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Telling Someone to Not Trade Works Like Reverse Psychology

by with No Comment AMT MarketsAssetsFeatured Highlights

Telling Someone to Not Trade Works Like Reverse Psychology

From the strange but true file, comes the realization after working within risk analysis for a long time that telling a speculator to avoid a particular market because I believe it is going to be volatile often has the opposite effect. Perhaps the best thing to do is to remain silent and allow inexperienced day traders to lose their money, convincing them to walk away from speculative endeavors forever. But I prefer to constantly teach and warn, while providing help for those who have made the firm decision they want to pursue the financial markets.

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It is rather well documented that 90% of retail traders lose their money. And as pointed out within AMT since our inception most brokerage institutions are counting on you to lose money. This because many platforms are letting you trade via CFD assets and virtual Forex wagering, meaning the brokers take the risks that you may actually make money and are willing to pay out your winning bet, because they know most of the time you are going to lose. If not today then tomorrow, because casinos always believe the gamblers will lose.

People ask why I refer to wagers and bets when I write about Forex, commodities and equity CFDs. The answer is because I feel the need to remind speculators constantly they are entering a domain that is akin to gambling. I have come to learn that I cannot stop inexperienced day traders from making costly mistakes by telling them not to trade. New retail speculators can be helped by providing them risk management via basic knowledge and expanding upon the theme. Angry Meta Traders intends to always make risk management and analysis of the markets its core foundation.

Yes, we also provide our insights about potential directions in particular assets constantly, and try to contribute our thoughts on the thinking of the large players within the marketplace. We would like AMT to become a membership pass into the temple for retail traders and the occasional institutional participant that reads our material. Temples are usually the domain for philosophies which have been gained through years of experience and contemplation about the human condition.

While it may sound absurd to discuss temples, experienced traders unless they have been merely lucky their entire careers, know the psychology of financial institutions is always important. Understanding the behavioral sentiment of large players and the quantitative engineering they use to make decisions is crucial. The keys to the inner workings of the financial temples is a metaphor, hopefully allowing day traders to feel like they have been given the ability to look inside and understand the decision making process of large institutions that can move the markets.

Angry Meta Traders is not always right, our analysis and predicted movements about assets are sometimes wrong. Yet, by stressing risk management via limited leverage, stop losses when appropriate (they almost always are), and telling traders to not be overly ambitious, we hope AMT delivers constant reinforcement and needed learning.

The noise of the market can be quite intense, false narratives, and misguided analysis are dangers all traders face, even the most experienced large players and financial institutions understand they will not always be correct. And this takes us back to the notion that trading for inexperienced people is not easy. But I know telling you not to trade works in the wrong way. So what I tell you now is to be patient, learn, gather wisdom as you trade and hopefully you will attain some of the tools needed to make your speculative life easier. Knowing that 90% of traders lose money, we hope that via our efforts to inform that we can put you within the small percentage of people who actually profit.

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Leverage and the Holidays Often Leads to Costly Volatility

by with No Comment Behavioral SentimentCommoditiesFeatured Highlights

Leverage and the Holidays Often Leads to Costly Volatility

This may seem like an unfriendly reminder for this time of year, but holiday trading can lead to dangerous storms for traders. Keeping a realistic viewpoint regarding your ambitions during Christmas and New Year’s is important.

Most day traders cannot afford to have an outlook that is beyond the short and near-term. This is an ugly fact many speculators with less than deep pockets have to acknowledge if they are new to speculating. While large traders and financial institutions can maintain mid and long-term outlooks, day traders who do not have the funds to keep overnight positions need to operate in an entirely different fashion.

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Trends via technical charts and fundamentals are crucial for all traders. Behavioral sentiment is a key ingredient too for all participants chasing assets. However, day traders also need to understand unique risk management limitations. The use of leverage is a vital dynamic, and can cause devastation fast when too much money has been wagered. The use of leverage by day traders effectively raises the probability that a trade will lose money.

Incremental changes in value to a Forex pair, commodity and equity share being traded on a brokers platform by a speculator using ‘borrowed’ money via an account that allows for margin often leads to quick outcomes that fail. Many brokers offer traders ‘polite’ leverage ranging from 10% to 100% in extra funds, this while enticing the speculator to the potential of profiting in a quicker and more robust manner. It should also be noted that when a broker is offering vast amounts of leverage, they are knowingly increasing a traders likelihood of losing. The use of leverage beyond 10% leads to plenty of expensive mistakes.

Unfortunately, the simple truth is if you can make fast money trading, you can lose fast money while trading. The use of the word speculating is simply a gentle way of not using the word ‘gambling’.

Traders tempted to pursue wagers during the next couple of weeks should remember a lack of normal volumes make many asset classes more volatile, meaning the use of leverage by speculators often leads to dangerous gyrations within their accounts.

Risk appetite has taken on a optimistic tone globally because of the upside U.S equity markets have been producing, while U.S Treasury yields are decreasing, but dangers still lurk. Day traders need to remain realistic regarding their pursuit of quick hitting trades during the holiday season, and make sure they use solid tactics while pursuing their outlooks. The trend may appear to be your friend, but short-term reversals in the wrong direction can cost money.

No one wishes for bad things, but speculators should also note that if risk adverse events occur during the holidays, that ‘negative news’ can often become amplified this time of year and cause more volatility. Speculative positions in Forex, Crude Oil and gold can produce rather wild results, and thin trading volumes can add to the swift changes in values.

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Profits: Business Ethics in an Age of Subjective Expediency

by with No Comment AMT MarketsBusinessFeatured Highlights

Profits: Business Ethics in an Age of Subjective Expediency

This article was originally written in the summer of 2006, Jeremy Blatch suggests current business governance remains shadowed by the same concerns.

Most of us in business today, be we entrepreneurs, professionals or key employees, recognize that our customers, clients and staff require us to act in their best interests and that our actions should reflect this.

A code of practice or some kind of ethical standard or guideline will be needed to ensure some degree of accountability and consistency. In this we encounter the first hurdle, as the degree to which corporate and governmental governance is superimposed by regulatory bodies on business, varies between industries, businesses, professional sectors and political divides.

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The effectiveness to which this is policed in reality depends on the will of those in supervision, and the willingness of those in business to conform to requirements. Many areas are of course not covered by statutory regulation and getting on with the daily running of a business requires constant decisions which often involve a degree of ethical consideration. In reality any ethical stance is at best subjective and open to subversion and expediency in the quest for profitability, which after all is the main reason for being in business in the first place.

Service providers that fail to make a profit irrespective of the quality of service that they offer will inevitably cease to be able to provide that service. But at what cost do we surrender integrity for the expediency of justifying a decision on the grounds of corporate strategy or profitability. And at what point does adopting a rigid ethical stance become a statement of moral judgment? Moralizing about the world and the problems faced by modern society has never been wise. Morality is also a subjective term, often influenced by personal experience and strongly held beliefs, but not necessarily shared.

When some of the world’s most successful entrepreneurs met recently in Monaco at the invitation of the BBC World Service and the international accountants, Ernst Young, to debate how to ‘feed the starving and save the planet’, there was broad agreement that amongst most people there is a distrust of corporate motives and skepticism of Corporate Social Responsibility, currently a trendy buzz word amongst the business elite.

Is not the sole responsibility of companies to make money, but at what costs? Does it really matter how they make money, after all is a woman with a starving child going to refuse a plate of food because it has been purchased with money from the sale of narcotics? If we have a view against investing in armaments, are we prepared therefore to open our borders to anyone who wishes to attack us for any reason, or do we wish for a society in which the strongest take all and those with weapons will be strongest?

Someone receiving a pension has strong views on the tobacco or gambling or arms production or certain drugs, and whilst they are quite happy to receive the pension income and rejoice at the level of payment, are they also prepared to self-select how the investment is managed? Business is fraught with hypocrisy in this area.

Google have weakened their ethical case by caving in to the demands of China for expediency. Brands like Nike and Gap are having their reputations challenged by allegations of sweat shop labor despite spending millions on marketing a different image. Yet people still keep buying their trendy brands. Walmart the most successful US retailer attracts more shoppers than any other store despite allegations of a poor record of employee relations. Does anyone care? Shoppers go where they can find the best quality at the keenest price.

One can make a difference in society without trying to gain the ethical high ground or slipping into moral judgment by simply giving away something you don’t need, to those who most need it. We have witnessed this last week two instances of philanthropist ‘walking the walk’ not just ‘talking the talk’ with Warren Buffet, one of the most successful investors of this century, donating much of his personal wealth to the Bill and Melina Gates Family Foundation. This injection of cash now gives the Gates Foundation around USD 30 billion, more than three times the total amount of charitable donations in the U.K, putting them with Andrew Carnegie, Henry Ford and John D Rockefeller, as the hitherto best known philanthropists of modern times.

A few days after the very public announcement of Warren Buffet’s donation, a U.K hedge fund has emerged as one of the U.K’s most generous philanthropists with a donation of around GBP 50m to charity assisting children in poverty. The Investors Forum, registered in Gibraltar, was created to give a highly professional service to investors covering the wider investment process. It comprises of an association of firms and banks committed to acting professionally, whilst giving something back to those most in need.

A unique investment concept called the “Solidarity Fund” will hopefully be launched from Gibraltar, which will give both corporate and individual investors the opportunity to make money whilst directly helping those in need. In today’s business world making a profit is essential for survival, but how we make it and what we do with it will determine what sort of people we are, and ultimately what legacy we will leave behind.

Jeremy Blatch is the Founder and Consultant of Ein Harod Family Office. You can find more of his articles at www.ehh.gi

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USD/INR: Bounce Higher Ignites a Return to High Water Values

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

USD/INR: Bounce Higher Ignites a Return to High Water Values

The USD/INR is trading near 82.4350 as of this writing, which is a value the currency pair has not touched since the second week of June. While some analysts may say the move to higher ground yesterday and early this morning is based on the U.S FOMC Meeting Minutes, Wednesday’s report from the Federal Reserve likely only reinforced the bullish momentum which started earlier this week. The world of Forex can feel fickle, particularly when so many of the internal dynamics are hidden from a large segment of people who are trying to speculate on the results.

If the mechanics of the move higher which started on Monday are examined a couple of points should be considered closely, the low of the USD/INR was around 81.7300 on the 3rd of July. This low took place as most U.S financial institutions were on holiday in preparation for Tuesday’s 4th of July celebrations.

Fears of U.S Economic Prospects: Behavioral Sentiment and Stagflation Potential

The reversal higher since the 3rd of July has been pronounced, but before going into last weekend the USD/INR was largely trading within a consolidated manner near the 82.0000 level with a test of this mark having been displayed forcefully since the middle of June. A range of nearly 81.8500 to about 82.1500 largely has played out the past three weeks of Forex trading.

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USD/INR One Month Chart as of 6th July 2023

Monday’s dip in value to lows around 81.7300 took place when there was very little volume in the USD/INR market. The depths challenged marks not seen since the first week of May.

The reversal higher the past few days is certainly part of more transactional volume starting to be pumped into the USD/INR as U.S financial institutions have returned, but they are also likely being caused by an underlying nervousness within the Forex markets which may be factoring in the notion the U.S Federal Reserve seems to be on a path which will increase the Federal Funds Rate on the 26th of July.

The behavioral sentiment being generated regarding a Federal Reserve which stays in an aggressive stance started before yesterday’s release of the FOMC Meeting Minutes. Nervous conditions have been on the surface of the broad markets because U.S inflation remains rather resilient – but also importantly because last week’s Gross Domestic Product numbers published on the 29th of June, came in stronger than anticipated. From a troubling perspective some analysts could point to the moderately improved growth and combination of stubborn inflation as a sign stagflation is starting to shadow the U.S, which would certainly be a troubling predicament.

USD/INR Move to New Highs this Morning could Ignite more Nervous Reactions

USD/INR speculators may believe the move higher in the currency pair is overdone and that values need to be lower. However, the current price of the USD/INR is one that has been experienced quite a bit since October of 2022. A look at a one year chart shows the USD/INR has returned to higher ratios of its price range which it has experienced since breaking upwards in the middle of September 2022. And to make things more interesting for technical traders, the USD/INR has actually produced a rather stable range between 81.6000 and 82.9000 since February of this year.

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USD/INR One Year Chart as of 6th July 2023

While traders are certainly trying to anticipate what will happen next in the USD/INR to gain an advantage, they should remember the currency markets are almost impossible to time on a daily basis, but a look at mid-term prices does offer plenty of insights. If the USD/INR climbs too high, perhaps to the 82.5000 level the Reserve Bank of India could get a bit nervous and consider some type of intervention which it supposedly has done a few times over the past handful of months – but perhaps at higher price ratios.

USD/INR Mid-Term Considerations and the Current Price Range

However it is more cost efficient and reputably less damaging for central banks to not intervene if they do not have to, and simply let market dynamics effectively create a price for the USD/INR based on supply and demand. Meaning the current prices of the USD/INR look to be rather high, but taking into consideration the range of the Forex pair the past five months the values are not new. The prices in fact have been rather established, meaning the USD/INR may trade slightly higher, but then a lower wave of downward momentum could be anticipated.

Day traders who are gamblers may be tempted to sell the USD/INR if the currency pair finds more upwards mobility in the near-term. Trading volumes should be back to normal now that U.S financial institutions have returned from their holidays, and traders should be ready for the potential of fast price velocity developing. Risk management on wagers regarding the USD/INR are essential as always.

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Fed Spits into the Wind as Day Traders React to Volatility

by with No Comment AMT MarketsAssetsFeatured Highlights

Fed Spits into the Wind as Day Traders React to Volatility

Broad market analysts continue to spit up an eternal fountain of opinions and data to show why yesterdays moves happened and why tomorrows are going to have bright sunshine and positive outcomes. However, day traders know this is not the reality for them and understand the gyrations and volatility of the marketplace is actually quite dangerous in the short-term.

Day traders may even know market correlations looking backwards are also tales of fiction sometimes. Random results from various fronts are often viewed and assembled by analysts and data providers to give credence as to why ‘John Doe’ lost all of his money, because he was not paying attention to the storm that was ‘obviously’ developing in front of his face. Thus, wiping away any stains of responsibility the analysts and data providers may have for their clients loss of money.

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Gold Five Year Chart as of 28th June 2023

Traders seemingly want to know what the U.S Federal Reserve is going to do every minute. If they could, short-term speculators would probably buy information on the amount of coffee breaks FOMC members take, and monitor what Fed officials daily meals are to understand their moods.

However, we should also understand that a lot of the day to day mechanics in the financial markets are tasks that have been done thousands of times before, in other words we know the history and results of many financial institutions. The U.S Federal Reserve is doing nothing new and their actions in July, August and onward really do not amount to much. The monthly decisions and annual manifestations of governments that spend too much cash and their officials trying to balance the value of their national currencies are well documented historically.

Markets in reality think long-term and this is where nearly all of the large money is invested. Day traders need to understand what they are doing is almost considered a ‘hobby’ by investment professionals who do not take the ‘hobby’ of the small speculators very seriously. This because the amount of money most day traders are using doesn’t affect market price very much, unless they form a ‘team’ like the Wall Street Bets ‘crew’ or act in unison via other social media groups influenced by people they mostly do not know personally, and should be wary of regarding motives. Let’s point out for a moment though, that long-term investors can lose money too based on faulty outlooks.

Long-term money is invested with perspectives that stretch often for periods of two to three years and beyond. Outcomes are projected not on data that cause daily momentary values to change, but rather on sophisticated insights which take a perspective the value of equities and certain indices, and other assorted assets tend to rise. Long-term investors mix their outlooks on economic road signs which will be affected by the investing landscape over a period of years. Meaning knowledge of geopolitics, interest rates, social stability and economic transparency are vital. History is a guide post for established financial institutions as they work. But sometimes these factors do not work, and employees at long-term thinking financial institutions find they need new jobs.

U.S Federal Reserve officials, after yesterday’s Core Durable Goods Orders and the CB Consumer Confidence reports which showed strength were published, might have raised their eyebrows. FOMC members likely acknowledged the long-term exuberance and nature of the U.S economy and thought ‘we need to raise interest rates again in July’ because growth data is too resilient. However, they have already said this via their FOMC Statement in June which warned about inflation and why it continues to be a concern, but the ‘words’ thus far have not been taken too seriously.

Yesterday’s reaction in the broad markets was not overly volatile because of the U.S data outcomes. Yes, short-term Forex traders were likely hurt or rewarded depending on the what lucky side of the coin they were betting. However, for the most part many long-term investors have already placed their positions and continue to do so, which they may not alter for the next two to three years depending on the amount of cash reserves they have in their arsenal. This ammunition of large capital, allows long-term players to remain in the game until a result can be quantified – good or bad.

Day traders and long-term investors are playing a different game. Their mode of operations work in different manners. Again, it must be stressed long-term investors do not take into consideration the outcome of most short-term traders, nor for that matter do global central banks. In fact most global central banks and the governments behind them, would rather see day traders simply give their money to investment ‘experts’ who put the ‘little peoples’ money into long-term savings and investment programs.

Speculative cash in the markets does exists, but the amounts of money being used by day traders and large ‘players’s looking for short-term results are quite different. It should also be pointed out that many day traders are using CFD’s – which largely means their positions are being wagered virtually – and are not really being deposited into the ‘cash markets’. In other words day traders can go broke much faster than their long-term counterparts who are investing in positions that have the power of time duration on their side. The virtual positions of CFD wagers are not going into the real cash market, thus not causing a reaction in the actual assets being traded.

Many day traders participating in the daily results of Forex, and equities and indices are merely trading on casino like platforms built for wagering on the results of what is happening elsewhere in the real cash markets of assets. It in a sense, it quite a bit like sports gamblers betting on the outcome of game they are not participating.

Tomorrow the GDP numbers will come from the U.S and the growth numbers will certainly be watched. The results will be consumed differently by day traders compared to long-term speculators. The Final Gross Domestic Product numbers from the States on Thursday are expected to show a slight rise. An outcome of 1.3% was seen last month, tomorrow’s anticipated number is a 1.4% gain.

If the growth number is stronger than expected, this would put the U.S Federal Reserve in a position in which it would almost certainly have to acknowledge another hike to the Federal Funds Rate is ‘needed’ in July. The Fed has learned the hard way that incremental rises in the costs of borrowing (Federal Funds Rate) are not curtailing the spending of U.S consumers. If the U.S doesn’t start to show recessionary like economic signs in the mid-term, the Fed may feel like it has been spitting into the wind. Day traders will find tomorrow’s GDP report causes volatility, but long-term investors will likely view this as just another day with a momentary price reaction.