However, the current hedge fund environment is based on much more than picking the right stocks or bonds and all that goes with it. The current hedge fund system is a group of funds, many of multiple hundreds of millions or even billions of dollars that don’t make investments per se as they try to beat their competitors by the microsecond in order to profit a very small amount on a a large but extremely short term investment (we will speak of the money of unfree countries below).
Writing from within the storm, it would be easy to feel a strong sense of nervousness as the newest Middle East War rages. However, this is unlikely the beginning of World War 3. Traders looking at WTI Crude Oil this morning have seen the commodity launch over $110.00. But the price has seen a slight dip and is now hovering above $105.00 in albeit fast conditions.
WTI Crude Oil Three Month Chart on 9th March 2026
Behavioral sentiment is nervous, there is no disregarding that notion and taking it seriously. Iran has been firing missiles and drones at neighbors and Saudi Arabia has been effected via some of their oil production. The Strait of Hormuz is certainly seeing an escalation in tension and is threatening to become a sea battle.
However, while the price of WTI Crude Oil rocks higher and day traders either make or lose money fast, speculators wager on short and near-term notions, there is likely a group of folks taking another approach and watching cash prices compared to options.
Yes, the intra-day price of WTI Crude Oil and all other energy sources will remain volatile near-term, but those with a mid and long-term outlook may be betting on optimism and the belief an end game will produce calmer prices.
WTI Crude Oil is up close to 40% percent when a mid-term perspective is used. Will the commodity remain above 100.00 USD six months from now? Will WTI Crude Oil be above $100.00 three months from now or even one?
This thinking may deliver some type of price resistance in WTI Crude Oil. Certainly, there is a chance of greater escalation. But even though it was widely reported that oil facilities in Iran were bombed this weekend by Israel, the terminals hit were on the outskirts of Teheran, not on the island of Kharg. As dangerous as the war has become and the potential of worse damage occurring, those who are striking Iran do not want to damage Kharg terminals – at least not yet.
As for endgame, Russian oil is being allowed to be sold more easily, sanctions have been relaxed. Thus, it can be said there are international efforts to fight against price spikes. There are concerns about higher oil prices causing bedlam via inflation for the global economy rightfully. However, at some juncture things will eventually calm down. And that is what day traders need to keep in mind as WTI Crude Oil has raced higher, the notion that tactically the Iranian war will reach a de-escalation period is reasonable.
Yes, there is a threat that Iran plays the an ‘Armageddon’ card and tries to destroy all vital energy resources in the Middle East, but we have likely passed that stage. Iran in many respects, respectfully, has been declawed. Iran can threaten, but can it really bite at this point? The island of Kharg is a key barometer, its facilities remain mostly kept out of the destruction zone, WTI Crude Oil may not spike too much higher.
As for highs, this morning’s jump occurred on fear, however the price has started to calm. We could certainly still see higher values in WTI Crude Oil this week or next, but thoughts about the potential of an end game resolving the current dangers, whatever that may be and no matter how long it will take – may prove to be an important ointment. Time shall tell.
10. Ya Gotta Believe: The New York Mets are finding ways to score in the late innings. Having won with last minute runs against the Atlanta Braves in the 8th and 9th innings early last week to save their season, hitting a home run to take the lead against the Brewers in the deciding game of the Wild Card in the 9th, and last night’s 5 runs in the 8th to take the lead in Game One against the Phillies in the Division Series has been rather remarkable. Game two between the Mets and Philadelphia will be played later today.
9. Information Technology: OpenAI’s value is now estimated around 157 billion USD, this after their latest round of investments garnered that includes both Nvidia and Microsoft funding. The search engine arms race will continue to get tougher and more competitive, but recent data released by Statcounter shows that Google still has over 90% of the U.S search engine traffic. While it has lost some ground in the search engine battles to upstarts statistically, Google remains dominant. Microsoft has made inroads with Bing, and Yahoo has also gained, but Google’s stranglehold via browser usage remains strong.
8. Helene Meets Milton: A pair of hurricanes – this if Milton fulfills forecasts and becomes a major storm – are not helping create easy days in the U.S Southeast, nor for the Biden administration. Criticism regarding a lack of government help has been heard in the aftermath of Helene and with another potential punch about to be delivered by Milton, U.S relief agencies like FEMA will certainly be pushed to the limit organizationally.
7. Oil Alerts: WTI Crude Oil went into the weekend close to 75.00 USD per barrel as nervousness increased about the potential of an attack on Iranian oil infrastructure. While many nations in the West do not purchase Iranian Crude Oil openly, the Iranian commodity is sold to China at nearly an 89% ratio. This allows oil from other suppliers like Saudi Arabia, the U.S and Mexico to sell elsewhere and the price of Crude Oil to remain relatively tame. However, if the supply of Iranian Crude Oil were suddenly to be crippled for any length of time, the price of the commodity from the other major suppliers would certainly go higher if expanded demand needs to be met. Speculators should pay attention to strike prices in the energy sectors via options trading in the future markets to understand potential vulnerabilities that large players may be anticipating.
6. Precious Metal: Gold prices remain within sight of record values, but below the apex values seen on the 26th of September. Risk sentiment, speculative forces and long-term investors are seemingly creating resilient support levels. Gold went into this weekend near the 2,653.00 USD ratio. Silver remains near 32.00 USD per ounce, which is where its price was traversing in May. Speculators intent on betting that silver will rise because nervous market conditions will create more demand need to be careful. A vast supply of silver exists in known mines globally, and producers simply need to extract more of the commodity to garner profits which is relatively easy. In other words, gold and silver do not correlate as much as some people believe.
5. Forex Chaos: Day traders of USDJPY, NZDUSD, EURUSD and a slew of other major currency pairs were taken on a wild ride last week as USD centric strength surged and fragile conditions in global markets grew. The coming days will remain difficult for FX retail traders as they face a whirlwind of threats. Technical and fundamental traders are being hit by shifting winds generating via a myriad of worries. Speculators without deep pockets are advised to remain cautious in the coming days because trading dynamics are not likely to ease. Yes, there will be price velocity which allows for quick profits, but those who are willing to bet on the prospects of fantastic gains must also accept the dangerous proposition that wildly expensive losses if they are on the wrong side of a trade are equally possible. Brokers will certainly welcome their clients with open arms this coming week because the volatility may entice many with the potential of getting rich. However, brokers will not tell you about the poor house on the other side of the street.
4. Unscripted: There are a little more than four weeks before the 2024 U.S elections on the 5th of November. Trump appears to be gaining momentum in polls, but certainly remains vulnerable per his ability to speak without a script and create verbal firestorms. Kamala Harris ran into problems recently with a suspected malfunctioning teleprompter and her inability to escape repeating the words ’32 days’. While the two candidates battle for voter supremacy, questions persists about the current leadership from the White House and who exactly is running the show.
3. Noisy Data: The Federal Reserve and economic data remain concerns. This Thursday the Consumer Price Index data will be released. If the inflation statistics can come in below expectations this may soothe financial institutions who have leaned into the notion the Fed needs to remain aggressive in November. Another interest rate has been expected, but some are nervous the Fed may not be able to cut as fully as wished. However, day traders need to also understand politics are playing a role in the bombastic soundbites being generated by the media, this as they try to deliver messaging which reflect their viewpoints. If inflation numbers remain under control the mid-term outlook continues to point towards more interest rate cuts. While the U.S jobs numbers on Friday were better than expected it should be noted revisions downward were seen again. There is one more Non-Farm Employment Change report before the election, by then it will probably not have an impact on potential voters, but its affect on the Fed will certainly be felt.
2. End Game: As the Iranian and Israel conflict escalates and threatens to become a dark spiral, some are still hoping for an avenue which will allow normality to return. That appears to be wishful thinking for the moment. Reports, perhaps paranoid, regarding an earthquake in Iran yesterday with a magnitude 4.5 seismic rating which was 48 kilometers from Semnan was noted by the USGS. The reason why it is potentially scary notion is because some are questioning if this was a nuclear test being conducted by Iran.
1. Risk Adverse: A trifecta of nervous behavioral sentiment is shadowing the financial markets via Fed outlook, Middle East tensions, and the approaching U.S election. Unfortunately none of these components are likely to disappear soon and in fact may grow in stature as outlooks potentially create more anxiousness. Safe havens in the USD, gold and U.S Treasuries may find they deliver some calm for those that are nervous. However, it must be noted that U.S equity indices gained nicely late last week after gains on Friday. The Dow 30 and S&P 500 remain near apexes and the Nasdaq Composite is within sight of highs. In other words, for all the talk about dark days, financial markets and investors are still active.
Sounds like the title has been written wrong doesn’t it? Reads as if the editor clearly doesn’t understand the nature of the financial markets and how they work. Certainly anyone who offers their services to you would like to see you make money, or so you would like to think if you are an idealist who remains innocent and trusts all people.
Unfortunately, the title of this artcle which has lured you into reading this WARNING is not wrong. It has been written as cautionary advice for new and even experienced speculators. Many of the ‘financial’ websites and people you are considering to engage with via their day trading platforms and ‘expert’ systems are not worthy. Many do not care if you make money and some in fact are planning on ripping you off.
Blackjack Betting and Sitting at the Table with Too Much Leverage
Volatility is in the eye of the beholder, brokers like when day traders without deep pockets use leverage, because they expect their ‘clients’ to get wiped out. Yes, brokers are not your friends in many cases, in fact they are rooting against you in the back rooms of their trading operations. Why? Because they are not actually putting your trade into the cash markets, they are allowing you to trade virtuallly. Think of it as entering a casino.
The casino wants you to bet outrageous sums of money, because they know statistically most gamblers will lose. Again, you have been warned. Your use of leverage is music to the ears of your broker, because they know the volatility of the market will knock you out of a trade if your margin trading is too high and the slightest of technical reversals will produce a losing position for you. Then they will ask you if you want to make another wager. You can continue to sit at the ‘blackjack’ table or walk away.
Learn To Trade Without Getting Ripped Off
The first thing you might want to ask and acknowledge when you begin to trade is how much money can be lost? The answer is all of your money. If the answer being given to you is that there is minimal risk and that you are guaranteed profits – immediately close the website you are looking at and find another. Guaranteed profits equates into assured losses for unsophisticated traders most of the time.
If you are speaking to someone on the phone and the person keeps asking you how much money you want to make, please hang up the phone and speak to someone else. Self proclaimed gurus should be shunned. As someone once said, people tend to use the word guru, because the word charlatan takes too long to spell.
Yes, even in the most reputable and best of companies who provide trading platforms, you are going to lose money sometimes. The art of speculating and successsful trading is a delicate balance between losing money and making money. It is probable if you are a new trader, that unfortunately you are going to lose money and you will become uncomfortable. Sure you could get lucky or be a prodigy who is supremely talented, but you should understand many folks lose money in the beginning. There is a learning curve for day traders and you need good teachers. You also need a calm emotional state of mind.
Finding a Pro to Trade for You
You might want to consider letting someone that you trust and who has a proven track record with verifiable clients you can authenticate to invest your money. However to have a pro trade for you, the amount of money as a minimum you will need for them to consider trading your cash is likely sizeable. It doesn’t seem like a fair question from a social perspective, but are you wealthy enough to allow someone to trade for you?
If you find a person that is reputable to trade for you, make sure they have explained their modus operandi and you agree with their outline. In other words have them discuss their plan of attack and how they perceive complexities within the markets. What sectors do they invest in, what is the break down via percentages regarding the amounts of money they put into various financial assets? Asking questions may seem a bit impolite, but reputable fund managers and family offices should not get flustered by your questions, and they should have answers that are easy to understand. Do not let them talk over your head with fancy words and equations. Clear and concise language is necessary.
You shoud ask how often they rebalance their portfolios and if they issue a quartertly report. Importantly, ask for an example of transparent accounting which shows transaction fees that will be charged in full, including services they are charged by other financial providers within your account. Commission and banking fees can add up quickly. And then ask the magic question regarding drawdowns, and what are the allowable losses in a trade and in an account that can happen before they have to stop trading. You should get clear explanations regarding all of your inquiries.
But You Likely Still Want to Trade for Yourself
If your emotions do not let you take into consideration that there are going to be negative days, perhaps declines for weeks and bad months – simply put, trading isn’t for you. Learning to handle your money and investing should not be a speculative adventure, this is not about having fun. Oh you will certainly experience thrills, but you should try your best to limit crises. Risk management is a way to curb the elements of gambling which every day trader is undertaking.
Will you become a professional investor? What is a professional investor? Nothing like semantics and flattery to get the juices of a prospective investor going. Do not be fooled by flattery. Do not be fooled by the fact that you have a degree. There are folks who do not have high school graduation certificates looking to take advantage of you, some of them are great traders and will eat you alive. Education at the best of colleges or universities is no guarantee you will become a good trader. There is a difference between paper trading and having skin in the game.
The marketplace is waiting for you to enter and anticipates taking your money. Brokers are trying to get you to come to their trading platforms because they want to make money from your transactions and wagers if they are not reputable. These brokers actually do not believe you will make money. Until you prove you know what you are doing you will be treated like a ‘mark’. When you do prove you know what you are doing you will be treated differently in more ways than one, and it might prove difficult to withdraw your winnings.
Trust is Important, but Facts and Regulations Help
You must deal with people and companies you trust. Make sure to do a deep examination of the folks you are about to forge a trading association. Trading virtually via digitalized CFD and Forex houses that are not regulated can lead to financial disaster. And ask where your broker is regulated, and then check on the mandates of the entity and government which has written the rules for brokers – are they legitimate supervisors and who do the regulations favor? There is a lot of work involved before you trade, you must practice due diligence.
AngryMetaTraders wants you to understand the game of trading. We talk about sports often because the world of trading can be closely compared. If you are good and lucky, perhaps the world of investing awaits your success. If you suffer a learning curve like many, you can compare yourself to an athlete that must train to beat the best. You will need patience and dedication. Surround yourself with reputable firms and people to asssociate your speculative endeavors with in order to get solid results long-term.
In order to be an effective day trader a speculator needs to be able to control their emotions. A person can have years of market knowledge, the best schooling, read the world’s greatest books, be able to quote the leading financial experts and still be a bad trader. While it is important to understand the complexities being generated via technical and fundamentals and the power of behavioral sentiment, again it doesn’t guarentee you profits.
When a day trader initiates pursuit of position, long or short, they can even be right about the eventual direction and still lose their money when the trade is complete. The missing link for many speculators while trading is their inability to control their emotions.
Many sports fans know that there are teams that have some of the highest paid athletes, but frequently have lackluster results because the team is not able to handle the bright lights of the stadium, they let crowds affect them. Some teams simply prove over time they are not prepared to really compete in the most important games; trading results frequently are similar when a speculator is not ready for the financial market they want to compete within.
Unless a market participant can handle their anxiousness, nervousness, frustration, assaults from value gyrations (reversals of price), doubts and the noise of the crowd (news being generated from the media that is mere hyberbole) and other challenges that can affect their emotional state – a trader is unlikely to have success.
Sports and trading are very similar sometimes. Professional athletic competitions between the world’s best are often a contest of ‘wills’. In many sports the top athletes are almost equally matched regarding their physical ability. In trading many speculators have the same perspectives regarding potential market directions, yet they produce different outcomes.
The difference maker in sports and trading when it comes to positive results – winning, is the ability to control their emotional state. Remaining calm and focused, knowing the goal and tasks that must be accomplished to achieve victory in sports and trading is often the result of keeping tranquil psychologically in the middle of battle.
You can have all the necessary trading skills needed to pursue a position within Forex, equity indices, commodities via the cash market, CFDs and futures, but if you do not have control of your emotions you are likely to lose.
Day traders also need to understand that one day of results, winning or losing, does not mean anything regarding future prospects. Like the best athletes, traders need to enter every trade as if it is a new game. Discipline, tactical objectives are important in trading. Being able to walk away from a losing position and leaving enough in your account to pursue the markets, for the next time you feel there is a potentially profitable objective that is attractive is also important.
You must know yourself to be a good trader, you must understand your own emotions and work on weaknesses. The ability to be profitable over a long time is not as simple as merely entering your online trading platform and opening a position which has been recommended or that you think is a winner.
It is one thing to understand the positive movement of a potential trade, but you must be ready for the negative possibilities when a trade is not going your way and the ability to navigate through the storm. Is your stop loss in place? Does the amount of leverage you are using allow you to walk away from a losing trade and still have enough ammunition (money) for other trades? Can you handle the volatility that is likely to ensue in potentially choppy conditions?
You need a solid gameplan. One of the greatest risks a trader is confronted by is their lack of emotional fortitude. Successful speculators embrace their trading positions because they are attractive, but they also manage their expectations and have a plan of attack in place before they enter every trade. Good traders can block out the noise of the crowd and enjoy the competitive nature of battling the financial markets.
The dangers of day trading in markets that are geared in favor of institutional houses with deep pockets and their ability to sustain volatility, versus smaller speculators should be taken into account before you trade. You are likely the smaller speculator, and you are engaging in a game that is not fair, it is a hunting ground and you are often the prey. It will be your proverbial head mounted on a wall as a keepsake by a salesperson who claimed to be your friend and care about your monetary outcome, when in fact what you have done is provide them with a solid commission and the ability to buy a nice dinner and pay their rent.
A lesson from the past week during this recent banking crisis and the trading panic that ensued, is these circumstances rarely make you money when it is you who are the frightened one and caught in the middle of the ‘troubles’ and having to make quick decisions. Brokerage houses may claim that they feel your pain, but actually they seek your discomfort, because brokerage houses working in the grey world of global regulatory confusion often make money when you lose. You must check on your broker’s licenses and understand how they are allowed to ‘trade’ your cash exactly. Brokers licenses are vastly different depending where their company is legally based and the jurisdictions they must comply.
Due diligence should not only be done by the broker regarding you as a client, you should undertake due diligence on your broker. The U.K, U.S, Cyprus, Malta, E.U, Germany, France, Australia and other locations have a long list of different rules which force brokers to act in different ways. Some jurisdictions are much less stringent and allow for a gambling environment, while others have secure rules that protect you. And then there are brokers situated in other regulatory landscapes that are faraway and without hardly any supervision. Just because your phone is telling you that you are getting a phone call from a ‘local’ number doesn’t mean that the phone call isn’t coming from a distance. Brokers can use software to make it look like they are calling from a location you feel comfortable dealing with, when in reality the call may be coming from a thousand miles away.
First Republic Bank 1 Year Chart and Volatility
You are Frequently the Hunted because your Money is Valuable
Traders looking to profit in all financial markets must acknowledge they are frequently mere spectators, who are allowed to bet on a game being played by much larger participants that are capable of moving market values and causing violent conditions. You as the smaller trader are actually being hunted as a valuable commodity by brokerage houses working on the premise they know you will lose your money. You are their profit source.
You are not BlackRock, Goldman Sachs, J.P Morgan, your monetary losses are not going to cause a fear of risk exposure in the larger financial world. Your position of a mere 100,000.00 USD in the EUR/USD is less than a speck of dust in the financial world. You are likely a meaningless speculator to the brokerage house, only important because they see you as a money source for their profit. This is not meant to be kind, it is meant to keep you based in reality.
Small Traders must Acknowledge their place in the Universe
A more calm demeanor and acceptance of the chaos within the marketplace needs to be practiced by small traders. Allow others to be alarmed. Being tranquil within trades you are situated permits you to think and react objectively when the markets are going ‘mad’ and this is to your advantage. Using proper risk management and very conservative leverage is vital for you as a speculator. Attaining these capabilities are often difficult to learn, for some it is impossible. You as a trader will always be treated as an afterthought by the real cash market.
Emotions weigh heavy on the best of traders, trends created by the nervousness of the broad market as behavioral sentiment changes is commonplace. It may help you as a day trader to accept that your positions are likely meaningless to the institutional wagers being placed. Your trades do not move the needle, because your trades are not even part of the real marketplace in many instances. You are merely being allowed to bet on the game and this is a fact you should acknowledge. You do not have to impress anyone but yourself, using conservative leverage and solid risk management is crucial to stay alive in the markets. Do not get talked into large bets, use your commonsense.
Your wagers are certainly able to pursue the decisions of the larger players based on behavioral sentiment being exhibited which are affecting the markets, but you are merely betting on momentary tracks of momentum, again not being affected by you, but by the large institutional traders who are risking millions and billions of dollars. Your technical and fundamental decisions are following the more powerful mass, your viewpoints are not changing the way the real markets are moving.
Another piece of knowledge you must come to realize is that many brokerage houses are interested in you actually losing money, particular if you are trading on their CFDs, via indices and share prices within the virtual world of ‘B book’. Forex pairs, commodities and cryptocurrencies are treated by the brokers in the same manner, your wagers are merely ‘side bets’ based on the outcomes of the cash markets being made inside the broker’s casino. As the casino, brokers are taking your bets with the knowledge you are likely going to lose and they are quite content about this result.
‘B Book’ Trading is Not the Cash Market
The trades you are making believe it or not, are not going into the real cash market. Your money is simply being held by your broker who allows you to trade on the market price, and the value in your account changes per the winnings and losses generated by the market action on the computer terminal according to the real marketplace. Again, it must be stressed your wager is on a game that your trade is not in reality participating in. You are merely a spectator, think of it as betting on a horse race and watching from the stands or television. You are not running the race, you are not the jockey, you are merely cheering on an outcome and can win or lose money based on the result of the horse you have bet on. You have nothing to do with how the horse performs, nor the direction your financial asset takes.
Many brokers only want to make money off of you and literally watch as you lose all of your money. The money that you are trading is too insignificant to be entered into the real cash market, so it is entered into their casino instead. Let’s remember you are often not trading the large cash amounts your positions are quantified numerically, because you are trading with leverage. You are betting on the virtual result. Did gold go up or down? Did the EUR/USD go up or down? Who won the game? Your broker is the bookmaker. They are operating a casino allowing you to gamble.
Brokers are Not Your Friends, You are their Profit Source
Brokers who allow you to trade virtually do not want you to lose all of your money too fast, because they do not want to hear your complaints or face your lawsuits, they want to act as your friend, the key word being act. They try to make sure your losses occur in a slow manner, this so it is not so obvious that they do not care. Because you are participating in a theatre of the absurd with them – one in which they believe you will lose all of your money eventually, you are a mere actor in a play you do not know you are participating.
You are part of the center stage, but you are not participating as someone who affects the outcome of a wager on a financial asset, no, you are merely being watched by your salesperson who got you to deposit and the risk management team of the brokerage firm where your money is being gambled. You are the risk for them. You are trading on a ‘B book’, your money lost is often their gain.
It is much better to find a broker and platform that actually trades your money in a real system, one that is buying you the actual asset. But that is not easy and you will have to make inquiries by asking the brokerage company if they are trading your positions in a cash market or virtually. And to be a participant in the real game, you often have to be trading much more money than you have to risk. Remember one of the golden rules of speculating is to risk nothing more than you can lose. If you are investing long-term that is a different proposition, but the rule of not investing more than you can afford to lose is still very important and should always be given attention.
The ‘friendly’ voices you often hear on the other side of the phone are actually not well intentioned, you have often been seduced, this after being lured by one of their adverts promising excellent trading conditions. They want you to deposit your money, tell you they will guide and help you try to trade. Some may be brave enough to claim you are certain to make money, hang up the phone if you hear this bold lie.
Always be cautious, be suspicious. Ask the person you are speaking to, how much money they are going to get in commission per your deposit, getting a straight answer will be a surprise. The more cash you put in the more money they often make, while that seems obvious, what needs to be understood is that their percentage of commission actually grows – for the salesperson from let’s say 5 percent to 10 percent if you give the brokerage a huge amount of money. Ask yourself how their commission goes up when your money is supposed to be safe and secured and being traded in real cash assets. How is a commission of 5 or 10% being paid to a salesperson by a firm on your money deposited, and how is the brokerage going to make money? The only way to pay out such large percentages of commission is based on their knowledge, that most of your money will never be returned to you. They are counting on you losing your money to them – the brokerage house.
EUR/USD 1 Year Chart and Volatility
The salesperson will often assure you it is best to start conservatively, deposit a small amount to test their trading platforms. When you get comfortable and you have come to trust the brokerage firm, they will go in for the large ‘kill’ and try to get you to deposit large amounts of money. This will often come with the tacit reminder to you that you can only make big money if you are willing to put a large amount of cash into a trade. You have to risk to win is their subtle message. You do want to buy a larger house, have a faster car, take a vacation in some exotic location don’t you?
At the Racetrack your Horse is Not Going to Win most of the Time
Why do brokerages want you to give them a lot of your hard earned money and allow you to bet against their ‘house money’. Because they know you are not likely to make profits. In actuality you are entering a casino, they are just not telling you that. Again, think of it as being a spectator at a horse race. You are betting money at the track on a horse. The track that takes your bet is happy for you to wager, because like a casino they know most people are going to lose money while betting on the horses. They offer your enticements like better odds at the racetrack.
Brokerages offer you leverage to make more money. Have a thousand dollars in your account? They will allow you to bet 10,000.00 USD and in some cases 100,000.00 USD based on leverage of 10 or even 100 times the amount of money you have depending on their jurisdictions and licenses. Why? To increase the volatility within your trading position, because the bigger the trade with the house money using their leverage, the smaller a numerical value in a position on a financial asset has to change in order to cause a sea of volatility. Bedlam within your account and knocking you out of the ‘race’ quickly is the desire. The more leverage you use, the more dangerous the betting becomes for you. Brokers, like racetracks, entice you to make large bets on unreasonable outcomes by promising a bigger payout on the worst financial wager or slowest horse.
Why you Should be an ‘Angry’ Trader and Treat Brokers Suspiciously
85 to 90% of deposited cash and often higher in ‘B book’ trading brokerages are the expected net loss of speculators. Not only do brokers make money on your spreads, transactions, overnight fees (what may be referred to as carrying charges), handling fees for depositing and withdrawing your money, but most make money when you lose on your trades. How? Because they are not really trading your money, they are merely keeping a record of your stated position knowing that the trade is most likely to go against you. And when the trade goes against you, they pocket your losses.
Before you place your money with a trader, simply ask if them if they are trading your money on a ‘B book’ platform. However, note that your salesperson often will have no idea what you are speaking about because most of them are young or have chosen to remain ignorant about the way their company actually handles your money when you speculate. Those that do know what your questions mean, will answer you in an elaborate fashion ready with reasons why your money is not actually going to go into the real market. It is an odd day when a salesperson at a brokerage firm would actually admit you are being placed on a ‘B book’ because your speculative positions are simply too small.
Bonus Money is a Sign that all may not be Right with your Broker
Why do you think it is so easy for many of these companies to offer you a bonus to trade? Because the money really doesn’t exist. Brokers tell you they are giving you the money to help you trade and make more profit, but the money really doesn’t exist, again the bonus money is virtual – it is air. They are making it sound like they are doing you a huge favor, when in fact they are merely giving you more ammunition so you can destroy your own account, and also entice you to deposit more money later. They are allowing you to increase the size of your ‘account’ with their bonus money to give you the opportunity to use more leverage. You are being enticed into the dream, allowing you to think about that new house you want. They are helping you dream, but when you lose the money they will hold your hand and say that this is the nature of the marketplace and that the trade was a good learning lesson. Hints of doing better on your next trade will sometimes be heard.
How is it that when your account goes negative, that you are never asked to pay the negative amount? Because the money given to you via the bonus which was part of your account never really existed. The broker is merely touching a few numbers on their keyboard and balancing out your account to zero. You do not owe them any money. You can simply deposit again and start to trade and pursue your dreams once again. You are the fish and they provide the bait with bonuses and dreams of bigger houses to catch you on their hook.
‘B Book’ brokerage houses seldom put your money into the real market. Sometimes they might get scared and put your money into a ‘real cash account’ known as ‘A book’, but in actuality your broker is likely giving the trade to a bigger institutional broker who then puts the trade on their ‘B book’. In other words the bigger broker is acting like an insurance company for the smaller broker. Thing is, the large broker often thinks the smaller broker will actually lose money too on your bet when they take the smaller brokers ‘B book’ wagers.
Meaning if you actually make money on the ‘A Book’ and cash out of the trade, your broker collects the money from a larger broker most of the time – this if your broker essentially hedged by placing your trader elsewhere as protection. However folks this is not really your concern. What you should do when you make money is make sure you are able to withdrawal the money quickly and efficiently and not let the broker make excuses why it is taking so long. Suddenly, you may be asked to give new identification to get your money. If this happens, please feel free to get impatient. You will be shocked at how easy it was to deposit your funds compared to getting them back sometimes.
Ask this question too, how is your money sent back to you? If you have deposited money by a credit card, if you are actually lucky enough to make more money than you have deposited, you will in most cases not be allowed to be paid via your credit card. The money will have to be wired to you via banks. That is fine, but make sure your broker actually has the capability to do this. Sometimes they do not know how to do this effectively, because they were not expecting you to win money. Your salesperson may say that the money is sent back by credit card for all your winnings, but this is often wrong so it is best to check on this beforehand.
Most brokers are counting on the volatility of reversals, leverage that is too high or stop losses to knock you out of a trade eventually. You lose and your broker wins. It may sound like conspiracy thinking, but be honest with yourself and read the small print of your user agreements which you may be tempted to glance over quickly, or better yet ask directly if your trades will be put in a ‘B book’ or into a cash market. Now one other thing you should be aware of, your salesperson representing their broker often does not know your money is not being traded in the cash market, because they are not privy to the risk team’s decisions who are watching your trades and trying to determine if you pose a danger to them.
Authentic Salespeople, Retention and Risk Teams
Your salesperson is most likely kept as ignorant as possible about the way your money works if their company operates a ‘B book’. Because it makes the salesperson much more authentic when they believe you are being treated fairly and the brokerage has your best interest in mind. The risk team is watching to see if you know what you are doing or if it is OK to let you bet and simply relax in the thought they know you are going to lose your money. The risk team at brokerages often asks the salesperson what the level of experience of a trader is regarding the markets – and your salesperson will ask you. While these might seem like a simple and innocent question, what the brokerage is doing is sizing up the amount of risk you to pose to their ‘casino’. When you open your account take the time to notice if you have suddenly been given to a more experienced salesperson to handle your account. Often this salesperson is known as a retention agent, this person has been ‘trained’ to keep you ‘happy’ and engaged, enticing you into large trades and to get you to deposit more money.
Think of it like a casino where players walk up to tables to play blackjack, the dealers give you your cards, pit bosses watch from behind making sure the dealers are working well and keeping an eye on you too. Casinos and brokers are watching you at all times. Yes, good ‘B book’ brokers are actually happy sometimes when you win, because you will tell your friends you made good ‘investments’ and withdrew your money without a hitch, thus alluring others into the casino – brokerage. But like a casino the brokerage knows most players lose, so the infrequent winning day for a speculator is good because others will step into the arena – where the odds are against them. This is a losers game.
Not all brokers are bad, some actually have solid interests in you doing well. You must do your homework and know who you are working with by asking questions and investigating what you are being told. Being suspicious and alert will help you stay alive and not become the hunted.
The NASDAQ Composite has been within the grasp of a selling trend since late November of 2021, and traders who feel the urge to buy should understand their goals and time frames clearly.
The NASDAQ Composite has seen a strong wave of selling take hold of its equities since the later stage of 2021. Investors have likely been spooked by inflation and high PE ratios which correlate into questionable values and fears of over exuberance and reactions. The combination of U.S Federal Reserve policy which is certainly having an effect on behavioral sentiment is problematic too. Investors are not fans of unclear outlooks and current economic conditions are definitely causing nervous sentiment.
Many traders and investors have not experienced a sincere bear market during their financial careers. Indices and their equities have produced a rather steady upwards vehicle for years. The thought that an equity index can actually go down for a long duration, without significant reversals higher following is troubling and new for many people. Timing new trends is exceptionally hard. An investor who has a ten year outlook certainly brings a different perspective to buying the NASDAQ Composite compared to a day trader who is likely maneuvering in the index with short term wagers using CFDs.
Current market conditions in the NASDAQ and other major global equity indices remain challenging and this will likely continue into early this summer. The U.S Federal Reserve will be conducting an FOMC meeting in mid-June and another interest rate hike is likely being considered. A potential rate hike of 0.50% may be seen. The potential of this additional hike to the current interest rate of 1.00% has likely been digested into the marketplace by financial institutions, but that is not the end of the troubling concerns.
Technical traders who watch the daily results of the NASDAQ Composite and other indices may attempt to speculate on the gyrations of their moves based on short term volatility. These traders should understand they are also battling large institutional traders who use complex algorithms to pursue their positions. The combination of nervous equity markets caused by uncertain economic outlooks, while it waits on the pronouncements of the U.S Federal Reserve are bound to deliver more nervous results in the NASDAQ Composite and other global equity indices.
While it may be accepted that the U.S Fed will raise interest rates again in June, the greater question that financial institutions want answered is what the U.S central bank’s outlook on additional interest rate hikes in the summer and fall will be. Inflation in the U.S remains troubling high. The rising costs of logistics, food and consumer goods are largely a manifestation of higher energy costs.
Yes, coronavirus has been a large ingredient too, regarding inflation and its current effect on employment and the resulting lack of workers is a component in the equation due to new perspectives among the workforce. The shortage of employable labor has also sparked concerns about demographics for the future. While the virus and its effects seem to have eroded in the West for the time being, unfortunately there are concerns regarding a potentially large problem in China if coronavirus infections continue to occur there. Shutdowns in China due to the virus can affect supply and commodities prices globally.
The costs of higher energy and commodity prices are something that companies and consumers will have to deal with in the months ahead. Disinflation is likely to come, but it may take a handful of months more. It is a complex puzzle and traders who want to bet on short term results will have to endure sudden storms of volatility which are likely to arise. Unanswered questions await and because of the shadows that hover over the economic landscape, clarity is not going to be delivered soon.
