolt against the establishment — rather than economic. Now, the counter-revolution has begun as liberals start fighting back. While I certainly don’t want the non-globalists to back down, you can be certain the globalist establishment isn’t about to back down either. Efforts will intensify on both sides as the pressures above continue to build unabated, making 2017 a year of intensifying battles while the economic time bomb keeps ticking away because no one is paying attention to these structural flaws. We’re too busy fighting over other things.


If anyone doesn’t think this is the Epocalypse, that’s only because they started thinking too certainly that it would happen in a particular way and didn’t note the caveats I gave along the way that said the exact order of events is unpredictable — that an election year could change the timing — but economic failure is assured, and the timing would not be long delayed.



My next article will look at the possibilities of when economic collapse will happen by examining the forces in the upcoming year (the headwinds) that are either certain or very likely to add pressure to this top-heavy structure with crumbling foundation.
http://thegreatrecession.info/blog/2...c-predictions/


COMMENTS FROM BENJAMINIS: There is not much more to say as these brilliant authors have said it all. Good Evening. See you tomorrow around 6:00 AM Eastern Standard Time.

https://www.dailyfx.com/forex/fundam...rs-series.html

What Can Separate Successful Traders from the Rest?
Friday, Oct 2, 2015 7:00 pm EST

by David Rodriguez, Quantitative Strategist

 

1. We looked through 43 million trades in our original Traits of Successful Trader Series
2. An examination of nearly 30 million trades since then backs up our findings
3. Here is what we believe to be the number one mistake that separates the successful traders

What separates many successful traders from those unsuccessful? To find out, we studied over 43 million real trades and published our Traits of Successful Traders series six months ago. Since then we’ve collected another six months of data and nearly 30 million trades since original publication.
How have the lessons stood the test of time?

What Separates the Successful Traders, and why do Most Traders Lose Money?
The average forex trader loses money for a simple reason: poor money management. Our study of real trader behavior from Q2, 2014 – Q1, 2015 showed that traders actually captured profits on individual trades more often than they took losses. Yet they ultimately lost money.

We re-examine the same theme with trading data in the past six months to see if the same pattern held. Obviously we would love to claim that our research and findings materially changed the behavior. Unfortunately there is no clear evidence to support this, and indeed we’re reminded of the same lessons.
First we highlight a fact that may surprise you: the average retail FX trader captures profits on their trades more than 50% of the time.
Percent of All Trades Closed Out at a Gain and Loss per Currency Pair, Q2, 2015 – Q3, 2015
https://media.dailyfx.com/illustrati...entWinLoss.png
Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015.

The above chart shows results of over 19 million trades conducted by clients of a major FX broker worldwide from Q2, 2015 through Q3, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the client. Red shows the percentage of trades that ended in loss.

For example, the Euro saw an impressive 59% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time.

If traders were right more than half of the time, why did most lose money?
Average Profit/Loss per Winning and Losing Trades per Currency Pair, Q2, 2015 – Q3, 2015
https://media.dailyfx.com/illustrati...vgLossGain.png
Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015.

The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite bring right more than half the time. They lose more money on their losing trades than they make on their winning trades.


Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 59% of the time, but the average losing trade was worth 32 pips while the average winner was only 18 pips. It is worth noting that these figures are fairly significantly changed from what we saw in our last study, but the ratios remained nearly the same. The average trader lost nearly 80% more on their losing trades than they gained on their winners.


The results are even worse in the volatile GBP/NZD pair: traders captured profitable trades 54% of the time with an average pip value of 54 pips. Unfortunately the average loss was nearly double that value at a sizable 105 pips.


What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution.

Cut Losses, Let Profits Run – Why is this So Difficult to Do?
In our data we saw that traders were very good at identifying profitable trading opportunities over 50 percent of the time, but ultimately they lost as the average loss far outweighed the gain. We discussed a clear reason for this in our original Traits of Successful Traders Series: human psychology.

It should surprise no one that we would advocate a very simple rule: cut your losses early and let your profits run. This point is so obvious to be banal—do less of what is bad and more of what it is good.

Yet it’s likewise clear that traders continued falling into the same trap through the past six months. Let’s take a closer look at why this simple rule can be so complicated.

Why is it So Difficult to Practice Good Money Management?
Why is good money management so difficult? Human nature.

As we noted in our original study, this is not at all limited to trading. We’ll draw on the work of a Nobel-prize-winning psychologist to help us understand a key shortfall in how humans treat gains and losses.

A Simple Wager – Understanding Human Behavior Towards Winning and Losing
What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 dollar gain. Which would you choose?

Expected Return
Gains
Choice A
50% chance to Win $1000
50% chance to Win 0
Expect to win $500 over time
Choice B
Win $450
Win $450
Most people will pick Choice B despite the fact that their expected gain will be less than that of choice A. This suggests that people would rather capture a sure-fire gain than make more money. If I only offered this gamble once this might make sense—why risk ‘losing’ $450? But if you’re regularly presented with this choice the rational decision would clearly be Choice A. How about losses?


Expected Return
Losses
Choice A
50% chance to Lose $1000
50% chance to Lose 0
Expect to lose $500 over time
Choice B
Lose $450
Lose $450
We flip the wager and now losses are guaranteed, but the severity of those losses will vary. With Choice A you now have a 50% chance to lose $1,000 and 50% of 0 losses—over time you can expect to lose $500. Choice B offers certainty of a lesser $450 penalty. Choice B is clearly the more rational decision—particularly if this wager is played over and over again. But most will actually choose A. What gives?


Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss.


Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory
Nobel prize-winning clinical psychologist Daniel Kahneman developed Prospect Theoryas an attempt to model how people make decisions. It wasn’t geared towards trading per se, but we’ll see that it has obvious implications for the trader.

The findings showed something remarkably simple yet profound:most people took more pain from losses than pleasure from gains.

It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This makes no rational sense: a $500 loss will more than offset a $450 gain but the reverse is not true.

Why should we then act so differently?

Let’s imagine that we can measure total Pain and Pleasure on an absolute scale, and let’s compare that to trading wins and losses.
To a perfectly rational actor, it might make sense that a $500 gain would give enough Pleasure to completely offset a $500 loss. Yet clinical studies will show that this is not the case, and indeed the chart below models this relationship and why it might be problematic.
Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure
https://media.dailyfx.com/illustrati..._Picture_2.png
Real studies of Loss Aversion in human behavior suggest that a loss can hurt a person anywhere from 2 and 2.5 times more than the equivalent gain will give pleasure. Most would have to be compensated anywhere from 2 and 2.5 to 1 in potential gains versus losses to be left neutral.

Again we have to emphasize that this makes little sense for the rational trader: you shouldn’t have to make at least $1,000 to offset the psychological harm of a $500 loss.

And yet this is what we see in real trader behavior. We as humans will avoid losing at all costs: we will allow an unprofitable position to remain open while closing out a winner at a more modest gain. Our data shows why this can ultimately force traders to lose money.


Plan to Avoid the Common Pitfall
Humans are not robots, and no amount of rationalization is likely to erase the effects of real cognitive biases for most people. But traders aren’t most people—a person opens a trade account in an attempt to gain. If all-too-common behavior will result in losses, that trader should take steps to avoid them and ultimately avoid wasting his or her time and hard-earned capital.


If extreme loss aversion and relative indifference to gains is the problem, the solution is straightforward: treat losses as equivalent on a 1:1 basis with gains.

From the start of any trading decision, know that you stand to gain at least as much as you stand to lose.

In trading terms this is called having a “reward/risk ratio” of at least 1 to 1. This simple rule could allow you to ultimately make money in trading if you turn profits on at least 50% of your trades.


The concept is so obvious that you might feel let down after reading this far into the article. But it is obvious because it likewise rings true in trading.

Does Using 1:1 Reward to Risk Really Work?
Our data certainly leads us to believe that it does. We used our anonymous trader data to profile over 93,000 real trading accounts which places at least 2 trades in our top 15 currency pairs. We then categorized those trading accounts by average Reward to Risk ratio in those trades and determined whether they turned a profit.

Our data shows that 52 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 6-month sample period. Those under 1:1? A mere 20 percent. This is nearly unchanged from the same study conducted in the 12 months before.



Traders who adhered to this rule over 2.5 times more likely to turn a profit over the course of these 6 months—a substantial difference.
https://media.dailyfx.com/illustrati...reallywork.png
Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015.

Game Plan: Which Techniques Can I Use to Avoid this Common Mistake?

Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher
Our data shows that the average trader is far too eager to take small gains in winning trades and allows losses to grow substantially larger. This is not rational behavior if the aim is to ultimately turn a profit in trading.



Make sure your profit target is at least as large as your maximum loss on any given trade.


And just as critically—establish a maximum loss via a Stop Loss order from the outset. You can certainly set your price target larger than your stop loss, and you should aim for at least 1:1 regardless of strategy. Our data suggests this can have a significant impact on whether or not a trader ultimately turns a profit.


The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same risk/reward ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away.


We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders.


Stick to Your Plan: Use Stops and Limits
Once you have a trading plan that uses at least a 1:1 Reward to Risk ratio, the next challenge is to stick to the plan. Remember that you have to fight human tendencies towards strong Loss Aversion every step of the way. It becomes more difficult to ignore emotions when there’s a sense of ownership in a trade: set up your trade with maximum loss and profit targets from the beginning—before you even place that trade.


Once those stops and limits are set, don’t touch them except to move them in your favor. There are countless stories (and hard data) to show the dangers of moving a stop order to accommodate a bigger loss.


Managing your risk in this way is a part of what many traders call “money management”. Without proper money management even the absolute best strategy stands a substantially diminished chance of ultimately turning a profit.



Can you turn a profit using a strategy that uses a reward to risk ratio below 1:1? Certainly—it’s a question of probability and expected outcomes. Yet our data shows the simple fact that most who use an inferior reward to risk profile are substantially less likely to ultimately turn a profit.

By that same token, 1:1 is a bare minimum; certain lower-probability strategies benefit from Reward to Risk ratio of 2:1, 3:1, and so on.
We will discuss different trading techniques in further detail in subsequent installments of this series.

The Traits of Successful Traders
This article is an update of our Traits of Successful Traders series. Earlier this year we studied over 43 million trades placed via a major FX broker over the course of 12 months. Through this we sought to answer a simple question: “What separates successful traders from unsuccessful traders?”


We take a look at over 29 million real trades placed in the six months that followed in order to see whether changing market conditions has affected our conclusions. The short answer is a resounding “no”.


Through this guide we hope to establish some of the “best practices” that successful traders follow, such as the best time of day, appropriate use of leverage, the best currency pairs, and more. Stay tuned for further updates on the Traits of Successful Series.


Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com

Sign up to David’s e-mail distribution list to receive future e-mail updates on the Traits of Successful Traders series and other reports
Contact and follow David via Twitter: http://twitter.com/DRodriguezFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
DISCLOSURES

 

1. Related Articles
2. Previous Articles From Special Report

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2. Feb 11, 1:58 am EST Tax and Trade Promises Won’t Carry Last Week’s Dollar, Equities Trend
3. Feb 11, 1:27 am EST Bid in Global Equities to Remain Firm; S&P 500 Leads the Way
4. Feb 11, 1:14 am EST Gold Prices Vulnerable into February Open- Outlook Constructive Above 1200
5. Feb 11, 12:49 am EST GBP Winning The Currency War Continues To Benefit London’s Economy

UPCOMING EVENTS
Economic Event
JPY Gross Domestic Product Annualized (4Q P)0
FOREX ECONOMIC CALENDAR

http://www.zerohedge.com/news/2017-0...uries-may-2013

"It Was A Deer In Headlights Moment": Japan Dumps Most US Treasuries Since May 2013
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Feb 12, 2017 8:20 PM

With the December monthly TIC data due out this week, bond traders will be closely watching if the selling of US Treasuries by foreign accounts, and especially central banks, which as we have repeatedly shown for the past several months has hit record levels...

http://www.zerohedge.com/sites/defau...n%202016_0.jpg
... will persist, with a focus on whether China's near record selling of US paper will persist.

http://www.zerohedge.com/sites/defau...8_HOLDCH_0.jpg
However, this time the surprise may not be China, but its nemesis across the East China Sea, Japan.

As UBS notes, Japanese investor appetite for developed market overseas bonds, and especially US, was a big story during the first seven months of 2016.

However, since then interest has waned. Weekly flow data underscores how Japanese investors sold ~¥4 trillion of overseas bonds from the time of the US presidential election to the end of Jan-17. Last week the Japanese government released more granular data for the month of December which highlights a number of notable developments.

Most importantly, while December saw the largest overall net selling flow of overseas bonds since Jun-15, this was entirely due to offloading of US Treasuries – other developed bond markets on aggregate actually saw modest net purchases. Indeed, while Japanese investors bought German and Australian paper, US Treasuries were sold to the tune of ~¥2.4 trillion (~$21bn) in December, the largest net selling flow since May-13.
http://www.zerohedge.com/sites/defau...ling%201_0.jpg
While last month (i.e. data for November) there were several factors that supported a rebound in Japanese investor demand for overseas debt (e.g., calmer market conditions, higher overseas FX-hedged yields, and supportive seasonality in Q1, a Trump honeymoon that was still in its early stages), so far there is little evidence of any bounce back in December, when yields surged across the curve, spurring widespread sales. Reuters and Bloomberg interviews with Japanese investors suggest that US political concerns and the potential for further Fed hikes are weighing on demand. Still, the potential for reallocation flows should not be overlooked, as highlighted by today's data.
http://www.zerohedge.com/sites/defau...ling%202_0.jpg
The selling has been so acute that after ignoring it for months (we first noted the record sales last September), the relentless selling has attracted the attention of Bloomberg which writes that "the consensus is clear: few overseas investors want to step into the $13.9 trillion U.S. Treasury market right now. Whether it’s the prospect of bigger deficits and more inflation under President Donald Trump or higher interest rates from the Federal Reserve, the world’s safest debt market seems less of a sure thing -- particularly after the upswing in yields since November. And then there is Trump’s penchant for saber rattling, which has made staying home that much easier."


[A]ny consistent drop-off in foreign demand could have lasting consequences on America’s ability to finance itself cheaply, particularly in light of Trump’s ambitious plans to boost infrastructure spending, cut taxes and put “America First.” The president has singled out Japan and China, the two biggest overseas creditors, as well as Germany, for devaluing their currencies to gain an unfair advantage in trade.


Whether Bloomberg is correct - especially after a brief rebound in the amount of Treasurys held in custody at the Fed in December - remains to be seen, some of the comments Bloomberg cites are worth nothing, the first of chich comes from a bond strategist at Japan's Mitsubishi UFJ:
“It may be more difficult than usual for Japanese to invest in Treasuries and the dollar this year because of political uncertainty,” said Kenta Inoue, chief strategist for overseas bond investments at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “Treasury yields may rise rapidly again in the near future, which will continue to discourage them from buying aggressively.”


Of course, the higher the yields go, the greater the implicit demand for yields should be, however in a world where everything is one giant momentum trade, it may take a while before it emerges.

Which is for now, other bond strategists agree with Inoue: "For now, risk-averse bond buyers like Daiwa SB Investments’s Shinji Kunibe are cutting back on Treasuries."

Like many institutional money managers that invest abroad, Kunibe, Daiwa SB’s head of fixed-income management, likes to hedge away the risk of the dollar’s ups and downs. And right now, it makes sense. After accounting for hedging costs, 10-year Treasuries yield about 0.9 percent, roughly 10 times the return offered by Japanese government bonds. Going back to the 1980s, Treasuries have rarely enjoyed such a big edge over JGBs. However, he sees U.S. yields rising further as Trump pursues expansionary fiscal policies and takes a protectionist stance on trade. “Yields are going to be in an uptrend,” he said.

As Bloomberg puts it, investors like Kunibe can ill-afford more losses. Japanese demand for US paper first slid into the late summer as hedging costs - mostly in the form of swap spreads - rose...

http://www.zerohedge.com/sites/defau...0tsy%201_0.jpg
... last quarter, Japanese investors who hedged all their dollar exposure in Treasuries suffered a 4.7 percent loss, the biggest in at least three decades, Bloomberg reports citing data from Bank of America showed. The same thing happened in Europe, where record currency-hedged losses also stung euro-based buyers.


“It was a deer in the headlights moment,” said Zoltan Pozsar, a research analyst at Credit Suisse.

While the yield pick up in recent weeks has made hedged positions profitable relative to JGBs once again, the Japanese are not rushing in.

Combined with the unpredictability of Trump’s tweet storms, interest-rate increases in the U.S. could further sap overseas demand. Mark Dowding, who helps oversees about $50 billion as co-head of investment-grade debt at BlueBay Asset Management in London, says the firm has already moved to insulate itself from further losses due to higher rates.

What’s more, central bankers in Japan and Europe are still experimenting with monetary policies that may benefit bond investors locally.

Right now, it’s just “much easier to stay home than go abroad,” said Shyam Rajan, Bank of America’s head of U.S. rates strategy.
Unless, of course, the BOJ, which has been experimenting with "curve control", and nearly lost it last week, fails to maintain the long end at the desired range.

Once that happens, and global bond curves become unhinged leading to a worldwide dumping of duration, it may be time to head for the exits.

COMMENTS FROM BENJAMINIS: I just happened to come across this excellent article on Japan and this week's TIC numbers and it also fits in with the theme of my earlier posts this evening on currency flows between Countries so just before heading for bed I leave this article to complete the subject matter.

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

A Look At The Week Ahead: All Eyes On Yellen, But CPI Will Be The "Trump Trade" Tiebreaker
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Feb 12, 2017 6:07 PM

Next week’s main event will be Yellen’s Humphrey HAWKins (as RBC bluntly put it) testimony in Congress starting on Valentine's Day in the House and continuing into Wednesday.

http://www.zerohedge.com/sites/defau...0hawkins_0.jpg
According to Bank of America, the market is underpricing the risk of a March hike. The bank's reasoning is that based on the view that with market pricing around 25% chance of a rate rise, Yellen may be tempted to try and increase those probabilities to close to 50% and make March live.
http://www.zerohedge.com/sites/defau...212_wirp_0.jpg
As BofA's Ralf Preusser adds, it is hard to see how Yellen can deliver a message that is more dovish than what the market is already pricing.

Bloomberg's Vincent Cignarella echoes the sentiment, writing that the dollar rally will also likely gain further momentum from Yellen’s testimony next week if the Chair leans hawkish, adding that That would probably raise the probability of a March rate hike closer to 50% from current odds of about 30%. Recently BlackRock Inc.’s Rick Reider said a March rate hike “is on the table,” given the Fed is close to its dual mandate on employment and inflation with the U.S. economy expanding.

Additionally, what’s sandwiched between Janet Yellen’s congressional testimony may prove to be just as important for currency and bond markets and may prove to be the "tiebreaker" when it comes to keeping the Trump reflation trade afloat according to the Bloomberg FX strategist. Even after President Donald Trump’s promise of a “phenomenal” tax plan helped send the dollar to its first weekly gain since December and triggered a resumption of risk-on sentiment, doubts remain over whether growth is strong enough for the Federal Reserve to tighten as much as has forecast for this year.

Trump’s pledge that his tax plan would come in two-to-three weeks lines up around when the so-called State of the Union address would likely take place, giving the former reality TV star a possible automatic prime-time national platform. That may be enough to maintain the dollar optimism in the meantime.

However, what’s sandwiched between Janet Yellen’s congressional testimony may prove to be just as important for currency and bond markets, and may be the tie-breaker when it comes to keeping the Trump reflation trade afloat. The one thing everyone should be keeping an eye on is the release of January inflation data on Wednesday between Yellen’s appearances before the House of Representatives and the Senate. While the Fed prefers to watch an index tied to purchases, the growing rate of consumer inflation and its erosion of disposable income by way of declining real household earnings is becoming hard to ignore. The CPI headline number has risen from below 0.5 percent in September of 2015 to a January forecast of 2.4 percent. That said, keep in mind that the bulk of the rise has been due to the anniversary of the "base effect" of gasoline prices, as well as surging rents. As the following CLSA chart shows, ex-shelter costs, core CPI is actually fading.
http://www.zerohedge.com/sites/defau...nt%20cpi_0.jpg
What does all this mean for the dollar? Here Cignarella says that the greenback as measured by the Bloomberg Dollar Spot Index closed above 1237.47, a mean reversion resistance. A sustained move above that level would likely see the dollar trade higher toward second reversion resistance at 1268.40.
The revival of the reflation trade and a response by the Fed that mirrors the central bank’s so-called dot plot for three rate hikes this year will likely set the tone for a long and sustained dollar rally. "Finally a trend impatient traders can bank on."
Here is what else to watch this week:

1. In the US, the focus will be on Chair Yellen’s Humphrey Hawkins testimony, but we also get inflation data, retail sales, industrial production, housing starts, Philly Fed, TIC data and several Fed speakers.
2. In the Eurozone, we get the second estimate of GDP, industrial production, and the German ZEW as well as the ECB minutes.
3. The UK data calendar is full of important data releases, namely inflation, labor market data and retail sales.
4. A light data week for Japan, with GDP the only release of note.
5. In Australia, the main focus will be on the labor market report, while we also get business and consumer sentiment and a speech from RBA’s Heath. New Zealand retail sales and Manufacturing PMI also coming up.
6. In the Scandies, focus this week will be squarely on Sweden, where we get the Riksbank meeting and several central bank speakers, as well as unemployment, inflation and inflation expectations. By contrast a quiet week for Norway with Norges Bank Governor Olsen’s annual address the only main highlight.
7. Little on the calendar in Canada, other than manufacturing and existing home sales.
8. In Switzerland, focus will be on inflation data.

A summary of key US events:
http://www.zerohedge.com/sites/defau...3%20week_0.jpg
And global:
http://www.zerohedge.com/sites/defau...n%201.24_0.jpg


Good Evening !!!


Benjaminis

Thanks Shabs19

You can be more disciplined if you actually have a trading plan written down and by having it next to your trading platform to read everyday.
You can list all the rules for each part of your strategy.

Not just the trading method, but also your trading objectives & goals, your pre-market/post-market activities, your risk management rules,
your trading equipment - platform & tools, your continuing education/research, your discipline mindset rules in BOLD.

Three equally important parts of the whole strategy:
Attached Image
http://www.forexfactory.com/attachme...1&d=1486978075


A nice little mantra:

Good day

Hope everyone is doing well.

Here are the charts so long.

http://www.bkassetmanagement.com/dai...00-caps_10496/

USDJPY Grinds Higher But 114.00 Caps
No comments
February 13th, 2017

Market Drivers February 13, 2017
Japanese GDP misses on headline
USDJPY takes out 114.00
Nikkei 0.41% Dax 0.49%
Oil $53/bbl
Gold $1231/oz.

Europe and Asia:
JPY GDP 0.2% vs. 0.3%

North America:
No data

USDJPY bolted out of the gate at the start of week’s trading, gapping higher at the Asian open as it rose to take out the 114.00 figure my mid morning Tokyo trade only to retrace part of its gains in late Asian and early European trade.

The pair was boosted by higher US yields which rose to 2.42% on the 10 year and by relief that President Trump did not engage in any jawboning of the currency over his weekend meeting with Prime Minister Abe.

On the economic front Japanese Q4 GDP missed its mark printing at 0.2% versus 0.3% eyed but nevertheless managed the fourth consecutive quarter of expansion. Analysts, however, noted that all growth was export driven with exports rising 2.6%, business investment increasing 0.9% while household spending remained flat. With Japanese domestic still very weak there is absolutely no reason for BOJ to taper is QE program and the central bank is likely to maintain it easing policy for the foreseeable future.

Although USD/JPY continues to get a boost from BOJ’s easing stance, the near direction of the pair will be driven by the actions of the Fed. To that end, tomorrow’s testimony by Fed Chair Janet Yellen in front of Senate banking committee will be the marquee event of the week as market tries to gauge the Fed’s appetite for a March rate hike.

The conventional wisdom is that Fed will likely hold off until June, adhering to its gradualist posture as it allows the US economy to continue to expand unencumbered. However, if Ms. Yellen provides a more positive assessment than the market anticipates, USDJPY could quickly verticalize towards the 115.00 figure as pro-dollar sentiment will turn considerably more bullish.

With no eco data on the calendar today, trading could remain lackluster through the North American session with FX taking its cues from fixed income and equities. For now, the 114.00 continues to cap any upside in the pair as FX markets are content to tread water ahead of Yellen testimony.

Hi Benjamin

Thank you for this very informative and useful post. I have also downloaded the Trading Psychology from their website. Looking forward to read it later today.

Good Morning KeepCalmfx

You are welcome. This should be a quiet day however you never know. When you have time later today let us catch up on the emails as I move things forward on the corporate website and other matters.

With regard to reviewing the demo trading accounts of others the goal was to teach people which becomes very difficult when Forex traders are not active and involved. I clearly understand why since many Forex traders are looking for instant gratification or some kind of holy grail or a trading signal or whatever will let them make money almost immediately. The benefits of these 101 pages have been beyond my original expectations because of my better understanding of human nature.

In life I have discovered that if something is relatively free it has little value to the user because there is no obligation attached to the knowledge. On the other hand when someone pays for a service or information whether the knowledge is valuable or not it seems to generate more effort than if you do not have to go to school. That in itself is why 95% of all those that trade Forex lose money. The ones that make money using methods that work for periods of time usually run up against changing dynamics and because of a LACK of proper money management method or better named "Risk Management" their Forex account usually gets wiped out. Of course everyone is trying to make money regardless how they trade and as the excellent outside material shared here over these 101 pages clearly suggests every successful Forex trader among other things needs a edge.

The EDGE that we taught here along with proven CORRELATION to other Asset Classes has been made very clear.

In closing as you know before you arrived on this thread and opened your FXCM UK $50,000 US Dollars Demo Trading Account your own personal Forex trading experiences mirrored those of most other unsuccessful Forex traders and now based on your work ethic and your desire and your demo results the goals are achieved and clearly confirmed.

Thank you and everyone else that has contributed to this thread. The FUTURE is ahead of us.

Best Regards


Benjaminis satisfied.

http://traderfeed.blogspot.ca/2017/0...oundaries.html

MONDAY, FEBRUARY 13, 2017
Pushing Our Trading Boundaries
https://1.bp.blogspot.com/-Vrou2-jyW...PainGrowth.jpg
I had an interesting experience recently. Until the snowfall of the last few days, I had been doing my jogging outdoors. It's great exercise, and it is very effective in clearing out the head and starting the day.

With the recent snow, I went back to the treadmill and resumed my jogging. The great thing about the treadmill is that it continuously measures pulse rate, calories burned, distance traveled, heart rate, and more. As I replicated my outdoor run on the treadmill, an uncomfortable reality hit me: I was not coming close to my target heart rate for optimal aerobic benefit. In simple terms, my outdoor runs were not pushing me nearly hard enough.

That's the great thing about keeping score: there's far less room for making faulty assumptions about your performance. In trading, we think we're working hard at improvement when in fact we're not really breaking a sweat: we're not truly pushing ourselves outside our comfort zones. When I gave a recent talk to the SMB traders, I was asked about patience and discipline and proposed the following exercise: calculate the median number of trades you've placed each day over the past two months. Then divide that number by two and limit yourself to that number of trades for the day. Once you hit that limit, you're done for the day.

Now that is a bit like getting on the treadmill. We're no longer relying on a subjective intention to trade more selectively; we're keeping score and forcing ourselves to actually *be* more selective. If you've averaged four trades per day and now can only take two, you've created a situation where you use half your bullets for the day if you take a single marginal, low-quality trade. Knowing you only have two trades to make during the day forces you to look for the best opportunities and to keep powder dry for possible later opportunities.

When I'm on the treadmill, I can't avoid looking at the screen that tells me if I'm cheating or not. When you're limiting the number of trades, you can't overtrade and somehow convince yourself that you're working on your game. There's a saying that talk is cheap, but it's not. It's quite expensive if it deludes us into thinking we're making progress when in fact we're not making sufficient efforts. Bella was right to lay into some of the traders, just as I was right to chastise myself and double down on sticking with the treadmill. If I want to clear my head and get fresh air, great, go for a jog. But if I want to work out and develop myself, then dammit keep score, track objective reality, and really figure out if I'm truly developing.

It's all about use it or lose it: if it doesn't grow, it stagnates. And if we don't break a sweat and push our boundaries, we never truly grow.

Further Reading: The Greatest Mistake Losing Traders Make

.Posted by Brett Steenbarger, Ph.D.at 7:05 AM

https://www.fxempire.com/news/articl...omorrow-388949

Risk On, Dollar Off Ahead of Yelling Yellen on Tomorrow


The markets continued to respond to the Trump – Abe meeting on Friday, with risk appetite improving through the Asian session, the Yen down 0.51% on the day going into the European session, with European equities kicking off the week in the black.
The rest of the majors had barely moved ahead of the European open before the Dollar eased, the Dollar Spot Index down 0.08% on the open.
There was little noise through the weekend to cause the markets to reverse the upbeat sentiment through the final 2-days of last week and with Trump now likely to be busy planning a meeting with China, preparing for the tax reforms, whilst also focusing on how to deliver on promises made from Friday’s meeting with the Japanese Prime Minister, we can expect the markets to begin shifting attention away from the Oval Office to the FED and macroeconomic data scheduled for release in the early part of the week.

There’s a lack of conviction in the markets at present on when the FED will be willing to make its first move of the year. As things stand, while the FED has pointed to 3 hikes for the year, the market has 2, suggesting that the FED will be on hold through to at least June.
The FED’s Vice Chair Fischer spoke over the weekend of the increased uncertainty about fiscal policy under Trump, adding that the FED will remain focussed on labour market and inflation data as a result, which will have muted the upward effects of the new of tax reforms on the Dollar over the near-term, the likely cause for Dollar weakness going into the European session.
Forward guidance from the FED has continued to confuse the markets at the start of the year and a lack of economic data out of Europe and the U.S through the day will leave little else to consider other than Trump’s shift in approach to foreign policy, the rising geo-political risk levels in Europe and of course, Yellen’s testimony to Congress tomorrow.

Economic data out of the U.S has yet to disappoint and recent commentary from Yellen has been perhaps more positive than normal, though there has yet to be any hints on when the FED will move.
Congress will likely want to corner the FED Chair on monetary policy through the 2-days of testimony, particularly with such a shift in the political landscape in the U.S, though the FED Chair will certainly need to be careful, Trump having already shared his views on Yellen and the abilities of the FED in returning the U.S economy to the boomtown days.

As things stand it will be tough for the markets to expect the FED Chair to suggest a possible rate hike in March, particularly with only voting member Harker talking of March being a live meeting. While the view is that rates are on hold until the summer, one thing is certain, some direction is needed on monetary policy, as Trump embarks on economic reforms and hiding behind the U.S President and uncertainty is unlikely to be acceptable, the U.S administration progressing on delivering on campaign pledges and with little delay when considering just how recently the U.S president was inaugurated.
Macroeconomic data out of the U.S this week includes key stats for the FED to consider, retail sales and inflation for January due for release on Wednesday, the impact of data through the week will be dependent upon the views of the FED Chair on Tuesday. A hawkish Yellen will certainly make the Dollar more sensitive to the data, a dovish Yellen, leading the markets to discount any positive figures.
So the real question will be whether Yellen will be shouting from the roof tops tomorrow or playing it cool, hiding being the FED’s new word, ‘uncertainty,’ in the months ahead.

At the time of the report, the Yen was down 0.51% at ¥113.755 against the Dollar, while the Dollar Spot stood at 100.78, down 0.11%.
Our view is that the markets will need to take a more bullish view on the Dollar ahead of Yellen’s testimony, though a lack of stats will test the markets willingness to commit, key data out of the U.S this week scheduled for release on Wednesday, after Yellen’s key testimony on Tuesday, the 2nd day of testimony generally having little to no impact on the Dollar.

http://traderfeed.blogspot.ca/2015/1...ders-make.html

SATURDAY, OCTOBER 17, 2015
The Greatest Mistake Losing Traders Make
http://2.bp.blogspot.com/-TvbUPNJUNa...Meditation.jpg
One of the greatest mistakes traders make is to allow their thought processes to get noisier as they lose money. They double down in their thinking about the market; they scan even harder for winning trades; they vent emotions about their losses. In short, they turn up the volume on their cognitive processes.

The core issue here is whether your trading is a performance skill like golf or a knowledge skill like mathematics. If I'm encountering difficulty with a math problem, I want to think harder and more creatively about finding the solution. Math requires explicit knowledge and problem solving. Golf, on the other hand, is more of an implicit learning skill where thinking more and harder frequently interferes with what the body knows. That creates the "yips".

If my trading is completely rule-governed and mathematical, a period of bad trading results probably means that market regimes have changed. In that case, I want to double down on my market analysis and see where patterns of trend, volatility, correlation, etc. have shifted. Analysis in that situation facilitates adaptation.

If my trading is intuitive and based upon pattern recognition, a period of bad trading results also could mean that market regimes have changed. Doubling down on analysis, however, facilitates paralysis; explicit processing interferes with implicit performance skill. Thinking harder about why your audience is not responding to the speech you're delivering will only interfere with your delivery and make the situation much worse.

My theory is that investment is an explicit performance domain. Trading is based on implicit learning and performance.

When traders encounter problems and shift into the cognitive mode of investors, they lose touch with their implicit, pattern-recognition skills. It's not simply that they overthink. They shift to the wrong information processing mode. In a literal, cognitive sense, they are out of their right minds.

Here's a great article for you: it's about teaching golf through implicit learning. The article cites a study in which two groups were taught putting skills. One group was given detailed instruction; the other group was given ample practice and left to figure out what to do on their own. When tested, the first group displayed greater knowledge of putting, but in subsequent performance, the first group did not outperform the second group. Indeed, in pressure situations, the group that was taught how to putt was more likely to choke than the group that learned through experience.

Why was that?

Under stress, the explicit learning group went back to their instruction and focused on what they should be doing. That shift to explicit thinking interfered with the performance skill and led to the choking. Amplifying the volume on their cognitive processes provided interference, not inspiration. The implicit learning group had no lessons to focus on and were more likely to rely on muscle memory, reducing the likelihood of choking.

The big takeaway from all this is that, if your trading is based on pattern recognition and a feel for markets, you want to become quieter when you encounter problems, not noisier. In finding the quiet beneath our 50,000 daily thoughts, we can apprehend the new patterns being displayed by markets and pick up a feel for them.

The worse you perform, the quieter you want to become. If you're a trader, not an investor, never let your thinking interfere with your information processing.

Further Reading:

Implicit Learning and Performance

Implicit Learning and Self Regulation
.
Posted by Brett Steenbarger, Ph.D.