Money Flow Trading Method along with Risk Management

Benjaminis
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4. Jan 13, 2017 10:15am

1. BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 2,319 Posts | Online Now

As I said earlier today now my focus goes back to you the Forex Trader.

I share the following general rules that always work as long as you know them and have the DISCIPLINE to follow them.

Trading Rules for Successful Traders

1. Limit your losses.

2. Let your profits run.

3. Keep position sizes within reason.

4. Know your risk-reward ration.

5. Be adequately capitalized.

6. Dont fight the trend.

7. Never add to losing positions. Dont average out.

8. Know market expectations.

9. Learn from your mistakes keep a trading journal.

10. Have a maximum loss or retracement in profits.

RD-7
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4. Jan 16, 2017 12:10pm

1. BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 2,320 Posts | Online Now

Quoting wayfarer
The two graphs: one instrument price, the yield on another tool. We are not interested in the prices of stocks and bonds. We look at the profitability of shares and bonds. When bond yields (2YR T-note) increases, investors are selling indexes (DOW30) and buy bonds. On the index Dou30 price falls. This is based on cash flows .Bendzhamin found these (God bless him), thanks to him for science. Currently the yield on 2year. higher than 10year. This is called inversion. Price indices fall. That's why Benjamin has a plan for DOU30 and yen selling. Such...
wayfarer

Do not worry about your English. You are doing great. Both yourself and KeepCalmfx are doing what you need to do to keep improving. You are correct in saying that there is a science or a formula that we follow. I will now post your remarks and clarify for you and others what I need to. You will only get better of that I have no doubt and by doing that you are making us all better including myself.

COPY AND PASTE of wayfarer's comments.

The two graphs: one instrument price, the yield on another tool. We are not interested in the prices of stocks and bonds. We look at the profitability of shares and bonds. When bond yields (2YR T-note) increases, investors are selling indexes (DOW30) and buy bonds. On the index Dou30 price falls.

COMMENTARY FROM BENJAMINIS: We are interested in the Asset Value of US 30 which is Equities, because as the price goes up or down money either flows into them with Risk On or flows out of them with Risk Off for the more immediate safety of mainly the US Bonds.

The shorter terms up to the 2 Year US Bonds are sometimes called NOTES.

When US Bonds are bought and we FOCUS mainly on the 2 Year US Bonds and the 10 Year US Bonds which is the BELL WEATHER indicator for general interest rates such as Mortgages whether in Canada or the USA or other places in the world.

So when we have RISK OFF money will FLOW towards safety based on their PERCEPTION of real safety. The money will flow partly to the US Bonds and also to the safety of USD/JPY and also to the Swiss Franc. (USD/CHF).

Some funds Flow to Gold and Silver however that is more difficult to understand by the masses including the so called experts since GOLD is the ENEMY of Fiat Currencies and because the COMEX is more a paper market where prices are manipulated care must be used going LONG GOLD or SILVER.

This year the Shanghai Exchange will deal with the false price of Gold and Silver that was the creation of Comex in the past. That is a whole other topic for another day.




This is based on cash flows .Bendzhamin found these (God bless him), thanks to him for science.

COMMENTARY FROM BENJAMINIS: We are all welcome since we all benefit from the Knowledge.

Currently the yield on 2year. higher than 10year. This is called inversion. Price indices fall. That's why Benjamin has a plan for DOU30 and yen selling. Such correlations have for other assets. There are news, economic and politichiskie. To date, the policy rules the market. This is what we trying to teach Benjamin. Sorry for my bad English. There will be questions, I will answer.


COMMENTARY FROM BENJAMINIS: The reason that there is a difference in Yields between the 2 Year US Bonds and the 10 Year US Bonds is because when there is RISK OFF the Billions of Dollars are only PARKED there for short period of time so the US Bonds of shorter duration have lower yields as more of those US BONDS or US Notes are purchased.

I believe that I have answered and made clearer the way things work for the moment. Please post questions or add comments if you care to. Thank You.

Ed. Note: Sign up for a FREE subscription toThe Daily Reckoning, and you’ll receive in depth insights for specific profit driven opportunities. By taking advantage now, you’re ensuring that you’ll be set up for updates and issues in the future. It’s FREE.

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4. Jan 16, 2017 8:31pm

1. BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 2,321 Posts | Online Now

THANK YOU VERY MUCH , HANOVER

I just found this great post at least for myself. I copied it and will paste it here now. I personally ask all my friends here who are learning and trading since December 27, 2016 which is 20 days ago if they would read what I am about to paste here now and give me their opinions. Thank You.

 

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4. First Post: Dec 25, 2010 6:46am | Edited Nov 20, 2016 11:32am

 

1. http://cdn.assets.forexfactory.net/n...ar18699_19.gif hanover
2. Joined Sep 2006 | Status: ... | 7,150 Posts | Online Now

Twenty-five widely believed forex myths

I would have saved myself a significant amount of time and money if I'd understood the following, when I first started out:


Myth # 1. That inverting the signals in a losing strategy must necessarily make it a winning one.
Any strategy that fails to exploit a real market inefficiency is effectively generating random signals. Inverting a random signal generator will only create yet another random signal generator, which will therefore be equally ineffective. Explained in more detail here (Part 1 and Part 2).


Myth # 2. That MM (and sizing variations, nedging, scaling in/out, etc) in itself can provide a winning edge.
Varying position size is effective only if the larger sizes coincide with winning trades, to achieve which one must already have an edge. All other forms of MM merely re-balance return and risk, and/or redistribute wins and losses; they do not alter expectancy. No negative expectancy game can be beaten solely by using MM. The attached XLS can be used to demonstrate all of this; PipMeUp has posted a mathematical proof here. Expectancy is improved only by better timed entries and/or exits.

Grid systems use arbitrary levels that have no technical basis. Martingale variants (see myth #12) merely accelerate risk of ruin without improving expectancy. Averaging down is justified only to the extent that, in the situations it is used, there is increased probability (commensurate with the increase in exposure) of price reversing with each new entry. Scaling in/out are averaging processes that can smooth a trader's income, but in themselves do not alter expectancy; single entry/exit point methods, if applied consistently over a long enough period of time, provide a similar kind of averaging.

'Recovery' type systems make no sense because (everything else being equal) recent losses have no greater effect on eventual bottom line than any other losses. Moreover, mentally grouping any set of trades as a single entity is merely an arbitrary process that has no bearing on subsequent market behavior or probabilities; each component position creates its own P/L, and must therefore be profitable in its own right to be justifiable. More on rescue/recovery trading here.

Nedging ('locking', or 'hedging' buy and sell positions in the same pair) in itself is impotent because every nedge can be replicated by a single net position, and nedging incurs greater transaction costs (swap + spread). The same logic applies to triangular and circular hedges, or 'baskets', which similarly resolve themselves into simpler net positions. More on same-pair hedging here and here.

The primary goals of MM should be (1) preservation of capital, and (2) an even distribution/diversification of risk (i.e. avoiding the possibility of one loss wiping out the gains made by several smaller wins).


Myth # 3. That merely being unconventional in one's approach improves one's chances of success.
Only an understanding of underlying market drivers, or at least the chart patterns they produce, can provide any kind of edge. Whether that is 'conventional' or 'unconventional' is moot.


Myth # 4. That entries are more important than exits, or vice versa.
Entries and exits are nothing more than vehicles to adjust net position, and are therefore equally important. At any point a trader is either net long, short or flat. All that ultimately matters is how frequently (and heavily) he is net long while price is rising, and net short while it's falling.


Myth # 5. That it's impossible to forecast price direction.
Every trading decision (e.g. entry, exit) ultimately reflects an implicit forecast, or at least a forecast on the basis of probability. The more accurate a trader is at adjusting his position relative to market turns, the more pips he banks. An edge is ultimately the result of ascertaining directional bias, or at least some kind of behavioral bias, at certain occasions in the market, and timing one's entries and/or exits accordingly.

Knowledge and experience in 'reading' the market (in deciding when to enter/exit) is key for a discretionary trader. With a mechanical trader, the 'forecasting' is implicit within his entry/exit rules, that he has already tested, and proven profitable to the point of statistical validity.

Some traders say "I don't make predictions, I simply follow price". "Following price" merely represents an implicit forecast that the current move (as perceived by the trader) will continue. Nonetheless, the current move must end at some future point.


Myth # 6. That taking high RR trades will in itself guarantee success.
Myth #6a. That a high win rate in itself will guarantee success (thanks to tashkent for pointing this out)
Everything else being equal, RR (aka payoff ratio, or avg net win to loss size) and win rate operate in inverse proportion to each other, i.e. shooting for higher RR trades will decrease your win rate commensurately, and vice versa. If price movement was a completely random walk, this inverse proportion would be exact and inviolable, and (ignoring costs) ALL trading systems would have a long term expectancy of zero, and consequently their P/L would be nothing more than fortuitous. Hence it's necessary to find an inefficiency — a directional or behavioral bias in price movement — to break this inherent equilibrium, and create a genuine 'edge'.

A strategy of 'cutting losses short' and 'letting profits run' is effective only to whatever extent markets 'trend' (in the situations that it's used). More detail here.

If success was as simple as taking high RR trades, then writing a winning EA would be child's play, and everybody would run one and effortlessly become a trading millionaire.


Myth # 7. That unrealized (floating) P/L is less important than realized (already banked) P/L.
It's easy to show that they're equally important. If you close the floating trade, profit is immediately realized, and you can always open a trade of the same direction and size, after which — apart from the additional spread cost — your entire situation (account equity; exposure to risk; available margin) is identical.

Here's another way of looking at it: no matter what the current P/L of a trade is, then (everything else being equal) approx 50% of the time you'll benefit from keeping the trade open (because your P/L subsequently improves) and 50% of the time you'll benefit from closing it (because your P/L would have subsequently worsened). Hence over a great number of trades, you'll be better off 50% of the time, and worse off 50% of the time, regardless of whether you realize the P/L or not.

It's both fallacious, and dangerous, to believe that a loss is not a loss until an order is closed. That is akin to believing that every trade, if left open for long enough, must eventually yield a profit, which is true only if one has infinite time and capital. If, in the interim, a margin call occurs, all unrealized losses suddenly become very real! Moreover, the money in your account that's available to you at any given time includes floating P/L. (And let's not forget that one of the biggest causes of the current global crisis was banks' ignoring paper losses).

Whether your current position is (say) +100 or -100 shouldn't have any effect on your strategy. The past can't be re-lived, hence the only thing that matters now is what will happen subsequently, and your trading decision(s) should reflect that. Market behavior and probabilities are not going to change because of the P/L of one insignificant retail trader.


Myth # 8. That 'casino based' MM doesn't apply to trading.
MM (bet/position sizing) is pure math, and applies to any speculative activity that generates a distribution of wins and losses. As indeed trading does.

MM can not provide an edge, unless you can establish serial correlation (i.e. the outcomes of consecutive trades are causally dependent), or otherwise find a way of getting the larger positions to coincide with winning trades. See myth #2. The edge can come only from the 'gameplay' that generates the win/loss distribution (in trading that is entries+exits). MM can then be applied to this distribution.


Myth # 9. That using prior profit to offset proposed risk in pyramiding is, in itself, a winning strategy.
You can't use this strategy to beat a casino, and since MM is pure math (see myth #8), it likewise provides no mathematical edge in trading. Pyramiding can work profitably because forex prices trend in a qualitatively different manner to (for example) 'trends' of blacks and reds at roulette, i.e. any edge necessarily lies beyond the MM. This is similar to the 'scaling in' illusion that was addressed earlier: for the subsequent position(s) to be justifiable, they must be on-balance profitable in their own right, otherwise they reduce eventual bottom line, regardless of whether they're being 'funded' by prior wins (the "market's money") or not.

If you see unbanked profit as being expendable (the "market's money"), then you're effectively trading to achieve breakeven, rather than attempting to maximize your profits.


Myth # 10. That exiting either a trade, a session, or a period (e.g. week, month, year) because one is ahead, P/L-wise, will improve one's eventual bottom line.
Unless there's statistical proof that market probabilities are about to become less favorable, quitting merely because you're ahead (to avoid "pushing your luck") is necessarily based on superstitious fear. Everything else being equal, there's a 50/50 probability of your gain increasing or decreasing, just as there is at any other time. Again, market behavior and probabilities are not going to change merely because one insignificant retail trader has had a recent winning or losing streak. Unless serial correlation has been proven statistically, each situation represents either an independently valid opportunity — or not — regardless of the P/L of recent trades.


Myth # 11. That a simple ('KISS') strategy is more likely to be profitable than a more complex one.
To be fair, it depends what is meant by 'simple'. Many simple strategies can be coded as EAs, yet very few EAs are long-term profitable. The decisions made by many expert (discretionary) traders are context-specific, and take a large number of factors into account, and are therefore not necessarily 'simple'.

To state the obvious, how simple or complex a strategy might be, is irrelevant. Profit is the ultimate, and universally accepted, goal.


Myth # 12. That some Martingale-based trading systems are superior to others.
The overriding factor behind all Martingale variants is the MM, or specifically the 'death sequence'. No amount of testing can determine (without a prohibitively high amount of statistical error) the likelihood of whether an extremely low probability event will occur sooner, rather than later. From this standpoint, all Martingale systems have an approximately equal probability as to when they will implode, and of course (because of their inherent recovery algo) all of them will remain profitable until that point. Hence all Martingale systems are essentially created equal.

Every Martingale variant aimed at mitigating risk incorporates a tradeoff that has a commensurate downside:

 

1. Using a more benign sizing progression (than doubling) cripples the recovery rate, i.e. necessitates >1 winning trade to return to breakeven.
2. Limiting the number of progression steps does likewise (e.g. if we cap the number of steps at 5, then it takes 31 wins @ 1 unit, instead of just 1 win @ 32 units, to recover from 5 consecutive losses).
3. Starting the progression with a tiny position size reduces return in exactly the same proportion.
4. Withdrawing money as insurance against the death trade reduces the funds needed to accommodate a given number of progression steps (and of course there's no guarantee that the death trade won't occur before the withdrawal). And if position size is based on account equity, then it will lower future returns also.

Another widely believed myth is that progressive staking systems can somehow improve overall expectancy (see rebuttal in myth #2). The mathematical reality is that they merely create a higher average bet/position size, which (exponentially) increases risk of ruin. The longer you trade using martingale, the greater the risk of encountering the 'death sequence'.

If you have a already have a strategy (entries+exits) that delivers positive expectancy, then martingale will not improve it; and if you don't have such a strategy, then martingale will not provide it. Or to put it simply, it's better to trade profitably and safely, than profitably with unnecessarily high risk.


[EDIT] Added some more myths......


Myth # 13. That a good system should be able to be transplanted onto a different timeframe, and still remain profitable.
Markets may be 'fractal' to some extent, but the price patterns on longer timeframes are qualitatively different to those on shorter ones. This is likely caused by factors like macroeconomics, cross section of participants, greater collective averaging, liquidity needed by heavyweight players, relative effect of news announcements, session considerations, etc.

Also, the shorter the trading horizon, the more significant that costs and slippage (relatively) become.


Myth # 14. That it's preferable to focus on one or two major pairs.
Not necessarily. Pairing the most negatively correlated currencies (the strongest against the weakest) delivers the best probability of catching strong, clean moves. This applies due to the triangular equilibrium (e.g. GBP/USD x USD/JPY = GBP/JPY) that is always maintained. Hence if GBPUSD and USDJPY are both trending upward, then GBP > USD > JPY, and hence GBPJPY will be trending upward even more steeply.


Myth # 15. That profitable trading is 90% mindset.
If method was unimportant, then EAs would, on average, outperform human traders. In any case, it's impossible to quantify the relationship that exists between Elder's three Ms: method (the strategic rationale behind entries and exits), money management (position sizing), and mindset (the emotional qualities needed to consistently execute the method). If one is to trade profitably, then all three are essential prerequisites: method = 100%, MM = 100%, mindset = 100%. Any weakness in mindset negates the efficacy of method, but mindset in itself can not compensate for deficiencies in method. Overleveraging can cause irretrievable drawdown despite having a profitable method (more info here). Hence all three are 100% important.

The "90% mindset" myth is possibly perpetuated by traders who attribute their failure to an obvious inability to remain disciplined, but while the ill-discipline was in fact masking an impotent method.


Myth # 16. That P/L-based trade management can provide an edge.
Unless backed by technical or statistical criteria, trade management strategies like moving SL to breakeven, or trailing a SL, do not in themselves provide an edge. They are merely a "feel good" measure that the market takes no cognizance of. The key measure is whether — over a great many trades — any reduction in risk compensates for profit that is forfeited by winners that are cut off prematurely, due to the tighter SL allowing them less room to move.

It is arguably better to plan the trade ahead of time, including predetermined SL and TP levels, when emotions are less compelling. Subsequently, unless it can be shown objectively that market probabilities have meanwhile altered, there is no valid reason to adjust these levels while the trade is in progress.

Extending this generalization, unless you have a proven statistical or technical reason for performing any action, you are merely guessing, and therefore gambling.

Traders who mention concepts like a "free trade" or the "market's money" are making decisions based on their P/L rather than market behavior/probabilities.


Myth #17. That losses are the trader's fault, rather than the market's fault.
Losses are an inevitable by-product of statistical fluctuation, and hence every trader/system will encounter them. The trader is at fault only when he fails to follow his plan, regardless of the outcome (win or loss) of a trade.

It is only the possibility of loss that creates the opportunity for the winners that occur. Without some kind of risk, no return is possible. (Explained well by alphaomega here).


Myth #18. That setting daily, weekly, etc profit goals or targets is a good idea.
Not necessarily true. The trader who does this is effectively attempting to impose his own P/L expectation onto the market. For many successful traders, income doesn't always come as a consistent ‘X pips per day’; they have days that exceed their average, and unprofitable days, also.

Traders who shut up shop because a goal has been met may miss additional valid setups. And conversely, if a trader falls behind his target, he must either set a more realistic target (proving that the original target was worthless); or he must overtrade or overleverage himself, in an attempt to reach his goal.


Myth #19. That adding more filters to a chart, to eliminate unprofitable entry signals, will improve one's overall 'edge'.
Adding more filters may ultimately eliminate more profitable entry signals than losing ones.

Another key consideration is dependency. For example, all indicators are ultimately derived from price (and in some cases, volume). Hence adding more indicators to the same timeframe chart will not necessarily provide independent confirmation, nor add value. Ultimately one must enter every move on a certain candle, and one can enter on an earlier or later candle by simply re-calibrating any existing indicators.

Non-linear indicators (which aim to reduce lag and overshoot, without compromising smoothness) are not necessarily superior to conventional indicators. Attempting to enter earlier into a move can mean that the entry catches a minor correction in the trend, rather than the desired full-scale reversal.


Myth # 20. That newcomers fail because they jump from system to system.
Sure, it's necessary to test a system for long enough to achieve statistical validity. But if a system/strategy/approach/concept is impotent -- i.e. it fails to address a real market inefficiency -- then persevering with it indefinitely will never make it profitable (see this!!). Hence an aspiring trader must be willing to try different approaches until he finds one that both suits his personality, and is also robust enough to be safely and dependably profitable over many years' worth of changing markets. Sensible use of a simulator, and testing multiple systems simultaneously, can help to expedite the process. Any system/strategy/approach/concept should be considered impotent until proven otherwise.


Myth # 21. That demo trading is pointless, because it doesn't test the trader's emotions.
The whole point of demo trading is to test a strategy objectively, without the results being distorted by emotional decision making.
Trading an unproven strategy live can cause a lack of confidence in the strategy, especially if losses occur, and lead to emotionally-based trading decisions.

Obviously demo trading is futile if the br0ker's test data (including costs and slippage) is inaccurate; or if the trader loses motivation and fails to apply the strategy consistently.

For some traders, microlots (10 cents/pip) might not test their emotions any more than demo. Each individual has a threshold position size where emotions start to affect his decision making (it's probably lower than many newcomers think! )

Demo accounts are also essential for debugging EAs.


Myth # 22. That markets are efficient to the point that all price movement is a completely random walk.
If that was true, then all types of analysis would be futile, all systems would have a long term expectancy of zero (ignoring costs), hence all P/L would be completely fortuitous, and ALL traders (given the erosion caused by transaction costs) would eventually lose.

Here is some evidence/examples of non-randomness:
 the large price spikes that coincide with high impact news announcements
 the price stabilization/profit taking that tends to occur in the wake of a news spike
 that traders tend to place their stops just outside swing points
 that heavyweights occasionally exploit these stops, in their search for liquidity (colloquially "stoploss hunting")
 that volatility frequently shrinks significantly as the market awaits a big news announcement
 that volatility otherwise follows fairly consistent patterns depending on the time of the day
 statistically, daily highs/lows of major pairs occur more frequently around certain times of the day (i.e. are not evenly distributed across the 24 hours)
 that price frequently stalls, and reverses, at certain key levels, which tells us that higher volumes of limit orders frequently cluster in predictable zones
 that higher volume (on shorter TFs) -- even local tick volume -- often signposts the start of a move; or imminent exhaustion (move is about to end)
 trapped trader behavior, creating turncoat (or 'flipover') S/R patterns during strong intraday moves
 that price invariably follows a repeating consolidation-breakout-move-consolidation-etc pattern, on all timeframes
 that longer term trends coincide with obvious macroeconomic factors (most notably, divergent CB monetary policy between the two currencies in the pair)
 correlations that exist between risk-on/risk-off in other markets and forex safe haven flows
 correlations between commodity prices and forex (e.g. WTI price vs CAD)
 consistently different ADRs for different pairs (compare GBPNZD with EURGBP, for example)
 different correlations between currencies (EUR/CHF correlation pattern is very different to EUR/USD, for example)
 patterns created by profit taking, as price approaches the weekend

However, the fact that non-randomness (or "inefficiencies") exist doesn't automatically mean that it's always possible for the retail trader to exploit them profitably. Spikes that occur the instant that red news is announced is one such example.

Conversely, to whatever extent inefficiencies like those listed are exploitable, and to the point that transaction costs are overcome, it is mathematically possible to profit systematically from trading.

In reality, "randomness" is a euphemism for either a lack of information; or a lack of knowledge about what information is available, and how to use it profitably.


Myth # 23. That a holy grail exists.
Every method has its Achilles heel — market conditions that are unsuitable — and is therefore prone to occasional losses. In general, return is impossible
without some kind of risk. Perfection can never be achieved simply because, at any point, the market is a mix of anonymous participants whose agendas are unknown. It only takes one large order, or one 'black swan' event (e.g. an unscheduled news announcement), to upset even the most 'perfect' technical strategy. Hence the need to manage risk.

The best that any (retail) trader can hope for is an edge, and the discipline needed to execute it consistently. An edge is ultimately determined by how heavily/frequently a trader is net long while price is rising, and net short when price is falling. In other words, the more accurately a trader times his entries and exits relative to market reversals, the more pips he banks. Nothing (MM, R:R, perfectly disciplined execution, positive attitude, etc) can overturn this fact.

If a claim being made about a system seems too good to be true, be wary of the egotist or the system seller. Systems with win rates, or even profit factors (PF is the product of win rate and average RR), that are absurdly high, are almost certainly being propped up by MM that will eventually prove unsustainable (martingale is a good example). Some info on how to interpret performance statistics here.


Myth # 24. That forex is a scam.
It's true that some br0kers cheat their clients, and that many vendors sell impotent EAs, signals, systems and indicators, and education that is effectively worthless. It's also true that heavyweight players attempt to manipulate prices in the hope of maximizing their profit (although manipulation can create recurring patterns that are potentially exploitable -- see myth #22). However, beyond this, at best spot forex is merely a decentralized market that facilitates the trading of one currency for another. At worst, it is no more sinister than casinos or lotteries: you choose to speculate, and you are responsible for the decisions that you make. Many people fall victim to their own greed, laziness and ignorance. Successful trading is a highly nuanced art, and there is no substitute for knowledge and hands-on experience. While educators can provide you with fresh ideas to test, ultimately the only person who can teach you to trade profitably is YOU.


And, finally.........

Myth # 25. Trading is about making money.
Trading is not so much about making money; it's ultimately about making correct decisions. If you consistently make good decisions, your account will grow. But if you chase after money, you'll almost certainly end up making poor decisions. (thanks to Seneca_pilot for contributing this)

It follows that the more you enjoy the actual process of trading, the more successful you're likely to be. And maintaining focus on the process can potentially help you to remain less emotionally attached to the money itself. Decisions should ultimately be made around market behavior and probabilities, not your P/L.

Amateur traders are impressed by high returns, whereas professionals focus more on managing risk. Quoting return by itself is meaningless, as it is a function of risk, payoff, MM and trade frequency (explained here).

____________________

NOTE: there seems to be confusion as to exactly what is intended to be true and false. The myths in blue typeface are FALSE statements, and the black text underneath attempts to explain why. For example:

Myth. Santa Claus lives at the North Pole.
The reality is that Santa doesn't even exist.
Attached File
http://cdn.assets.forexfactory.net/i...attach/xls.gif Martingale comparison.xls 125 KB | 876 downloads | Uploaded Oct 22, 2012 9:00pm

From Post 1321

Quoting KeepCalmfx
{quote} Here is what I have learned so far. 1stly by having a $50 000 demo account, you eliminate your chances to trade with Fear, when you trade with fear, you dont think rationally and clearly, so by getting the fear out of the way, you can start to subconsciously form positive pathways in your brain that confirms every month by making a consistent profit that you can make a consistent profit each month indeed. So after 3 months to year trading on a demo account a certain strategy/way it becomes second nature, later you just see the perfect setup...

From Post 844

Quoting BenjaminIs
{quote} Hello KeepCalmFX and raveon and anyone else that can explain what you have learned. We have two answers now , mine and wayfarer. Some of the others are not online !!! We do nothing for the moment not until at least 2:15 PM after the FOMC Minutes are released in 8 minutes. Then I will return and suggest your first trade.


Here is what I have learned so far.

1stly by having a $50 000 demo account, you eliminate your chances to trade with Fear, when you trade with fear, you don’t think rationally and clearly, so by getting the fear out of the way, you can start to subconsciously form positive pathways in your brain that confirms every month by making a consistent profit that you can make a consistent profit each month indeed. So after 3 months to year trading on a demo account a certain strategy/way it becomes second nature, later you just see the perfect setup with the money flow, within the trading plan and you don’t think twice to enter. So I believe then you would be able to treat your live account as the Demo account you trained on. Just my opinion.
“You must have the desire, the interest and the DISCIPLINE to control your FEAR and your Greed otherwise you will lose” You must also control your EGO, if you have a few winners, then don’t think you know what the markets will do next, the next trade could be a loss, so you must have the disciple to stick to your trading plan, also don’t increase your position size now because you had a few good trades, the next loss may be just around the corner. The market is always write and the trend is your friend.
Through doing research you become aware of newsletters/blogs/sites/writers you can trust for their honest opinions, the facts, so the reality and not perception that people want you to believe or someone else’s perception because he is bias. Like Benjamin showed us a lot of times, with his experience he came across sites and bloggers/writers you can trust more than others, because it is the truth, not his/her own perception or the way he/she wants you to think. The money flow sets the trend.
Then you take the information and start with a trading plan.
After Benjamin’s research, he came to the conclusion that for the following 3 months the main trend would be as follow for the following instruments, it can change if new factors came into play (4 trade plans):

 

1. US30 – Short (100 units)
2. JPY- Short (100 units)
3. Silver- long (100 OZ)
4. Gold- Long (5000 OZ)

For the next 3 months the market will not go short/long every hour of the day, because the market ebb and flow.
So even though the main trend is short for the US30 for the next 3 months, the market will go long/retrace at times. (We must also keep up to date with news, because if there is a drastic change our trading plans might also change.)
So each day, we start trading, we must confirm if it is risk on – market going long or if it is risk off – market going short on the US30. (We don’t look at other charts to trade, except our trade plans.)
This you can see on a 1 hour, 4 hour chart.
If it is risk on, we stay out of the markets, if we have positions open that is fine, because we have a very good Risk Management in place.
As he also explained many times, “When the markets head down and we have Risk Off the money flows into US Dollars first and then the money is parked usually into US Bonds so the bonds go up and the yield goes down. Money also flows to USD/JPY”
We should preferably trade between 2 AM EST and 5 PM EST. Benjamin start at 2 AM EST because that is when Frankfurt opens one hour before Europe fully comes on line and the Money starts to Flow again since Japan has gone home. The real action is between 8:30 AM EST and 4:30 PM EST.
The duration of a trade can be as quickly as 15 minutes to one hour or in cases where we have a DRAWDOWN longer. He take +/- 25 trades a day if I can remember corectly.
We wait for big news like NFP to see what the markets does before entering a trade. Again patience is key. When we are in profit, +/- $250 we will move our stop loss to breakeven, there after move his SL every 25 pips in profit. If the market hits our positive SL then it is fine and we move to the next opportunity.
Our risk/reward is 1:3, we add our stop loss and take profit immediately after we place an order.
We can take the profit if we have a good profit, my personal opinion, $850 - $1000 is a good profit. Like Benjamin says : “"A Bird In Hand Is Worth Two In The Bush" and ”You Can Never Lose Money By Taking A Profit” So we are not greedy in letting our profits get eaten up as the market ebb and flow, we take our cut and wait patiently for a price signal to re- enter the market.
Sometimes, especially if you have not time to watch your chart every hour/4hours and can only view it daily, then by placing a 1:3 R/R ($1000 risk, $3000 reward), you can leave the markets to do its thing, because we now have an edge, because we know the direction of the main trend.
At no time can there be more than $10,000 US Dollars of the $50,000 US Dollars in the market. This formula is 20% of the trading capital.
There is no set rule that we need three positions on each Trade Plan. What we do is to make sure that the loss on any Trade Plan since we can be wrong is 6%.
So as Benjamin said, if we are trading US30 and we enter the first position and it does go up for a while against us of say - $ 500 then we enter our second position with same 1:3 R/R, usually if not always when it turns around the last position put on whether the second or third if need be is the most profitable one. This is where the charts are very helpful as we can see Support and Resistance and also here the SAR, FRACTAL and Awesome Indicator helps very much. More on these indicators on Post 705, 706, 708.

If you have your first position on and it moves into profit and it build momentum, this is when you can enter your 2nd position. And if you are in a drawdown of say $ 500 with your 1st position then you add the 2nd one and as the 2nd and 1st one is in profit you can add your final position with moving your SL to breakeven ect.
No one knows what the market will do, all we do is enter the market with our edge (Money flow) and Technical tools, and then we have the best probability of a successful trade and watch what happen. If you take a loss, then it is fine, not all of our trades will be winners, you will never have a system with 100% success rate.
I still have a lot to learn on the fundamental side/money flow and I also must still work on my fear of missing out, not to enter when I see a setup but wait for confirmation before I enter.

Comments from Benjaminis: The last few posts since the last post of power should bring old and new Forex traders up to date or explain what we teach. Much of this material will be put on our new Corporate website. If you have any questions after you read the material please ask.

WITHOUT COMING ACROSS AS ARROGANT OR EGOTISTICAL , LET ME SAY THIS. THIS WORKS PERIOD. LOOK AT MY PUBLISHED RESULTS LIVE AND FURTHERMORE AND MUCH MORE IMPORTANT THAN MY RESULTS LOOK AT THE RESULTS OF MY SUPERSTAR STUDENT "KeepCalmFX"

Subscribe to our thread and when we go live on our company website one month from today on May 15, 2017 then all subscribers to this thread get a FREE LIFETIME PASS to our website. The fee for all other paid subscribers will be $50 US Dollars monthly.

Here is one of my older posts that summarize how our method of Forex trading with proven results work. This has taken me 14 years to develop. It can be taught to any qualified Retail Forex Traders at the most in 6 months. KeepCalmfx learned from December 26, 2016 to April 15, 2017 which is less than four months. Look at the published results of KeepCalmfx.

No excuses, ever
1

1. Post 1,326
2. Cleanup
3. Quote
4. Jan 17, 2017 9:19pm

1. BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 2,323 Posts | Online Now

Excellent Chart From USD/JPY Thread

http://www.forexfactory.com/attachme...6&d=1484651455

With the above chart as background this is why and how what we learn and teach here works.


Benjaminis

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

Myth # 23. That a holy grail exists.
Every method has its Achilles heel market conditions that are unsuitable and is therefore prone to occasional losses. In general, return is impossible
without some kind of risk. Perfection can never be achieved simply because, at any point, the market is a mix of anonymous participants whose agendas are unknown. It only takes one large order, or one 'black swan' event (e.g. an unscheduled news announcement), to upset even the most 'perfect' technical strategy. Hence the need to manage risk.

The best that any (retail) trader can hope for is an edge, and the discipline needed to execute it consistently. An edge is ultimately determined by how heavily/frequently a trader is net long while price is rising, and net short when price is falling. In other words, the more accurately a trader times his entries and exits relative to market reversals, the more pips he banks. Nothing (MM, R:R, perfectly disciplined execution, positive attitude, etc) can overturn this fact.

If a claim being made about a system seems too good to be true, be wary of the egotist or the system seller. Systems with win rates, or even profit factors (PF is the product of win rate and average RR), that are absurdly high, are almost certainly being propped up by MM that will eventually prove unsustainable (martingale is a good example). Some info on how to interpret performance statistics here.

What to look for in a Trade Explorer

Somebody suggested a post on this topic, and I couldn’t resist giving it a shot. My comments are based on a hypothetical scenario: what would I look for in a TE, if I was considering having the TE’s creator trade my money on my behalf.

First, it’s important to define one’s desired performance agenda. For me, it’s steady long-term account growth with tight control on risk, and my priorities are set accordingly. (For others, it might be to start with a $100 account, the loss of which they can easily shrug off, and use maximum available leverage in the hope of turning it into $100,000 as quickly as possible. For still others, it might be the guaranteed recovery offered by a martingale variant, because they are willing to wear the risk of sudden and unexpected loss of the entire account, at any future point. In short, forex is an open-ended vehicle that allows plenty of different speculative strokes for different folks).

The numbered points correlate with the numbers in my attached screenshot.


1. Statistical validity: This is the first thing that I look for. Given my long-term agenda, I like to see an absolute minimum of a 12 month, 500+ trade, track record, on a live account, and preferably a lot more. Anything significantly shorter than this is unlikely to be indicative of future performance, i.e. could be written off as “beginner’s (good or bad) luck”.

Of course I realize that FF’s TE hasn’t yet been around for long enough to allow for track records of a decent size.


2. Profit factor: I once read an article in which a famous trader (it was Paul Tudor Jones, if I recall correctly) said that he could count on the fingers of one hand, the number of traders he knew personally that, over their entire career, had been able to maintain a PF>2. Hence, even allowing for the fact that retail traders have the advantage of agility, whenever I see a PF>2, I think something like “well either
(a) this guy is well on his way to becoming a multi-millionaire, or
(b) he’s employing some unsustainable MM, or
(c) if he doesn’t meet the criteria in point 1, then he’s been lucky so far”.
Any EA with a PF>2 almost certainly fits into category (b) or (c). If it seems too good to be true.......

IMO a better PF is obtained by dividing the profit pips by the loss pips. That cuts MM (point (b)) out of the equation. As I’ve posted many times before, MM can ultimately never rescue a trader/system whose entries/exits fail to attain positive expectancy. Trade expectancy determines whether your equity curve points upward or downward, and MM (position sizing) determines the steepness of its gradient. Increase position size and you increase return and risk in like proportion. In this post I illustrate how it’s possible to turn a 30% per annum return into 900%, by merely using MM and increasing trade & compounding frequency. If a trader/system has attained a pip-based PF>1.5 over more than 2 years, and 1,000+ trades, then that’s a symptom of a very proficient trader, IMO.

One very important point: PF must include open trades, i.e. unrealized P/L. A number of traders, instead of applying a formal loss exit strategy, leave trades open until they return to profit (or, even worse, average their losers). Unrealized gains and losses form a very real part of the available balance in a trading account.


3. Maximal drawdown: this is essentially the product of MM and risk management. If it has been allowed to reach > 30%, then the trader/system is sizing too aggressively for my personal liking. But, having said that, everybody’s appetite for risk is different. Remember that, if you’re using fixed fractional sizing (compounding your equity growth, by risking X% per trade), when your account is Y% in drawdown, it requires a gain of (100 x Y)/(100 – Y) percent to return to breakeven. For example, if your account is 20% in drawdown, it requires a (100x20)/(100–20) = a 25% gain on the remaining capital to return to BE. Hence the more you let drawdown run away from you, the more irretrievable it becomes.

In addition to this problem, risk of ruin increases geometrically when position size is increased. For example, if you double your trade risk from (say) 2% to 4%, your risk of ruin — however small it might be — is nonetheless more than doubled.

In general, risking the textbook 1%–2% per trade should keep you out of trouble; at least it will afford you some time to study your system performance, and if necessary, revise and overhaul your system, before drawdown gets completely out of control. However, if the trader/system has an exceptional win rate, then there may be reason to justify an increase beyond 2%. The table attached to this post gives the probability of attaining X consecutive losses over the course of 50 trades, for a given win rate. However, keep in mind that the table assumes 1:1 RR trades, and also does not take into account losing sequences that contain occasional wins, e.g. L– L– L– L– L– W– L– L– L– L has only 5 consecutive losses, but the losses exceed the wins by 8. Again, what constitutes acceptable or unacceptable drawdown is a personal decision, and it may be worthwhile to run some kind of Monte Carlo-type analysis (assuming that you have enough historical performance data) to gain some kind of feel for your optimal position size.

One final point: some traders don’t have all of their trading capital deposited with the broker, hence a X% drawdown in the account may be significantly less than a X% drawdown overall. (Obviously it’s only necessary to keep enough money in the account to avoid a margin call; the rest may be deployed safely elsewhere).


4. Lots per trade: I look at a breakdown of the individual trades, both for the use of stoplosses (alas, FF’s TE doesn’t show these), and unduly large variations in the lot sizes used. Large variations in size is a big red flag to me. Formal stoplosses aren’t essential, but if they’re not there, it’s impossible to determine what kind of loss exit strategy (if any) the trader is employing. If there are signs of averaging down, or (even worse) doubling down, then that’s the biggest red flag of all, IMO. Obvious signs of ‘hedges’, baskets and/or recovery/rescue trading are also a big turn-off for me, as they provide no real edge, and suggest that the trader lacks a basic understanding of trading math.

I work on a basic rule of thumb of 1 full lot per $25,000 in the account (scaled proportionally according to the account size). That equates to approximately 2% risk with a 50 pip stoploss. If position sizes are significantly larger than this, then I start to question the level of risk that's being taken. (See the XLS/image below: for example, at 2% risk and a 50 pip SL, you may trade 0.04 lots for every $1,000 in your account).

I also look at the largest losses in the account, percent-wise. Again, each loss should be no greater than 2% of the account balance, unless there are valid reasons for taking greater risk (e.g. an exceptionally high win rate).


5. Average win size divided by average loss size, preferably in pips. Most profitable traders/systems end up with a career RR>1, i.e. they win more on winning trades than they lose on losing trades. Hence a value > 1 is a healthy, but not necessarily essential.

I also compare the loss sizes (percent) with the win sizes (percent). A consistent highest %loss usually means that formal SLs are being used, which is good risk management IMO. And again, the loss sizes should, on average, be less than the win sizes, which is an indication of a healthy RR.

Finally, I check the winning trades (in pips) against the trade time. If there are many small wins (e.g. < 5 pips) for trades that have been open for several hours, this suggests that the trader might be playing some kind of recovery strategy, i.e. leaving trades in loss until they return to breakeven, a dangerous strategy that lacks 'cut losses' risk management. I'll open up the charts of such trades, to see how far they were allowed to proceed into drawdown; if the worst case is several times the size of the average winning trade (in pips), then that's another red flag.


For me, those are the “big five” criteria. The Sharpe and Sortino ratios give a measure of the consistency of monthly returns (higher values indicate greater consistency), but these are secondary, only after one has attained some evidence of positive expectancy.

Balances and percentages are much less important to me. These are the figures that attract newcomers to forex, but they can be easily skewed, not only by MM, but also by deposits and withdrawals from the account. With leverage and some luck, almost anything is possible — in the short term.


I’ll add to this post when I get some more time. But that’s enough for starters. I expect that it will provoke some interesting comment.

David
Attached Images (click to enlarge)
https://www.forexfactory.com/attachm...1&d=1365816311 https://www.forexfactory.com/attachm...1&d=1365816311 https://www.forexfactory.com/attachm...1&d=1365816394
Attached File
https://cdn-assets.forexfactory.net/...attach/xls.gif Risk model calculator.xls 23 KB | 337 downloads

https://larouchepac.com/20170415/lar...Dont%20Do%20It

LaRouche: No Threats, No Provocations over Korea. The Order Is, Don't Do It!
April 15, 2017
https://larouchepac.com/sites/defaul...?itok=rlpEcOva
[flickr/rapidtravelchai]
ore
With the British looking to blow up the Korean Peninsula, Lyndon LaRouche declared that the situation had to be "calmed down" immediately. He emphatically warned that this is a wild region where things can run out of control very rapidly, and that it is a region he knows very well. There can be no threats, verbal or otherwise. There should be talks, with no element of threat. The problem has to be pre-controlled, not after war breaks out.


LaRouche pointed to the Chinese, who are operating rationally, and whose example we should follow. We are in full solidarity with the Chinese on this, and with the great, profound dignity of the Chinese government, LaRouche stated.


For example, China's Foreign Minister Wang Yi said it was necessary to prevent the situation on the Korean Peninsula from going down an irreversible route. Wang was speaking at a joint media briefing with visiting French Foreign Minister Jean-Marc Ayrault on April. 13.


Wang said a return to the negotiating table was the only way to avert a crisis. "The United States and South Korea and North Korea are engaging in tit for tat, with swords drawn and bows bent, and there have been storm clouds gathering. We urge all sides to no longer engage in mutual provocation and threats, whether through words or deeds, and don't push the situation to the point where it can't be turned around and gets out of hand," Mr. Wang said. "No matter who it is, if they let war break out on the peninsula, they must shoulder that historical culpability and pay the corresponding price for this."


"Military force cannot resolve the issue," Wang said. "Once a war really happens, the result will be nothing but multiple loss. No one can become a winner," Wang said. "As long as dialogue takes place, it can be official or unofficial, through one channel or dual channels, bilateral or multilateral. China is willing to give support to all of them," Wang said.


China has sent their top nuclear negotiators to Pyongyang "to communicate the gravity of the situation to the North," according to NBC.

U.S. Vice President Mike Pence arrives in South Korea on April 16 which will be followed by a trip to Japan. Commenting on the trip a White House foreign policy advisor said, "We're going to consult with the Republic of Korea on North Korea's efforts to advance its ballistic missile and its nuclear program."

North Korean Vice Foreign Minister Han Song Ryol gave a 40-minute interview to Associated Press, which only published selected quotes. AP wrote that Han said his country has determined the Trump administration is "more vicious and more aggressive" than that of his predecessor, Barack Obama. He said that North Korea will keep building up its nuclear arsenal in "quality and quantity," and said Pyongyang is ready to go to war if that's what Trump wants.

Asked whether they will carry out a new nuclear test, Han said: "That is something that our headquarters decides. At a time and at a place where the headquarters deems necessary, it will take place."


Han said Trump's tweets have also added fuel to the flames. "Trump is always making provocations with his aggressive words," Han said. "It's not the D.P.R.K. but the U.S. and Trump that makes trouble... Whatever comes from U.S. politicians, if their words are designed to overthrow the D.P.R.K. system and government" North Korea will respond if attacked, he stated.


"We've got a powerful nuclear deterrent already in our hands, and we certainly will not keep our arms crossed in the face of a U.S. pre-emptive strike," he said. "Whatever comes from the U.S., we will cope with it. We are fully prepared to handle it."

In commenting on Han's interview, Chinese Foreign Ministry spokesperson Geng Shuang said China had noted the statements coming out of Pyongyang and was closely following North Korea's moves. Geng added China urged "all parties" to avoid taking steps that might further inflame "a very sensitive and complex situation. Such actions would be very dangerous and very irresponsible," he warned.

Comments from Benjaminis: Let us hope that this most dangerous matter gets resolved very soon.

http://traderfeed.blogspot.ca/2017/0...ding-been.html

Saturday, April 15, 2017
How Tough Has Trading Been?
https://2.bp.blogspot.com/-xilmO1qwH...STTI041217.jpg
Thanks to a savvy trader for this graphic of the Soc Gen Short Term Trading Index, which is the composite results of the largest diversified futures funds holding positions for less than 10 days. Even the longer track record is net negative. Interestingly, hedge fund performance was positive for the first quarter of 2017, but the performance of CTAs was negative over that same period. These results mirror my own experience working with trading firms: those trading short-term and those trading in a momentum/trend style have been performing worst. Those performing best in Q1 were ones focused on Asia, as well as activist funds and funds trading volatility strategies.

In other words, those market participants with specialized strategies have been outperforming the generalists. Working at a number of funds as a performance coach, I can tell you that--on average--those placing directional bets on interest rates in Q1 greatly underperformed those trading relative value strategies. Even among day trading firms, uniqueness of strategy has been an important predictor of success thus far in 2017. Those traders day trading big liquid instruments have underperformed those finding unique opportunities in carefully selected individual stocks.

I'm not so sure this is all that different from the dynamics in the broader business world. If new participants enter a crowded space, they are less likely to be successful than if they find unique niches. This is an important challenge for those aspiring to trading success. The risk tolerance of most trading firms does not permit long holding periods for directional positions. This tends to throw everyone in the short-term camp depicted above. You're not going to win by playing the same game as everyone else, just as you're not likely to find gold if you prospect the hills that have been well picked over by previous miners.

It's not enough to learn how to trade; it's critical to trade uniquely. It's not enough to trade with rules and discipline; one must also find opportunity creatively. The firms achieving the results depicted above are trading trends in liquid markets in a disciplined fashion. A great approach to success would be to research strategies that made money during months when those other participants were performing worst. There is no guarantee that future returns will mirror backtested ones, but digging for gold in well-mined fields is a poor risk/reward proposition.

Further Reading: Creativity and Innovation in Trading
.
Posted by Brett Steenbarger, Ph.D.

Comments from Benjaminis: It looks like I might have to sign these professional managers up to our course. It really surprises me that the industry numbers are not that impressive.

If I gave KeepCalmfx, One Million US Dollars to manage under LPOA (Limited Power of Attorney , I would be fairly certain KeepCalmfx could achieve results of 5% a month for three months in a row. That would be profits of $150,000 US Dollars and the PERFORMANCE FEE would be 20% or $30,000 US Dollars.

http://www.darkmindfx.com/


Benjaminis

http://traderfeed.blogspot.ca/2014/1...iscipline.html

Tuesday, December 23, 2014
Creativity is the New Discipline
http://1.bp.blogspot.com/-zLarbpdJer...lume122214.jpg
One of the central themes of my new book is the importance of creativity in generating trading ideas with an edge. What I call Trading Psychology 2.0 emphasizes flexible adaptation to changing markets, not rigid adherence to static trading methods. From this perspective, creativity is the new discipline: poor discipline shows up not only in emotional decision-making, but in consensus thinking.

You know that saying "Garbage In, Garbage Out"? Poor quality inputs will lead to faulty outputs even if you employ the best of programming. In trading we might say "Consensus In, Consensus Out". If you look at the same things as everyone else, you'll pretty much wind up thinking--and trading--like everyone else. That's not a good recipe for superior risk-adjusted returns.

To enhance our creativity, our discipline needs to be an improvement in our information diet. We need to take in fresh information, better information, and information organized in new and useful ways. I've long enjoyed the Finviz website as a source of novel perspective. If you click on the heatmap above, you'll see major ETFs and the relative volume of their trading yesterday. Light blue indicates much above average volume; dark indicates significantly below average volume. At a single glance, we can see where money was flowing. That's not a bad starting point for identifying rotational markets and sector/asset class based market themes.

How have the SPX stocks behaved on recent earnings days? This heatmap gives a useful view, a quick visual take on whether the market is tending to be pleased or disappointed with company performance. That's not a bad starting point for thinking about long/short themes.

Want a visual on the relative performance of various commodities? Or how about a visual on the relative strength of various currencies? Looking across asset classes, you can begin to detect emerging global themes.

But not all creativity comes from visualization. Here is a well curated summary of breaking news and blog posts that can feed the head.

A great goal for 2015's trading is to enrich your capacity for market insight. If you look at what others are not, you begin to ask questions they don't ask. And that can lead to fresh answers.

Further Reading: The Sobering Odds of Daytrading Success


What Proportion of Daytraders Actually Makes Money?
http://4.bp.blogspot.com/-Mm2yM1c6uZ.../Daytrader.jpg
I strongly recommend reading the research study of speculator skill from Barber, Lee, Liu, and Odean. They studied the returns of daytraders over a 15-year period, the largest sample I am aware of in such a study. Their study is also unique in that it looks at the ability of traders to make money in a second year after having made money in the first.

The authors conclude that "there is clear performance persistence." The very top traders who make money net of fees tend to continue to make money going forward. The traders who lose money tend to continue losing money.

Here is the most important conclusion, however:

"In the average year, 360,000 individuals engage in day trading. While about 13% earn profits net of fees in the typical year, the results of our analysis suggest that less than 1% of day traders (less than 1,000 out of 360,000) are able to outperform consistently." (p. 15).

In other words, 87% of day traders in a given year lose money after fees are taken into account. About .28%--one in 360--is able to make money after fees year over year.

To be sure, that small group of very successful day traders earns a significant return. After expenses, they average +28 bps per day. Compare that to the 350,000 out of 360,000 daytraders who average a daily loss of 5.7 bps per day after expenses.

The authors conclude that day trading skill genuinely exists. They also conclude that it is very, very rare.

Further Reading: Can Day Traders Be Successful?
.
Can Day Traders Be Successful?
http://1.bp.blogspot.com/-dIoGqHMAL8...600/Stupid.jpg
Is it stupid to pursue day trading?

Back in 2008, I wrote about a research study that suggested that the great majority of day traders lose money, but it is "not entirely a fool's game", as the largest participants demonstrated skill and success.

An update of that study finds that there is evidence of cross-sectional variation in day trading skill: those who make money in one year are more likely to be profitable in the following year and vice versa. Altogether, about 15% of traders studied earned meaningful returns (enough to overcome trading expenses) over the course of a year.

I'm not sure pursuing day trading is any more stupid than pursuing a Hollywood career or a calling to become a WWE wrestler. Many are called, few are chosen in most performance fields.

What *is* stupid is thinking that you can be in the elite group of performers without substantial deliberate practice and experience. I know of several day traders who have enjoyed very long careers of consistent success. Every one spends significant screen time absorbing market patterns and working on their craft.

Barber and team also cite evidence that day traders not only learn from their trading experience, but also show signs of failing to learn from experience. In their study, for example, 24% of all traders had histories of prior losses and they accounted for over half of all day trading volume!

In short, day trading is like American Idol tryouts. A few contestants are really good and a few of those become true stars. Many are fair to middling and never go anywhere. And a few are so head-scratchingly awful--and unaware of their awfulness--that you wonder how they can persist in their talent delusion.

Is it stupid to pursue a dream? Not if you wake up and are willing to do what's necessary to make it a reality.

Further Reading: Why It's So Easy to Lose Money in Markets


THURSDAY, AUGUST 17, 2006
Why It's So Easy to Lose Money in the Markets
A reader recently emailed me a deceptively simple question: "Why is it so much easier to lose money in the markets than to make money?"

Well, let's look at a few reasons:

1) The stocks and indices most familiar to traders have provided the worst returns.

2) The time frame most comfortable for short-term traders (daytrading) has provided the worst returns.

3) The growth of stock index and ETFs has created automated arbitrage strategies that have greatly diminished market trending.

4) Markets tend to confound human nature by refusing to do in the next time period what they have done in the previous one.

5) Because of the above, following normal human sentiment makes people lose money in the markets, almost as if the game is rigged.

6) Because markets change their trending and volatility over time, we'll always tend to be most confident just as things are turning--and overconfidence is deadly.

7) There's no minor league for trading: once you place your order, you're up against the pros, who have a lot of tools at their disposal.

I've learned many things from traders, but this perhaps is most important: The most successful traders and trading organizations I've had the pleasure of getting to know are constantly adapting to changing market conditions. They don't rely on a single trading model; they are always modeling. They do not scalp the midday hours the same as they approach the early morning. They know the difference between a market with active institutional participation and one dominated by locals--and trade accordingly.

People are comfortable with the known, and that keeps them static. It is so easy to lose money in the markets, because markets are dynamic.
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.
Posted by Brett Steenbarger, Ph.D.at 2:22 PM

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

Summary and Conclusions
It is now clear from video evidence that the WHR report was fabricated without input from the professional intelligence community.


The press reported on April 4 that a nerve agent attack had occurred in Khan Shaykhun, Syria during the early morning hours locally on that day. On April 7, The United States carried out a cruise missile attack on Syria ordered by President Trump. It now appears that the president ordered this cruise missile attack without any valid intelligence to support it.


In order to cover up the lack of intelligence to supporting the president’s action, the National Security Council produced a fraudulent intelligence report on April 11 four days later. The individual responsible for this report was Lieutenant General H. R. McMaster, the National Security Advisor. The McMaster report is completely undermined by a significant body of video evidence taken after the alleged sarin attack and before the US cruise missile attack that unambiguously shows the claims in the WHR could not possibly be true. This cannot be explained as a simple error.


The National Security Council Intelligence Report clearly refers to evidence that it claims was obtained from commercial and open sources shortly after the alleged nerve agent attack (on April 5 and April 6). If such a collection of commercial evidence was done, it would have surely found the videos contained herein.

This unambiguously indicates a dedicated attempt to manufacture a false claim that intelligence actually supported the president’s decision to attack Syria, and of far more importance, to accuse Russia of being either complicit or a participant in an alleged atrocity.

The attack on the Syrian government threatened to undermine the relationship between Russia and the United States. Cooperation between Russia and the United States is critical to the defeat of the Islamic State. In addition, the false accusation that Russia knowingly engaged in an atrocity raises the most serious questions about a willful attempt to do damage relations with Russia for domestic political purposes.


We repeat here a quote from the WHR:
An open source video also shows where we believe the chemical munition landed—not on a facility filled with weapons, but in the middle of a street in the northern section of Khan Shaykhun [Emphasis Added]. Commercial satellite imagery of that site from April 6, after the allegation, shows a crater in the road that corresponds to the open source video.

The data provided in these videos make it clear that the WHR made no good-faith attempt to collect data that could have supported its “confident assessment.” that the Syrian government executed a sarin attack as indicated by the location and characteristics of the crater.

This very disturbing event is not a unique situation. President George W. Bush argued that he was misinformed about unambiguous evidence that Iraq was hiding a substantial store of weapons of mass destruction. This false intelligence led to a US attack on Iraq that started a process that ultimately led to the political disintegration in the Middle East, which through a series of unpredicted events then led to the rise of the Islamic State.

On August 30, 2013, the White House produced a similarly false report about the nerve agent attack on August 21, 2013 in Damascus. This report also contained numerous intelligence claims that could not be true. An interview with President Obama published in The Atlantic in April 2016 indicates that Obama was initially told that there was solid intelligence that the Syrian government was responsible for the nerve agent attack of August 21, 2013 in Ghouta, Syria. Obama reported that he was later told that the intelligence was not solid by the then Director of National Intelligence, James Clapper.

Equally serious questions are raised about the abuse of intelligence findings by the incident in 2013. Questions that have not been answered about that incident is how the White House produced a false intelligence report with false claims that could obviously be identified by experts outside the White House and without access to classified information. There also needs to be an explanation of why this 2013 false report was not corrected. Secretary of State John Kerry emphatically testified before the Senate Foreign Relations Committee repeating information in this so-called un-equivocating report.


On August 30, 2013 Secretary of State Kerry made the following statement from the Treaty Room in the State Department:
Our intelligence community has carefully reviewed and re-reviewed information regarding this attack [Emphasis added], and I will tell you it has done so more than mindful of the Iraq experience. We will not repeat that moment. Accordingly, we have taken unprecedented steps to declassify and make facts available to people who can judge for themselves.


It is now obvious that this incident produced by the WHR, while just as serious in terms of the dangers it created for US security, was a clumsy and outright fabrication of a report that was certainly not supported by the intelligence community.

In this case, the president, supported by his staff, made a decision to launch 59 cruise missiles at a Syrian air base. This action was accompanied by serious risks of creating a confrontation with Russia, and also undermining cooperative efforts to win the war against the Islamic State.


I therefore conclude that there needs to be a comprehensive investigation of these events that have either misled people in the White House White House, or worse yet, been perpetrated by people to protect themselves from domestic political criticisms for uninformed and ill-considered actions.

Sincerely yours, Theodore A. Postol
Professor Emeritus of Science,
Technology, and National Security Policy
Massachusetts Institute of Technology

Email: [email protected]
Video Evidence That Reveals the White House Intelligence Report
Issued on April 11, 2017 Contains Demonstrably False Claims about a Sarin Dispersal Crater Allegedly Created
in the April 4, 2017 Attack in Khan Sheikoun, Syria

http://image-store.slidesharecdn.com...e-original.png

Good morning, Benjamin
I trust you enjoying the weekend. Are you perhaps hinting that QE 4 is on the horizon ??
regards,

Good Morning

Yes that is always a fair possibility because that would be the only way that the FED could keep the entire financial system around the world from collapsing however I do not think politically and realistically they will have time since once the collapse starts it will be quick and drastic.

All we need to do is to keep our radar on all possibilities and adjust our views and knowledge accordingly.

I hope I have answered your excellent question.


Benjaminis

Good Day KeepCalmfx

I need your feedback and of course anyone else qualified or knowledgeable enough to answer my question please offer your opinion.

I had posted in the last few days an answer to power about the CORRELATION between the US 30 and SPX500 and USD/JPY along with the US Dollar Index.

I just read the USD/JPY thread and looked at the two excellent charts produced on this topic.

Have a look...

 

1. https://cdn-assets.forexfactory.net/...ar339698_1.gif houtiantan
2. | Joined Jun 2013 | Status: Member | 27 Posts

With the DXY bouncing off the 61.8 Fibonacci level on the multiyear chart, I think we have reasons to short the US dollar. I have been shorting USDJPY over the past weeks. Here's a good setup!
Attached Images (click to enlarge)
https://www.forexfactory.com/attachm...1&d=1492342568 https://www.forexfactory.com/attachm...1&d=1492342598

My conclusion is that the US Dollar Index as the Finviz charts show is effectively NEUTRAL to USD/JPY going down towards 100.000

Please review and let me know if looking at the charts, the CORRELATION is clear when we have RISK OFF.

When the US 30 and SPX500 Sell Off money flows towards whatever safety they think there is until we go back to RISK ON.

Here is part of my post that went into this subject...

Here is the link that I found this morning on LinkedIn with one of his calls on USD/JPY.

https://media.licdn.com/mpr/mpr/shri...77/0505320.jpg
Michael Bridgman
Currency Trader and Forex Trading Coach at PrivateForexCoaching.com

A countertrend long on the USDJPY
http://www.privateforexcoaching.com/2017/04/a-countertrend-trade-long-on-the-usdjpy-to-end-the-trading-week/
https://image-store.slidesharecdn.co...f11-medium.png

On Edit at 4:25 PM Eastern Standard Time.

I have sent a PM to Michael on Linkedin which is where I met him and I have asked him for the cost of his course. He seems to be a Class Act and I found a testimonial from a Bank Trader that I will share now.


I have been trading Forex for six years as a professional institutional (bank prop) trader and as a trader for a central bank before that. I became very interested in taking Michael’s course to learn how to successfully trade on a 15 minute chart – which is not something I have done before as an institutional position trader. His course became a journey that opened my eyes to intraday trading and the use of very tight stop losses!

His 15 minute chart methodology is very intelligent, and his no-BS minimize risk approach can save your fiscal health whenever the market decides to roller coaster and move 150 pips in the other direction. This is not a “plug and play indicator system” that doesn’t require thinking and evaluation.. It is a methodical trading method which promotes taking minimal risk to capture consistent profits with strict money management. Also, Michael’s teaching style is personal and very informative. As others have said, he really cares that you succeed. As an institutional trader, I have found his strategy for trading on the 15 minute chart gives me a real edge. I highly recommend taking his course to anyone serious about forex trading!

Michael T – European Bank Trader

Comments from Benjaminis for KeepCalmfx ... I am so tempted to drop everything that I have learned and teach and try his methods. Then I should be able to do 50% a Month (ROI) SMILE !!!

On Edit at 8:45 PM Eastern Standard Time...and finished at 9:00 PM Eastern Standard Time.

Sometimes I wish I could stop thinking and think of nothing except the Sun and the Moon and the Stars. However since that is not possible at this moment, I came back to add these comments. What starting me thinking is the comments of Mr Bridgman where he said that because the US Dollar Index went up the USD/JPY went down. Now we know that as the US 30 goes down so does USD/JPY. I do not factor the strength or weakness of the US Dollar Index in my CORRELATION.

So... what I just did is looked at an hourly chart from Finviz on USD/JPY from April 6, 2017 until today April 14, 2017.

Have a look at it and you will see USD/JPY went from 111.000 to 108.57... (A difference of 243 PIPS !!!)

http://finviz.com/forex_charts.ashx?t=USDJPY&tf=h1

Now here is the hourly chart of US 30.

http://finviz.com/futures_charts.ashx?t=YM&p=h1

You can see it went from 20,800 on April 6, 2017 to 20,400 on April 14, 2017...

Now I will produce the hourly chart of US Dollar Index from April 6, 2017 to April 14, 2017...

You can clearly SEE that it started at 100.50 and finished at 100.50 So... IT HAD NO EFFECT ON THE MOVEMENT of the 243 PIPS towards 108.000 on USD/JPY.

Here is what Michael Bridgman said...

April 13, 2017 by Michael Bridgman
After a third higher low for the day and a stronger USD, a long trade is taken risking 10 pips. Price completed a reversal formation and closed above yesterday’s low. When price bounced off its low today in the Asian session, buyers were entering at a very important level on the Daily chart. The USDJPY has been coming down all week and it was not surprising to see it move up today with a stronger USD. If today’s low is retested and gives way, it will be very telling. If it price continues higher… a break and daily close above 110.00 will be telling.
http://www.privateforexcoaching.com/...Y-1024x478.png
When taking countertrend trades, it is prudent to use tight stops and not to expect as many pips. Lock in profits along the way and get the risk out of the trade as soon as possible by moving your stop loss to a positive net position. Also it’s a good idea to take smaller size positions. As always read price which is the best indicator of all and protect your profits.

Enjoy the long weekend and good luck with your trading!

Comments from Benjaminis: Here is the part of the above that I am talking about. "it was not surprising to see it move up today with a (stronger USD). If today’s low is retested and gives way, it will be very telling. If it price continues higher… a break and daily close above 110.00 will be telling."

The STRONGER OR WEAKER US DOLLAR INDEX HAD NO EFFECT AND THE CORRELATION BETWEEN US DOLLAR INDEX and USD/JPY is clearly ZERO.

I would appreciate feedback on my observations. Thank You...

P.S. On Edit Again at 9:05 PM Eastern Standard Time...

I went back to his blog to look at this analysis of his on March 21, 2017. Here is what it says.

Riding the USDJPY down with the current USD weakness

March 21, 2017 by Michael Bridgman
Optimistic or not about President Trump’s future policies, the USD is weak and being sold off. In particular, the USDJPY is vulnerable and it set up nicely today. After testing its Asian high and rolling over, a short is taken with a 15 pip stop loss. Price moved down then slowed down and took us out of our trade just before the U.S. Open. It then dropped for the first candle of the U.S. Open before reversing upward. At the first sign of selling another entry short was taken with a 13 pip stop loss for a potential 58 pips to our Daily Target.

Comments from Benjaminis: In my view and based on CORRELATION the STRENGTH or WEAKNESS of the US Dollar Index CANNOT and WILL NOT move USD/JPY down 243 PIPS. At least now I will not bother using it as a direct factor. What say you ?

Thanks


Benjaminis

ON EDIT at 10:45 AM

I looked at the USD/JPY chart that I copied and pasted here on this post and it is a 4 hour chart and the Dollar Index Chart is a long view going back to 2010 so we know that US 30 and SPX has been selling off in the last number of days and all the CORRELATION charts that I used from Finviz is all the same Time Frame.

For KeepCalmfx

The following words were said in jest. What I was saying that if professional Forex traders make statements that are not correct at their level then maybe I should follow them and that is the topic that I asked for an opinion on which is the CORRELATION and what causes USD/JPY to go down (Get Stronger) ?

The US Dollar Index or RISK OFF which we know we have when US 30 and SPX500 and of course other Equity Markets around the World SELL OFF.


Hope you had a nice weekend so far.

Comments from Benjaminis for KeepCalmfx ... I am so tempted to drop everything that I have learned and teach and try his methods. Then I should be able to do 50% a Month (ROI) SMILE !!!

Here is my original comments to KeepCalmfx

"Comments from Benjaminis for KeepCalmfx ... I am so tempted to drop everything that I have learned and teach and try his methods. Then I should be able to do 50% a Month (ROI) SMILE !!!"

Here is what I was in a teasing way saying. First I want to acknowledge that YES, I have a very strong EGO. However my ego is a healthy ego because I know that I am very good at what I do and of course always want to keep improving. However when I see the TOP PROFESSIONAL FOREX TRADERS in the world rarely going over 5% a month and I recently made it to 49.1 % in 50 days what I said was if I follow what Michael teaches my results might go from 25% a month to 50% a month which is not a realistic goal under any circumstances.

I hope I cleared up any confusion. The next ten years of my life , G-D willing is devoted to my Forex business because this is what I love to do.

Here is what the industry is achieving at the highest levels.

http://traderfeed.blogspot.ca/2017/0...ding-been.html

Saturday, April 15, 2017
How Tough Has Trading Been?
https://2.bp.blogspot.com/-xilmO1qwH...STTI041217.jpg
Thanks to a savvy trader for this graphic of the Soc Gen Short Term Trading Index, which is the composite results of the largest diversified futures funds holding positions for less than 10 days. Even the longer track record is net negative. Interestingly, hedge fund performance was positive for the first quarter of 2017, but the performance of CTAs was negative over that same period. These results mirror my own experience working with trading firms: those trading short-term and those trading in a momentum/trend style have been performing worst. Those performing best in Q1 were ones focused on Asia, as well as activist funds and funds trading volatility strategies.

In other words, those market participants with specialized strategies have been outperforming the generalists. Working at a number of funds as a performance coach, I can tell you that--on average--those placing directional bets on interest rates in Q1 greatly underperformed those trading relative value strategies. Even among day trading firms, uniqueness of strategy has been an important predictor of success thus far in 2017. Those traders day trading big liquid instruments have underperformed those finding unique opportunities in carefully selected individual stocks.

I'm not so sure this is all that different from the dynamics in the broader business world. If new participants enter a crowded space, they are less likely to be successful than if they find unique niches. This is an important challenge for those aspiring to trading success. The risk tolerance of most trading firms does not permit long holding periods for directional positions. This tends to throw everyone in the short-term camp depicted above. You're not going to win by playing the same game as everyone else, just as you're not likely to find gold if you prospect the hills that have been well picked over by previous miners.


Benjaminis

Hi Benjamin & Everyone else.

I posted some charts to view the correlation.

I agree there is no correlation between USD index and USDJPY if you look at the charts, especially the lower time frames.

Dear KeepCalmfx

Thank you very much for doing the work to confirm what I pointed out. What I find so fascinating on a very personal level for myself since I have invested 14 years of my life to develop my skills at this high level of proven success and as I have been planning and working on the corporate website with JL as you know and we had an important meeting on this on Friday at my office.

I started to realize that very few professional Forex traders and professional Forex teachers alike appear from what I have seen to be using directly our Money Flow Trading Method with CORRELATION along with our very sophisticated Risk Management strategy so we do not need to earn profits by scalping and our wins are much larger as you showed when you did the average amount of my winning Forex trades and my losing ones. Then the KEY to results over 5% Return on Investment Monthly is the winning percentage of all Forex trades.

Since the percentage of winning trades is well over 60% of all Forex trades than it becomes evident when recent profits that I generated of over $24,000 US Dollars within 60 days can occur when you are qualified and understand how to trade Forex for maximum reward and minimum risk.

[quote=BenjaminIs;If I gave KeepCalmfx, One Million US Dollars to manage under LPOA (Limited Power of Attorney , I would be fairly certain KeepCalmfx could achieve results of 5% a month for three months in a row. That would be profits of $150,000 US Dollars and the PERFORMANCE FEE would be 20% or $30,000 US Dollars.[/quote]

Thanks for the confidence you have in me. With you as my mentor I am sure one day I will get there. Trading $ 1 000 000 with a consistent 5% each month would be a huge achievement. One that I will add to my bucket list. I still have a long way to go. My 1st goal is getting consistently 10% profit for the next 3 months on my $50 000 demo account.

Hello again and I have replied to your question however I just came across a Jim Willie article who is one of the world's experts on this subject so I am putting his article from two years ago here to share and read again myself to see how things have changed in the last two years.



By: Jim Willie CB, GoldenJackass.com


-- Published: Wednesday, 16 April 2014

Sometimes pictures are far more effective in communicating an important point. They are extremely effective in undermining respect and confidence, when in the cartoon format. A sequence of graphics struck the cognitive circuits recently. Long explanations will not serve well. The US Federal Reserve has been printing money since 2011 to cover USGovt debt securities in a frenetic manner. They have lost control. They call it stimulus, when it is actually the opposite.

It does assist the speculators with nearly zero cost money to borrow, but one must be a club member to win loan grants. The Quantitative Easing programs are deceptive. When the program was initially announced, the Jackass claimed it would be part of an endless sequence. With QE1 and QE2 and Operation Twist and QE3, following the failed trial balloon called Taper Talk, it is quite clear to anyone with an active brain stem and absent rose colored glasses that the USFed is caught in a trap called QE to Infinity.

It is not stimulative. Instead, the uncontrollable bond monetization causes capital destruction. It causes economic degradation. It causes lost jobs and vanished income. It is a gigantic wet blanket to smother and destroy the USEconomy slowly, amidst unending propaganda. QE is the device that will result in Systemic Failure, which is already flashing signals of its arrival.

MONEY VELOCITY FALLING RAPIDLY
Money Velocity continues to fall rapidly in both the USEconomy and that of Canada, reaching 50-year lows in the Untied States. The indication is failure in monetary policy, as hyper inflation has killed capital on an extensive basis. The capital destruction is in its fourth year, probably having reached critical mass.

Compared and contrasted with fast rising money supply, the systemic failure is obvious to conclude. The exception is to morons, Wall Street junkies, Big Bank criminal elite, and USGovt hacks. The fast decline in Money Velocity means that it is not moving in the body economic. The reason is simple. The blood system is contaminated with the USDollar, a toxic currency with no backing in a hard asset. The new money is toxic currency under phenomenal debasement by its own steward, the USFed itself. They redouble their harmful policy instead of abandoning it.


The Money Velocity picture is not pretty. The declining rate has broken lows set 50 years ago. Technically, the velocity of money is the frequency at which one unit of currency is used to purchase domestically produced goods and services within a given time period, like an inventory cycle time. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy. The result would be that growth (as measured in GDP) should be rising. With falling velocity of money, then fewer transactions are occurring and a recession is indicated. Such is the present case in astonishing rapid deterioration. Consumers and business are holding firm their money rather than investing it, as they see poor prospects. New capital formation is not occurring inside the USEconomy, or pitifully little. Debts are being dissolved, usually in default. It should be noted that the velocity of money has also been falling in the EU and Japan. The entire global economy is in recession, the pathogenesis shared.



DESTRUCTION OF CAPITAL
The claim that the QE bond monetization is stimulus is pure propaganda, and could not be further from the truth. The claim disguises the nature of the hidden Wall Street bailout, which is to cover their worthless mortgage bonds, and to cover all manner of derivatives, in addition to the obvious coverage of USTreasury Bond sales. Nobody wants the USGovt bonds anymore, except for Belgium operating as hidey hole on behalf of the Euro Central Bank, and for Japan operating as the usual lackey servant. The claim of stimulus is 180 degrees wrong. The bond monetization is pure unsterilized monetary inflation, free money shoved into the system without offset. To be sure, Bernanke had a machine to produce money at no cost, except that like with acid it ruins capital. The result is pure inflation, and extreme motivation for the entire world to take on hedge positions with energy, metals, farmland, and more in order to protect themselves from the ruin of money. The effect is felt as a rising cost structure, felt across the world, and thus shrinking profit margins for the entire global business sector.

As businesses realize the lost profitability, they shut down and retire their capital. They turn idle their factor machinery, their design workstations, their office computers, their transportation vehicles, their company buildings and offices. The destruction of capital is the ugliest dirty secret behind the official New Normal of central bank monetary policy. They are killing the system, so as to avoid liquidating the big banks. By refusing to take the proper capitalism path in liquidating failed corporate structures, they have instead chosen to kill capital, force income engines to the sidelines, generate capital formation in other nations (like the East & Asia), and destroy the USEconomy. The US and West has forgotten capitalism and embraced socialism with a fascist twist.

RAMPANT MONETARY GROWTH
Contrast the declining Money Velocity with fast rising Money Supply growth (presented in March). The conclusion is both galloping economic recession and systemic failure, hardly a reward. Yet it continues without interruption, only the promise of interruption. The systemic failure and breakdown is upon us, the evidence stacking up, the message no longer escapable. The two charts back to back make the point convincingly. New money is wrecking the financial structures and economic systems by destroying capital. The USFed balance sheet is well over $3 trillion, and continues to grow. The new money is going largely in a hidden Wall Street bailout of their bonds and derivatives. The USFed is a grand liar, as their QE volume is growing, not tapering. They are using proxies and back doors, in addition to airborne dirigibles like the Interest Rate Swap contract.

Like with the Hindenburg, the floating monsters will explode someday. The growth in money supply is frightening and alarming, evidence of the wrecked capital and wrecked system. Many have called the Jackass a lunatic and alarmist, but they seem incapable to explain the fast rise in monetary base, yet fast decline in money velocity. Monetary policy is a failure. The fiat paper money is toxic. The big banks are insolvent. The global franchise system of central banks should be shut down, except they control the governments, control the finance ministries, control the central banks, control the regulators, and control the militaries.



LOST CRITICAL MASS IN INDUSTRY
It is very confusing that money velocity is falling fast, yet central banks are creating new money very rapidly. Imagine a Ferrari or Lamborghini race car spinning its gears, burning its engine out, running out of oil, making no movement. It aint working, started by Alan Greenspan, amplified by Benjamin Bernanke, and to be continued by Janet Yellen. They are stuck with failed monetary policy, and cannot alter the destructive course. The Jackass has maintained that a critical error was committed by granting China the Most Favored Nation status for trade. It was actually a fatal error.

The industrial investment is taking place in Asia, led by China. Wall Street and the USGovt leadership at the time, under President Clinton and Robert Rubin, betrayed the nation. They leased gold from the Chinese, in order to perpetuate the fiat paper USDollar regime. They deployed the lunatic Rubin Doctrine, to wreck next year for a few more tomorrows. In doing so, the Chinese benefited from $23 billion in foreign direct investment in the space of a mere two to three years. But the blowback was fatal.

The USEconomy lost its industrial critical mass, and has inadequate traction from monetary policy in accommodation. It still has some industry, but not enough. The ultra-low interest rate makes borrowing costs low, but grotesquely inadequate new capital formation has taken place in the USEconomy. It is being done in Asia. Worse, the new industrial parks are springing up across the US landscape, operated by Chinese industrial masters. The QE is not stimulating the USEconomy because 1) the US lacks critical mass industrially, 2) the regulator burden and corporate tax burden and ObamaCare burden are too great, and 3) the nation is too busy with court cases against the big banks and waging war against fabricated enemies. This is Game Over !!!

As David Chapman points out, "It all seems counter-intuitive that the velocity of money should be falling even as the ECB, the Fed, the BOJ, and the Bank of Canada have been maintaining low interest rates for years in order to encourage borrowing and keep the cost of money low. The central banks have also pumped billions of dollars into the economy through QE and other stimulative measures. The result has been an explosion in the monetary base, a sharp rise in M1 but lower growth for M2 and sluggish M3. The economies are weighed down with debt, banks are reluctant to lend, consumers and corporations are unwilling to borrow. The money instead has been used for speculation, primarily going into risk assets such as the stock market. Corporations instead of investing in new plants and investment are sitting on cash hoards or buying back their own shares. Both are non-productive."


CANADA DITTO ON FAILURE
The Jackass howls in laughter at the claim that Canada is different, an independent nation, a refuge of wiser leadership, the Great White North with more integrity. What nonsense! Canada is in the US pocket, and has been for a very long time. The arguments that Canada is different or better or free from gold corruption are truly baseless and stupid. The big Canadian banks short gold with Wall Street banks, and have been doing so for a long time. See the Scotia Mocatta alliance with JPMorgan in recent months. The Canadian Govt efficiently vacated all their gold in the 1980 and 1990 decades.

It was probably stolen in part by Mulroney, just like as Bush & Clinton & Rubin stole the US gold. See the hidden brisk activity at Barrick Gold, where the ex-prime minister sat on the Board of Directors. Pay close attention to the Evergreen gold contracts by Barrick, which never force under contract the delivery of gold, only the sale under dubious specious contracts. Then the big Canadian banks are deeply committed in the Wall Street and London derivative entanglements, just like the big US banks. All their big banks are hollow reeds, just like in the Untied States. Lastly, the Canadian stock exchanges engage in rampant naked shorting of the mining stocks, not by those who wish to preserve the fiat currency system, but rather by the investment banks that fund the capital requirements for the mining firms themselves. They sell more shares than granted on finance deals. The most disturbing gold factor from Canada in the last year has been the collusion of Scotia Mocatta with JPMorgan in the provision of gold bullion.

They have been offered some special deal for the future, but that future will include a charred landscape and devils as warlords. Scotia Mocatta is in Satan's service at the Wall Street altar. The old formula still holds: CANADA = UNITED STATES / 10 (just like always). The Jackass expects an extreme conflict very soon, as Canada is far more a Chinese commercial colony than the Untied States. My expectation is that Toronto, Ottawa, and Vancouver will soon begin marching to a different drummer out of Beijing, Shanghai, and Hong Kong. A big hat tip to David Chapman for his recent article (CLICK HERE) on the Money Velocity subject, where the graphic was obtained.

BLACK HOLE DYNAMICS
Bernanke was correct. The cost of newly printed electronic money is zero. But he left out the other half of the statement, since he is a lousy economist. The value of the newly printed electronic money is zero. Due to his pathetic education, Bernanke overlooked or fails to comprehend the effect of hyper monetary inflation.

Endless spigots of new fiat money are not the salvation of a system, but rather a cornucopia of new capital formation can lift the system in an effective legitimate manner. The unchecked inflation results in the destruction of capital, the wreckage of income producing engines, the extreme ruin of jobs. The new money goes down a drain. The curvature to the drain is defined by toxic bonds even as the inflection is marked by harmful derivatives. The stubborn behavior of the central bank franchise system operations, their deep collusion, their phony patches to the bond structures, their self-dealing $23 trillion in near zero interest loans to themselves, their waged war to protect the King Dollar regime, it is all destructive. Sooner or later the people and madding crowds will awaken, surely very late in the end game.


GOLD STANDARD PROTECTION, SOLUTION, FUTURE
The protection is with Gold & Silver bars & coins. The solution is not more bond purchases, broader monetization programs, more liberalized bank reserve rules, or suspended accounting rules. The solution is liquidation of the big dead zombie banks, and a return to the Gold Standard. It will be put in place. It will be installed. It will arrive with a vast new structure of legitimacy. It will include barter systems and decentralized mechanisms. It will include new Letters of Credit based in Gold Trade Notes. But the East led by Russia, China, and followed by India, Japan, and South Korea will be the promoters, installers, and architects of the new strong stable equitable Gold Standard system that the Untied States dreads and fears.

The West will continue its rapacious confiscation of wealth and its vicious devotion to war until the platform they stand on built of USD ceramic tiles and USTBond cables and SWIFT pylons collapses. The return of the Gold Standard will relieve the global economy of the burden and wreckage of central bank ruinous and criminal actions. The damage will be extensive. The survivors will be owners of Gold & Silver. The rest will become debt slaves in a nasty fascist state.

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

home: Golden Jackass website


Jim Willie CB, editor of the “HAT TRICK LETTER”


-- Published: Wednesday, 16 April 2014 || Source: GoldSeek.com

Comments from Benjaminis: It is fascinating to see what has unfolded in exactly two years from when Jim Willie wrote this. We first had Brexit followed by the election of President Trump and now we move forward to elections in France and Italy and Germany. The people have started to rise up and the changes in the last two years show what this article has clearly pointed out and explained.