Forex Trading On Margin Accounts - The Benefits And Risks

FOMC rollover speculation boosts gold (Saxo Bank)

FOMC rollover speculation boosts gold (Saxo Bank) submitted by jacobhess13 to EconReports [link] [comments]

Head of FX strategy at Saxo Bank warns that if/when Chinese Yuan tanks, NZ Dollar will join it

Head of FX strategy at Saxo Bank warns that if/when Chinese Yuan tanks, NZ Dollar will join it submitted by mark000 to newzealand [link] [comments]

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ...

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ... submitted by cpiforlife to CryptoChats [link] [comments]

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ...

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ... submitted by cpiforlife to drip [link] [comments]

How To Trade Like Banks Using SUPPLY And DEMAND | Smart MONEY Forex Trading Strategy

How To Trade Like Banks Using SUPPLY And DEMAND | Smart MONEY Forex Trading Strategy submitted by emadbably to OptionsInvestopedia [link] [comments]

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ...

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ... submitted by cpiforlife to CryptoChats [link] [comments]

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ...

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ... submitted by cpiforlife to coinmarketbag [link] [comments]

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ...

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ... submitted by cpiforlife to dao [link] [comments]

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ...

Forex Shark's PIGGY BANK - The Animal Farm Money Printer | Strategy for ... submitted by cpiforlife to Yield_Farming [link] [comments]

This #Forex Bank (INSTITUTIONAL #TRADING) Strategy Will Make You More Profitable - Trading Strategies

This #Forex Bank (INSTITUTIONAL #TRADING) Strategy Will Make You More Profitable - Trading Strategies submitted by DerqaouiFOREX to u/DerqaouiFOREX [link] [comments]

Bankers Strategy Forex Banks Funnel 3

Bankers Strategy Forex Banks Funnel 3 submitted by trumadge to u/trumadge [link] [comments]

Bankers Trading Strategy - Trade Forex Like The Banks

Bankers Trading Strategy - Trade Forex Like The Banks submitted by trumadge to u/trumadge [link] [comments]

Remora Strategy - How To Trade Forex Like The Banks

Remora Strategy - How To Trade Forex Like The Banks submitted by trumadge to u/trumadge [link] [comments]

How to Create a trading plan?

While timing and market forecast are not always possible, having a trading strategy can help you establish wide principles and a road map for trading. The reality of your circumstances and money serves as the foundation for a sound trading plan.
It considers the amount of money you are ready to invest in trading and, consequently, the level of risk you can withstand without losing all of your investment. Keep in mind that forex trading often occurs in a high-leverage setting. For those who are ready to take a chance, it also provides greater benefits.
There are a number of forex trading platforms that can help you get initiated irrespective of the volume of your trade. Some trustworthy names are TD Ameritrade, Growing Capital, Saxo Bank, CMC Markets, and City Index.
submitted by Danialwilson22 to u/Danialwilson22 [link] [comments]

Best Forex Trading Strategies used by banks!

Best Forex Trading Strategies used by banks! submitted by jackcarey123 to u/jackcarey123 [link] [comments]

Best Forex Trading Strategies used by banks!

Best Forex Trading Strategies used by banks! submitted by jackcarey123 to u/jackcarey123 [link] [comments]

Hyperinflation is Coming- The Dollar Endgame: PART 5.1- "Enter the Dragon" (SECOND HALF OF FINALE)

Hyperinflation is Coming- The Dollar Endgame: PART 5.1-

(Hey everyone, this is the SECOND half of the Finale, you can find the first half here)

The Dollar Endgame

True monetary collapses are hard to grasp for many in the West who have not experienced extreme inflation. The ever increasing money printing seems strange, alien even. Why must money supply grow exponentially? Why did the Reichsbank continue printing even as hyperinflation took hold in Germany?
What is not understood well are the hidden feedback loops that dwell under the surface of the economy.
The Dragon of Inflation, once awoken, is near impossible to tame.
It all begins with a country walking itself into a situation of severe fiscal mismanagement- this could be the Roman Empire of the early 300s, or the German Empire in 1916, or America in the 1980s- 2020s.
The State, fighting a war, promoting a welfare state, or combating an economic downturn, loads itself with debt burdens too heavy for it to bear.
This might even create temporary illusions of wealth and prosperity. The immediate results are not felt. But the trap is laid.
Over the next few years and even decades, the debt continues to grow. The government programs and spending set up during an emergency are almost impossible to shut down. Politicians are distracted with the issues of the day, and concerns about a borrowing binge take the backseat.
The debt loads begin to reach a critical mass, almost always just as a political upheaval unfolds. Murphy’s Law comes into effect.
Next comes a crisis.
This could be Visigoth tribesmen attacking the border posts in the North, making incursions into Roman lands. Or it could be the Assassination of Archduke Franz Ferdinand in Sarajevo, kicking off a chain of events causing the onset of World War 1.
Or it could be a global pandemic, shutting down 30% of GDP overnight.
Politicians respond as they always had- mass government mobilization, both in the real and financial sense, to address the issue. Promising that their solutions will remedy the problem, a push begins for massive government spending to “solve” economic woes.
They go to fundraise debt to finance the Treasury. But this time is different.
Very few, if any, investors bid. Now they are faced with a difficult question- how to make up for the deficit between the Treasury’s income and its massive projected expenditure. Who’s going to buy the bonds?
With few or no legitimate buyers for their debt, they turn to their only other option- the printing press. Whatever the manner, new money is created and enters the supply.
This time is different. Due to the flood of new liquidity entering the system, widespread inflation occurs. Confounded, the politicians blame everyone and everything BUT the printing as the cause.
Bonds begin to sell off, which causes interest rates to rise. With rates suppressed so low for so long, trillions of dollars of leverage has built up in the system.
No one wants to hold fixed income instruments yielding 1% when inflation is soaring above 8%. It's a guaranteed losing trade. As more and more investors run for the exits in the bond markets, liquidity dries up and volatility spikes.
The MOVE index, a measure of bond market volatility, begins climbing to levels not seen since the 2008 Financial Crisis.

MOVE Index
Sovereign bond market liquidity begins to evaporate. Weak links in the system, overleveraged several times on government debt, such as the UK’s pension funds, begin to implode.
The banks and Treasury itself will not survive true deflation- in the US, Yellen is already getting so antsy that she just asked major banks if Treasury should buy back their bonds to “ensure liquidity”!
As yields rise, government borrowing costs spike and their ability to roll their debt becomes extremely impaired. Overleveraged speculators in housing, equity and bond markets begin to liquidate positions and a full blown deleveraging event emerges.
True deflation in a macro environment as indebted as ours would mean rates soaring well above 15-20%, and a collapse in money market funds, equities, bonds, and worst of all, a certain Treasury default as federal tax receipts decline and deficits rise.
A run on the banks would ensue. Without the Fed printing, the major banks, (which have a 0% capital reserve requirement since 3/15/20), would quickly be drained. Insolvency is not the issue here- liquidity is; and without cash reserves a freezing of the interbank credit and repo markets would quickly ensue.
For those who don’t think this is possible, Tim Geitner, NY Fed President during the 2008 Crisis, stated that in the aftermath of Lehman Brothers’ bankruptcy, we were “We were a few days away from the ATMs not working” (start video at 46:07).
As inflation rips higher, the $24T Treasury market, and the $15.5T Corporate bond markets selloff hard. Soon they enter freefall as forced liquidations wipe leverage out of the system. Similar to 2008, credit markets begin to freeze up. Thousands of “zombie corporations”, firms held together only with razor thin margins and huge amounts of near zero yielding debt, begin to default. One study by a Deutsche analyst puts the figure at 25% of companies in the S&P 500.
The Central Banks respond to the crisis as they always have- coming to the rescue with the money printer, like the Bank of England did when they restarted QE, or how the Bank of Japan began “emergency bond buying operations”.
But this time is massive. They have to print more than ever before as the ENTIRE DEBT BASED FINANCIAL SYSTEM UNWINDS.
QE Infinity begins. Trillions of Treasuries, MBS, Corporate bonds, and Bond ETFs are bought up. The only manner in which to prevent the bubble from imploding is by overwhelming the system with freshly printed cash. Everything is no-limit bid.
The tsunami of new money floods into the system and a face ripping rally begins in every major asset class. This is the beginning of the melt-up phase.
The Federal Reserve, within a few months, goes from owning 30% of the Treasury market, to 70% or more. The Bank of Japan is already at 70% ownership of certain JGB issuances, and some bonds haven’t traded for a record number of days in an active market!
The Central Banks EAT the bond market. The “Lender of Last Resort” becomes “The Lender of Only Resort”.
Another step towards hyperinflation. The Dragon crawls out of his lair.

QE Process
Now the majority or even entirety of the new bond issuances from the Treasury are bought with printed money. Money supply must increase in tandem with federal deficits, fueling further inflation as more new money floods into the system.
The Fed’s liquidity hose is now directly plugged into the veins of the real economy. The heroin of free money now flows in ever increasing amounts towards Main Street.
The same face-ripping rise seen in equities in 2020 and 2021 is now mirrored in the markets for goods and services.
Prices for Food, gas, housing, computers, cars, healthcare, travel, and more explode higher. This sets off several feedback loops- the first of which is the wage-price spiral. As the prices of everything rise, real disposable income falls.
Massive strikes and turnover ensues. Workers refuse to labor for wages that are not keeping up with their expenses. After much consternation, firms are forced to raise wages or see large scale work stoppages.

Wage-Price Spiral
These higher wages now mean the firm has higher costs, and thus must charge higher prices for goods. This repeats ad infinitum.
The next feedback loop is monetary velocity- 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 faster the dollar turns over, the more items it can bid for- and thus the more prices rise. Money velocity increasing is a key feature of a currency beginning to inflate away. In nations experiencing hyperinflation like Venezuela, where money velocity was purported to be over 7,000 annually- or more than 20 times a DAY.
As prices rise steadily, people begin to increase their inflation expectations, which leads to them going out and preemptively buying before the goods become even more expensive. This leads to hoarding and shortages as select items get bought out quickly, and whatever is left is marked up even more. ANOTHER feedback loop.
Inflation now soars to 25%. Treasury deficits increase further as the government is forced to spend more to hire and retain workers, and government subsidies are demanded by every corner of the populace as a way to alleviate the price pressures.
The government budget increases. Any hope of worker’s pensions or banks buying the new debt is dashed as the interest rates remain well below the rate of inflation, and real wages continue to fall. They thus must borrow more as the entire system unwinds.
The Hyperinflationary Feedback loop kicks in, with exponentially increasing borrowing from the Treasury matched by new money supply as the Printer whirrs away.
The Dragon begins his fiery assault.

Hyperinflationary Feedback Loop
As the dollar devalues, other central banks continue printing furiously. This phenomenon of being trapped in a debt spiral is not unique to the United States- virtually every major economy is drowning under excessive credit loads, as the average G7 debt load is 135% of GDP.
As the central banks print at different speeds, massive dislocations begin to occur in currency markets. Nations who print faster and with greater debt monetization fall faster than others, but all fiats fall together in unison in real terms.
Global trade becomes extremely difficult. Trade invoices, which usually can take several weeks or even months to settle as the item is shipped across the world, go haywire as currencies move 20% or more against each other in short timeframes. Hedging becomes extremely difficult, as vol premiums rise and illiquidity is widespread.
Amidst the chaos, a group of nations comes together to decide to use a new monetary media- this could be the Special Drawing Right (SDR), a neutral global reserve currency created by the IMF.
It could be a new commodity based money, similar to the old US Dollar pegged to Gold.
Or it could be a peer-to-peer decentralized cryptocurrency with a hard supply limit and secure payment channels.
Whatever the case- it doesn't really matter. The dollar will begin to lose dominance as the World Reserve Currency as the new one arises.
As the old system begins to die, ironically the dollar soars higher on foreign exchange- as there is a $20T global short position on the USD, in the form of leveraged loans, sovereign debt, corporate bonds, and interbank repo agreements.
All this dollar debt creates dollar DEMAND, and if the US is not printing fast enough or importing enough to push dollars out to satisfy demand, banks and institutions will rush to the Forex market to dump their local currency in exchange for dollars.
This drives DXY up even higher, and then forces more firms to dump local currency to cover dollar debt as the debt becomes more expensive, in a vicious feedback loop. This is called the Dollar Milkshake Theory, posited by Brent Johnson of Santiago Capital.
The global Eurodollar Market IS leverage- and as all leverage works, it must be fed with new dollars or risk bankrupting those who owe the debt. The fundamental issue is that this time, it is not banks, hedge funds, or even insurance giants- this is entire countries like Argentina, Vietnam, and Indonesia.

The Dollar Milkshake
If the Fed does not print to satisfy the demand needed for this Eurodollar market, the Dollar Milkshake will suck almost all global liquidity and capital into the United States, which is a net importer and has largely lost it’s manufacturing base- meanwhile dozens of developing countries and manufacturing firms will go bankrupt and be liquidated, causing a collapse in global supply chains not seen since the Second World War.
This would force inflation to rip above 50% as supply of goods collapses.
Worse yet, what will the Fed do? ALL their choices now make the situation worse.

The Fed's Triple Dilemma
Many pundits will retort- “Even if we have to print the entire unfunded liability of the US, $160T, that’s 8 times current M2 Money Supply. So we’d see 700% inflation over two years and then it would be over!”
This is a grave misunderstanding of the problem; as the Fed expands money supply and finances Treasury spending, inflation rips higher, forcing the AMOUNT THE TREASURY BORROWS, AND THUS THE AMOUNT THE FED PRINTS in the next fiscal quarter to INCREASE. Thus a 100% increase in money supply can cause a 150% increase in inflation, and on again, and again, ad infinitum.
M2 Money Supply increased 41% since March 5th, 2020 and we saw an 18% realized increase in inflation (not CPI, which is manipulated) and a 58% increase in SPY (at the top). This was with the majority of printed money really going into the financial markets, and only stimulus checks and transfer payments flowing into the real economy.
Now Federal Deficits are increasing, and in the next easing cycle, the Fed will be buying the majority of Treasury bonds.
The next $10T they print, therefore, could cause additional inflation requiring another $15T of printing. This could cause another $25T in money printing; this cycle continues forever, like Weimar Germany discovered.
The $200T or so they need to print can easily multiply into the quadrillions by the time we get there.
The Inflation Dragon consumes all in his path.
Federal Net Outlays are currently around 30% of GDP. Of course, the government has tax receipts that it could use to pay for services, but as prices roar higher, the real value of government tax revenue falls. At the end of the Weimar hyperinflation, tax receipts represented less than 1% of all government spending.
This means that without Treasury spending, literally a third of all economic output would cease.
The holders of dollar debt begin dumping them en masse for assets with real world utility and value- even simple things such as food and gas.
People will be forced to ask themselves- what matters more; the amount of Apple shares they hold or their ability to buy food next month? The option will be clear- and as they sell, massive flows of money will move out of the financial economy and into the real.
This begins the final cascade of money into the marketplace which causes the prices of everything to soar higher. The demand for money grows even larger as prices spike, which causes more Treasury spending, which must be financed by new borrowing, which is printed by the Fed. The final doom loop begins, and money supply explodes exponentially.

German Hyperinflation
Monetary velocity rips higher and eventually pushes inflation into the thousands of percent. Goods begin being re-priced by the day, and then by the hour, as the value of the currency becomes meaningless.
A new money, most likely a cryptocurrency such as Bitcoin, gains widespread adoption- becoming the preferred method and eventually the default payment mechanism. The State continues attempting to force the citizens to use their currency- but by now all trust in the money has broken down. The only thing that works is force, but even the police, military and legal system by now have completely lost confidence.
The Simulacrum breaks down as the masses begin to realize that the entire financial system, and the very currency that underpins it is a lie- an illusion, propped up via complex derivatives, unsustainable debt loads, and easy money financed by the Central Banks.
Similar to Weimar Germany, confidence in the currency finally collapses as the public awakens to a long forgotten truth-
There is no supply cap on fiat currency.

QE Infinity

When asked in 1982 what was the one word that could be used to define the Dollar, Fed Chairman Paul Volcker responded with one word-
All fiat money systems, unmoored from the tethers of hard money, are now adrift in a sea of illusion, of make-believe. The only fundamental props to support it are the trust and network effects of the participants.
These are powerful forces, no doubt- and have made it so no fiat currency dies without severe pain inflicted on the masses, most of which are uneducated about the true nature of economics and money.
But the Ships of State have wandered into a maelstrom from which there is no return. Currently, total worldwide debt stands at a gargantuan $300 Trillion, equivalent to 356% of global GDP.
This means that even at low interest rates, interest expense will be higher than GDP- we can never grow our way out of this trap, as many economists hope.
Fiat systems demand ever increasing debt, and ever increasing money printing, until the illusion breaks and the flood of liquidity is finally released into the real economy. Financial and Real economies merge in one final crescendo that dooms the currency to die, as all fiats must.
Day by day, hour by hour, the interest accrues.
The Debt grows larger.
And the Dollar Endgame Approaches.

Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. From reading my Post I cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any opinions or information contained on this Post are just that – an opinion or information. Please consult a financial professional if you seek advice.
*If you would like to learn more, check out my recommended reading list here. This is a dummy google account, so feel free to share with friends- none of my personal information is attached. You can also check out a Google docs version of my Endgame Series here.
I cleared this message with the mods;
IF YOU WOULD LIKE to support me, you can do so my checking out the e-book version of the Dollar Endgame on my twitter profile:
The paperback version is a work in progress. It's coming.
THERE IS NO PRESSURE TO DO SO. THIS IS NOT A MONEY GRAB- the entire series is FREE! The reddit posts start HERE:
and there is a Google Doc version of the ENTIRE SERIES here:

You can follow my Twitter at Peruvian Bull. This is my only account, and I will not ask for financial or personal information. All others are scammers/impersonators.

submitted by peruvian_bull to Superstonk [link] [comments]

Best Forex Trading Strategies used by banks!

Best Forex Trading Strategies used by banks! submitted by jackcarey123 to u/jackcarey123 [link] [comments]

Hyperinflation is Coming- The Dollar Endgame ADDENDUM (FIRST PART)

Hyperinflation is Coming- The Dollar Endgame ADDENDUM (FIRST PART)


Hey everyone, I wrote this section as purely a response to the hundreds of questions, comments, and rebuttals I received over this series. They are listed in no particular order, and I do my best to answer each point as concisely and accurately as possible.

Updated Complete Table of Contents:


Jeffrey Snider- QE is not money printing! QE is the creation of bank reserves which are swapped for commercial bank assets within the financial system. These bank reserves CANNOT be spent in the real world.

Ok, a lot to unpack here. First, in a TECHNICAL sense you are correct- QE does not create money in the form that normal people think of as money. No physical cash is printed and shipped to banks, instead the Fed “prints” by adding entries to their internal SQL ledger and exchanges these new entries for assets. These entries are bank reserves, and like I have already described, are exchanged for assets, mostly Treasuries.
They can’t be immediately “spent” into the real economy- THEY ARE A FORM OF MONEY, but they are trapped exclusively in the financial system, within the markets. Joseph Wang, former Senior trader at the Fed, describes this best, explaining that we have a two tiered money system- the bank reserves trapped at the Fed, and commercial bank deposits that the rest of us can access. .)These two systems interact and work with each other to provide liquidity and funding.
This doesn't disprove the Dollar Endgame hypothesis- because they can be turned into real economy dollars through the Treasury. This is why high fiscal deficits are the key to extreme inflation- it’s a pairing of the money PRINTER with the money SPENDER.
When the Treasury issues bonds, they receive funds as consideration in the form of commercial bank deposits. These commercial bank deposits CAN be spent in the real economy! Or else what is the point of all this? Why would the government issue debt for money it cannot spend on real world essentials like tanks, bridges, pensions or hospitals?

QE into Bank Deposits
Through this process, the banking system and Treasury paired together turn Bank Reserves, which can only be held by commercial banks at the Fed, into deposits, and then into funds in the Treasury General Account, which can now be spent in the REAL economy.
The Treasury is the missing link- which is why in 2008 we didn’t see widespread inflation, because the massive tsunami of QE was trapped within the financial system and could not be spent in the real world. We saw inflation in financial assets, but nothing else.
Once the Treasury is underwater and is continually incurring significant fiscal deficits, and the Fed is monetizing these deficits through QE, that is when we see a massive increase in inflation and a resurgence of the vicious feedback loops that propelled countries like Weimar Germany to monetary doom and hyperinflation.
That's why we even had widespread inflation in 2021 and 2022- the Treasury borrowed AND the Fed printed fresh cash to monetize the debt. And this cycle will continue.

Macro Alf- The true risk is deflation, not inflation. Macro indicators point to a global recession on a scale not seen since 2008. The destruction of aggregate demand will push inflation down to 0 and then below. The Fed will hike us out of inflation.

I am not surprised that many believe this, as all mainstream economists in the late 1960’s believed that stagflation was impossible, or that the dollar could never de-peg from gold. Of course the macro indicators point towards deflation- central banks are hiking rates into 356% global debt to GDP, oncoming recession, energy crises, and war. However, what you and many others completely fail to understand is the entire point of the Central banks.
They DO NOT exist to “maximize” employment.
They DO NOT exist to “minimize” inflation.
They exist to backstop the banks, markets, and most of all, the federal governments via money printing.
They care about “financial stability” more than anything- to them, this means the Treasury has enough cash to roll over its debt, and the banks have enough cash to meet redemptions.
Just look at their actions! Honestly, who cares what they say, state, proclaim, or announce. Everytime there is a financial crisis, they find another excuse, another reason, to turn the money printer back on.
Do you REALLY think that if the Treasury defaults on its debts, and all Treasury bonds enter freefall, that they’re going to sit back and do nothing?
They have printed TRILLIONS for FAR LESS.
Treasuries are the backbone of the global financial system. They are used as collateral in the Eurodollar market, they are held by sovereign wealth funds, used to fund FX swap transactions, and most importantly fund the largest military superpower the world has ever seen.
The Treasury rate is used throughout finance- described as the “risk free rate” ; they are used in almost every valuation metric, including Option Pricing Models, Backsolves, GPCs, DCFs, etc. I would know- this is the industry I work in!
The importance of this asset CANNOT be understated. The Fed will do anything to prevent a deflationary collapse- and they will have to print, as we have already covered, the US Treasury is already bankrupt, deep underwater with $31T of Federal Debt, and $163T of unfunded liabilities.
To prevent a bankruptcy, the Fed will print WHATEVER IT TAKES. This money will be spent in the real economy, as fiscal deficits are at all time highs, and inflation will spike higher, EVEN as the economy contracts while the Fed continues hiking.
Just look at Argentina- they have 83% inflation, and they have 75% interest rates! THEY ARE HIKING AS HARD AS THEY CAN AND IT DOES NOTHING.
It all leads back to a tweet I wrote awhile ago-

The Debt Paradox
So no, the Fed hiking will not lead to widespread deflation- the Treasury will break before that happens, and the system will be flooded with money.
And ironically the higher and faster they hike, the quicker the largest borrowers in the world, the federal governments themselves, become bankrupt.
We are in a macro environment that is more indebted than any other time in human history. The higher they raise rates, the more interest is due on all these debts, and to prevent a collapse greater than the Great Depression, the central banks have to print MORE.
Thus hiking rates ironically really does nothing in the long term to fix the situation. It may slow inflation in the short term but it dooms the central bank to print more in the long run in order to stave off Treasury collapse.

All this inflation is caused by corporate greed. Large companies with monopolies are hiking prices to take advantage of people. It’s all a scam. But not the Fed.

Look, I completely understand where this is coming from. A ton of corporations have taken advantage of their market share to hike prices, garner unfair profits, and even fire workers without cause.
This much is true. However, the broad increase in prices of everything, from lumber, to coal, to computers and food, is NOT due to soulless companies- it is due to a 40% rise in M2 money supply financed by the Fed! Milton Friedman said it best- “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
Restaurants, small businesses, real estate, family farms, plumbing companies, and many more distributed industries saw large increases in prices charged to consumers in the last 2 years- this is without major monopolies controlling the majority stake! And for those who would posit that this inflation is “just due to the war in Ukraine” and gas disruptions from Russia, may I remind you that inflation was already at 7.5% per the BLS in January 2022, before the war had even begun!
It’s easy to blame businesses for this phenomenon, and like I stated- there are definitely some firms guilty of price gouging consumers and labeling inflation. But your local small deli store or carpentry shop aren’t raising prices to hurt you, they’re doing so because the price of all their inputs are rising- and thus what they charge to consumers must rise as well.
If deflationary collapse occurs or the government defaults, we can repeat the Bernanke playbook post 2008; just lower interest rates again to 0% to ensure Treasury solvency.
This is a common counterargument. However it falls prey to the exact same conundrum that was discussed earlier- namely how everything the Fed does to avert disaster would make the situation worse, not better.
By lowering interest rates to 0%, this stimulates loan demand and therefore credit creation, which spurs an increase in money supply as the banks lend money into existence. Everyone goes to take out loans, buying cars, houses, food and essentials on credit. Debt burden thus increases in the system overall, making it even harder for the Fed to raise rates in the future.
And this serves to incentivize the Treasury to borrow and spend even more recklessly, as they have the excuse of low interest rates to finance government spending. ALL this does is only slightly delay the inevitable and make the problem worse, not better.
Furthermore, this credit boom increases inflation as new money is created and pumped into the system. So it doesn't even solve that problem.
The fundamental issue, stated again and again, is that the Treasury is underwater and is spending out the wazoo, and as inflation continues to rise, Treasury spending will continue to rise and thus borrowing will increase.
Lastly, let’s talk about the elephant in the room- the bond market!! If the Fed implements Yield Curve Control, similar to what the Bank of Japan did to their market, then they would effectively push bond yields down, but the price would be promising to do infinite QE to buy any bond with a yield above the set amount.
Who wants to buy 0%, or 0.5% bonds, when inflation is 8%? Nobody- so the Fed will have to be the buyer of only resort, which means they will effectively monetize all Federal deficit spending. QE will thus steadily increase for the foreseeable future as the entire bond market gets eaten by the Fed.

Money velocity is insanely low and keeps dropping. The idea that inflation can accelerate with falling velocity is asinine, and thus inflation will subside back to 2% within a year or so.

Money Velocity
This is another common argument, especially among those who are educated in economics. At first glance they seem correct, as the chart above from the Fed demonstrates, there appears to have been a massive collapse in money velocity since the late 1990s and especially since COVID.
What they fail to understand is that the manner in which money velocity is calculated is extremely flawed. Instead of using the actual transaction volume of the economy divided by GDP (which would be difficult to do, but could potentially be done with data from Visa and Mastercard as well as ATM txs), they calculate it as
“the ratio of quarterly nominal GDP to the quarterly average of M2 money stock.”
Thus, the denominator is the money supply- and as money supply expands, the equation forces “money velocity” lower and lower. This equation works well enough if you have stable GDP growth and flat or miniscule money supply growth; but it blows out as soon as we see massive money printing like we did in 2008 or 2020. The estimate therefore goes LOWER as money supply INCREASES, which is ironically just the opposite of what happens in reality!
Just take this equation to the real world- if countries like Venezuela who have hyperinflation suddenly use this metric, they would theoretically REDUCE money velocity by printing more money. The velocity there, with money supply growth over 5000% YoY, could easily be infinitely near zero- estimating that 1 Venezuelan bolivar only changes hands every century.
If you go in the streets or talk to the people living under this monetary hellscape, you will see that they spend every dollar the DAY they get paid- as prices will change hour to hour, day to day. They treat their currency like melting ice cubes in the hot tropical sun; they must be used immediately or else be completely wasted. See this documentary for examples.
These kinds of illogical, nonsensical equations can only be thought of in the ivory towers of academia and banking institutions which are protected from the consequences of the real world. None of this works in practice.
So no, money velocity didn’t really fall THAT far in 2020, it just appears that way due to the way it is calculated. Now, did it fall somewhat, maybe 10-20%?? Sure! But that can only be determined by looking at live transaction data on the real economy, not arcane equations made up by the Fed.
So many PHDs and so little common sense….

QE is a net good for the economy. It creates a wealth effect and thus stimulates aggregate demand, increasing prosperity and asset prices for all. The rising tide lifts the boats.

This is another common argument I see from the Neo-Keynesians. Let’s remember first that QE is a completely new experiment- it was not used during the 1800s and early 1900s for example, where America entered the Gilded Age and experienced some of the fastest economic growth in human history. It wasn’t used during the 1950s or 60s, another period of rapid development. So we were able to achieve massive economic growth WITHOUT centralized banking or money printing- in fact, I would argue that on a percent of GDP basis we grew faster during these times and the average worker experienced far more prosperity than now.
It’s only been used at scale post the 2008 financial crisis and into the “lost decade” of the 2010s and 2020s that we are currently experiencing. The thesis was by boosting asset prices we therefore boost the economy; but this is asinine on several levels. First, WHO holds the assets? Recall that the top 10% of Americans hold 84% of all registered stocks on exchanges. They also hold the majority of the land, housing, businesses, and debt instruments. Goosing asset prices higher only directly helps these economic elites- it does little for everyone else.
Besides, this creates the “credit boom” that Mises described- an artificial rise in asset prices solely due to central bank interference. It is not based on true economic productivity.
The Fed creates no new factories, they create no new jobs, no innovations, no startups. Instead they create cheap money which “funds” these things- but as the price of money gets distorted, so do investments, and thus unprofitable and useless projects are built up with debt.
This results in a phenomenon similar to the Chinese “ghost cities”- entire sections of the economy built without need or purpose, and worse, they waste limited commodities and energy to create.
When the debt cycle rolls over, as it always does, the debt must be paid, and the assets that are liquidated are found to be near worthless- a waste of time, energy and resources.
QE therefore harms the real economy and enriches the wealthy at the same time. It cannot be said to be capitalist or socialist; it is simply plutocracy and kleptocracy; crony capitalism where the wealthy steal from the poor and foot them with the bill.

Even if inflation gets a bit high, it won’t and can’t get worse. The system will be fine, and the Fed hikes will cure the situation. It’ll be rocky for a little bit, similar to the stagflation of the 1970s, but we’ll get through this and in a few years it’ll be back to 2%, no problem.

The issue with this argument is one of scale. Sure, in the late 1970s and early 1980s, the Fed, under the reign of Volcker, was able to hike rates to the 20% range, but debt to GDP at the time was 30%- not the mammoth 132% we have now.
Besides, this doesn't take into effect the slippage that will occur in bond markets- as the Fed continues to hike, bonds will selloff hard, racing ahead of the Fed and moving rates much higher, much faster than the Fed anticipates.
With $31T of Federal debt, this means interest expense will spike; thus the Treasury must borrow MORE to rollover existing debt and in doing so lock in higher coupon payments, OR they must ask the Fed to pin interest rates LOW, in a policy called Yield Curve Control, but this requires infinite QE as every time the yields peek their head above the target interest rate, the central bank must print as much money as needed to buy bonds, forcing rates back down to the target.
The Bank of Japan is currently experimenting with this policy, and it is creating an emerging markets currency crisis for them.
Besides, this ignores the basic feedback loops that take place once inflation rises above 2 or 3%- first, the inflation expectations loop, where people frontload purchases, driving up prices.
Next is the Treasury feedback loop- more inflation means deficit spending increases, which means more government borrowing, which means more QE, which means more inflation.
After that is money velocity- as inflation increases and people lose faith in the currency the speed of transacting in the money starts to increase. This increases inflation as the dollars get turned over faster, and are able to bid more products within a given timeframe (say a month or a year)
Next is the wage price spiral, where prices rise, forcing workers to strike or demand higher pay, which is usually eventually given, which increases business costs, which forces higher prices, repeating the feedback loop.
Long story short, once the inflation genie is out of the bottle, it is very hard to put back- and it usually begins to grow a life of it’s own. These processes feed on each other exponentially.
Worse yet, like already stated, there is $31T of federal debt, $20T or so of Eurodollar debt overseas, and $166T of unfunded liabilities owed by the US government - all debts which must be paid in dollars, which must either be paid through taxation or the printing press. Passing new tax laws during an economic downturn is essentially political suicide, so the printing press is the likeliest answer here.
The REAL risk for hyperinflation lies in the international community finding another World Reserve Currency - if this happens, either slowly or over time, the global DEMAND for dollars switches into global SUPPLY of dollars as USD positions are liquidated in favor of the new global reserve currency.
The dollars are now dumped for real goods and services- and the strong tailwind of demand becomes a headwind of supply as USDs flood back into America, bidding up prices of land, food, manufactured goods etc. The scramble becomes a stampede and the entire system unwinds as trillions of dollars flow back to the States, causing a massive whiplash in inflation and further pushing the US Treasury into deficit spending, thus causing more money creation, and more inflation, in a vicious feedback loop.
Again, this process may take years to play out- but no reserve currency has lasted forever, and the inherent structural defects explained by Triffin’s Dilemma cannot resolve themselves. All currencies come to an end.

What would the effect of a CBDC (Central Bank Digital Currency) be? Would it be able to be used to “reset” the system?

I am being completely honest and transparent when I say this- CBDCs must be resisted AT ALL COSTS. Most people are completely blind to the level of Orwellian control that this sort of technology would implement over the populace.
Remember, Keynesian economic theory rests on stimulating spending and consumption, and utilizing government deficits and central bank money printing to pull economies out of depressions. It arose from a need to get the US and Britain out of their 1930’s economic contraction and into a strong economic position in order to fight World War II. The Keynesians believed the best way to stimulate spending would be to cause inflation, as this would force people with “hoards of cash under their mattress” to go out and spend these funds before they lost more value.
There was no way to centrally force people to spend- they could just increase money supply and pump that money into the economy by government spending in order to hike inflation up and as a second order effect, produce higher spending patterns.
They’ve always wanted more control over spending- and a CBDC would get them there. With a CBDC, they would eliminate the need to have banks, credit unions or trust companies- you would essentially just make a direct account with the Fed. The Fed would be able to create new policies, written in code, that would enforce certain actions on your deposits.
They could program in a 1% weekly negative interest rate- the balance would decline by 1% a week in perpetuity, and thus you would be forced to spend or invest it unless you wanted to see your money disappear.
They could enforce taxes directly to your account. You buy cigarettes? That’s unhealthy and against their guidelines. $15 taken. Alcohol? Doesn't promote work ethic- $10. New car? That’s bad for the environment. $1900.
They could even ban travel, remove the ability to buy firearms or food, and reduce your ability to use healthcare services.
The issue is not whether these things are good or bad- there are arguments to be made for reducing consumption, buying used cars, reducing environmental waste, etc.
The issue is that to force these policies on the people via a CBDC would grant the Fed and Treasury virtually unlimited, Orwellian power to control and command almost every aspect of a citizen’s life. Freedom of speech would now be an afterthought- who cares about the protest if no one can buy a bus ticket, Uber, or gas to get there??
And the worst thing is these extreme neo-keynesian economists ACTUALLY THINK this would be a good thing! “Think of all the policies we could implement! We could ban smoking, we could reduce travel, we could lower CO2 emissions directly! We could even eliminate the IRS as we can tax people directly from their bank account!”
In my opinion, the economists who support these kinds of policies are nothing but grifters, frauds and cronies of the lowest sort- those willing to force total financial control on the populace so that their “theories” can be tried in real time, on real people.
Furthermore, I think it would be incredibly difficult for them to “reset” the system. Monetary resets have happened before, but usually they occur only under the most difficult and strenuous of circumstances, and involve an issuance of a new currency that is some fraction of the old one- for example, in Peru, due to the bad state of economy and hyperinflation in the late 1980s, the government was forced to abandon the inti and introduce the sol as the country's new currency.
The new currency was put into use on July 1, 1991, by Law No. 25,295, to replace the inti at a rate of 1 sol to 1,000,000 intis. Coins denominated in the new unit were introduced on October 1, 1991, and the first banknotes on November 13, 1991. The new currency was basically a reverse stock split of the old currency- and if a monetary “reset” occurred in this manner, the only intended effect would be to boost confidence in the currency and thus shore up bank deposits, slow down monetary velocity, and reduce inflation.
The “reset” would likely hurt the working class the most- as some wealthy government elites would know about it beforehand, they would sell their assets for another currency, wait until the conversion, and then re-buy the assets with the new currency. The old currency, the Inti, quickly became completely useless as everyone switches to the new system.
I’ll be honest, I’m not exactly sure what a CBDC “reset” would look like, as it has never been tried before. I think the main issue is the debt- does the debt get converted as well? If so, then the problem may not be really solved. If you convert the debt at 10:1 and the currency at 10:1, what has really changed?
Nothing- and therefore likely what they would do is apply a different conversion rate to debt to de-lever the system and wipe at least some of it out. But this is all speculation.
(You didn’t hear this from me, but there has already been a covert war on cash and ATMs from the CIA, look up Operation Choke Point).
CBDCs must be resisted. At all costs.

Just cut government spending down to zero, or close to it! This would solve the issue.

This is another common counterargument- the hyperinflationary feedback loop rests on government deficit spending, which increases during inflation, resulting in more borrowing, and thus more money printing, and thus more inflation.
If we cut government spending enough to drastically reduce deficits, we would essentially be gutting our own economy, and very quickly bring on a Great Depression. The only “tool” that we have to escape a Great Depression quickly IS government spending, and thus we would be in for a long, hard downturn with severe unemployment and price collapse.
Remember the equation for GDP:

GDP Equation
Government spending is part of the value add of the formula FOR GDP. Thus, if we reduce government spending, all else being equal, we REDUCE GDP.
According to data from the St. Louis Fed, Federal Net Outlays are currently 29% of GDP, in 2021 data. Thus, if we were to severely slash government spending, we would see a reduction of 25% or so. To get rid of the deficits, we would have to slash so much spending that we would basically immediately see a collapse of 15.96% of GDP within a few weeks.
As all things do in economics, this would have immediate knock- on effects. Government contractors, like Boeing, Lockheed Martin, or Raytheon would quickly lose huge revenue streams. Massive layoffs would occur across defense, infrastructure, social services, and more- and within a few months GDP would drop another 10% or so.
This would spur on a deflationary wave similar to the Great Depression. Unemployment would soar- bringing all the issues with it, the soup lines, homelessness, crime, collapsing house and business values, and political upheaval. If the FDIC did not step in to print enough money to shore up the banks, there would be widespread bank runs as the capital reserve requirement for banks is 0%- and most banks only hold 2-5% of reserves in cash to pay out to consumers who want to redeem their deposits.
In my opinion, all this is besides the point- the government will NEVER cut spending this much, and create this severe of a depression, to stave off a crisis they believe cannot occur.
Firstly, most government spending is mandatory- per the Government Accountability Office, 70% of federal outlays are already earmarked and must be spent. To reduce the size of these programs would basically require an act of Congress, a bill passing through the House and Senate and signed by the President.
The other 30% of discretional spending is very hard to cut as well- lobbyists, corporations, citizen’s rights groups, unions, and other powerful interests will do anything in their power to ensure that the money continues to flow into their coffers.
Besides, some of these programs are good, or at least appear good! Imagine the political backlash if a House Rep proposes to cut food stamp benefits, or funding for the DEA, or National Parks Service.
Remember who runs our country- and these people will do virtually anything to prevent the money spigot from turning off. They do not believe, or maybe don’t even care, if extreme inflation comes. They are benefiting from the structure of the current system- why would they change it?

Delete all the debt!

The basic equation learned in first year finance and accounting programs is this:

Accounting Equation
Thus, for every asset there is a liability or equity. If you destroy one side of the equation, the liability side, you simultaneously destroy the other side of the equation, on someone else’s balance sheet!
Treasury bonds are debt, and a LOT of them are held by Boomers in retirement accounts. Even if we could go in and somehow “delete” the bonds and annul the coupon payments, this would be tantamount to deleting assets of these retirees- and what will they have to retire with then? The retirement accounts would lose trillions of dollars worth of value!
There is no easy way out of this trap. Remember, in a debt based monetary system, most money is actually credit- the only “real” money that is not someone else’s liability is cash, but his makes up for less than 3% of total money supply. Imagine if we had a 97% reduction in money supply within a few months- the pure economic catastrophe that would occur is unimaginable.
Besides, remember debt based instruments, like Treasury bonds, are literally the collateral that holds this whole system up. There is $2.2T in reverse repo secured by Treasuries, and most of the Eurodollar market, as well as the interbank repo market (which blew up in September 2019, spurring a Fed rescue). Wiping out the debt would also wipe out the collateral which underlies the entire financial system.
It’s all intricately linked together, like a wired bomb- remove any connection, and the whole thing can blow. That’s not to say that this would be impossible, just that it is very unlikely to be taken as a serious response to the crisis.


This is the end of the first section of the addendum. the next section will be uploaded next Monday.

Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. From reading my Post I cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any opinions or information contained on this Post are just that – an opinion or information. Please consult a financial professional if you seek advice.
*If you would like to learn more, check out my recommended reading list here. This is a dummy google account, so feel free to share with friends- none of my personal information is attached. You can also check out a Google docs version of my Endgame Series here.

You can follow my Twitter at Peruvian Bull. This is my only account, and I will not ask for financial or personal information. All others are scammers/impersonators.

submitted by peruvian_bull to Superstonk [link] [comments]

In HFT, are strategies (e.g. optimal execution, market making) purely mathematical or do they mainly rely on the technology (e.g. speed, collocation)? #fintech #trading #algotrading #quantitative #quant #quants #forex #fx #banks #hedgefunds #hft

In HFT, are strategies (e.g. optimal execution, market making) purely mathematical or do they mainly rely on the technology (e.g. speed, collocation)? #fintech #trading #algotrading #quantitative #quant #quants #forex #fx #banks #hedgefunds #hft submitted by silahian to quant_hft [link] [comments]

My 25 Year FI Journey

November marks my 25th anniversary working towards financial independence. I hope others might benefit from the observations I gathered over an extended timeframe of perseverance.
I began adulthood with severe anxiety regarding finances.
I developed FIRE-type thinking before FIRE was a commonly understood philosophy. My thinking developed through personal experiences and later through forums such as these. FIRE thinking helped me to overcome an unhealthy fear of becoming destitute while accelerating other life goals that have brought peace, contentment, and happiness to everyday life.
This article documents that journey as a means to give back to a community which has given much to me. I hope it is informative, supportive, and motivating for everyone on their own journey. I will answer questions and offer additional perspective in the comments where possible.
This is a throw away account and certain milestones have been obfuscated to create some semblance of privacy and anonymity, though all financial figures quoted are accurate.
  1. About Me
  2. My FI Philosophy
  3. Milestones
  4. My Investment Philosophy
  5. My Expense Pattern
  6. My Evolving View Of FI
  7. Lessons & Observations
About Me
I achieved FI in 2017. I have no plans to RE.
I am mid-40s living in a HCOL area. Married with no kids as we prefer partying over parenting.
I grew up in upper lower class economic conditions around military bases. My parents struggled to save money outside of any retirement benefits afforded from their jobs. Frequently being unable to have the trips, food, clothes, and toys that the “other” kids had formed an indelible mark. There have been periods where I have had significant anxiety regarding financial safety.
I work in tech. My wife is an overworked, underpaid social worker.
My career began as a deeply indebted student and after graduation included jobs in training, engineering, product, executive leadership, startup CEO, investing, and governance.
I write a well-read technology blog and authored 3 books that are now irrelevant.
I travel extensively, sometimes for work, sometimes pleasure. I have visited 50 countries. I have a pilot’s license. I own 2 houses, a plane, 2 cars, and a boat.
My FI Philosophy
  1. Live Life Below My Means. I should always be saving money, regardless of what my income level is. As long as I earn a W2 income from a job, my monthly expenses should be (on average) at least 50% below the average after-tax income. This also means that it’s OK to increase my spend on quality of life as my means has increased, though it wasn’t until my 30s before I practiced this without stress. As you'll see, having this policy is easier to state than to always follow.
  2. FI Definition. Because of my youthful anxiety towards money, difficulty in determining what a viable number of years “in retirement” might be, and debates as to what constitutes a Safe Withdrawal Rate (SWR), I chose to shape a personal definition. For me, FI is the ability to generate enough income from non-W2 activities such that my annual rate of expenses is covered. Income generation can happen from rents, selling volatility, interest, or dividends. In other words, FI is when my net worth continues to grow with or without traditional W2 income. This philosophy may change one day – either because the net worth pool is large or the expected number of years before death materially shrinks.
  3. Eliminate Debt, Even If It Is An Economic Mistake. After having bought and sold five different homes, I came to realize that the mental stress of having debt outweighed its economic benefits. Starting sometime around 2018, I decided to eliminate all possible debt, even 2% mortgage debt. While the arbitrage of investment results would have yielded a better overall economic outcome by keeping the debt, that financial gain could never be large enough to compensate for the anxiety-neutralizing-feeling of being “debt free”. Whatever I owned was owned by me alone, and in the unlikely event I were to become unemployed or without income, the future of those assets was solely in my control and not in conjunction with a bank. I execute this policy on life assets, such as my primary home and automobile, and toy assets, such as my plane. This, of course, requires a person to have enough assets to cover the debt, and it took me 15 years to achieve this threshold.
  4. Invest To Beat The Market. If I am willing to devote more energy and research time than others (at the cost of fun, family time, etc), then I should be able to make smarter decisions that yield higher results. Split investments into those things which are liquid vs. illiquid. Try to keep most of my available cash in liquid investments. I prefer (and try) to earn equity in illiquid investments through time-based contributions, sweat equity, carried interest, or as a job benefit. This doesn’t always happen, and I have had to outlay cash for angel investments, as a limited partner in a VC fund, and stock purchases for companies I’ve run. Never let others manage our money as they lack incentives to behave as an owner. As you’ll see, lacking this wisdom once cost me $3M in my early career.
Year Net Worth Addl Illiquid Assets W2 Income Material Events
1997 -$95,685 $- $14,110 Pizza Delivery
1998 -$88,299 $- $25,906 Graduate Univ.
1999 $25,612 $- $104,155 Footnote #1
2000 $88,843 $2,700,954 $125,543 Emp. Equity! :-)
2001 $247,777 $800,056 $232,223 Dotcom Bust
2002 $294,994 $- $144,987 Footnote #2 :-(
2003 $336,523 $- $283,847 First Home Buy
2004 $384,258 $- $207,411 Sold 1st Startup
2005 $436,189 $15,000 $138,845 1st Angel Investment
2006 $558,473 $15,000 $191,384 2nd Home Buy
2007 $614,038 $15,000 $204,448 3rd Home Buy
2008 $545,783 $15,000 $231,926
2009 $638,926 $15,000 $233,656 Footnote #3 :-(
2010 $1,009,650 $25,000 $427,404
2011 $1,333,754 $100,000 $384,681 Started 2nd Startup
2012 $1,637,200 $104,000 $89,187 Became VC Scout
2013 $1,966,303 $407,703 $255,000
2014 $1,777,266 $1,360,905 $230,000 Sold 1st Angel Investment!
2015 $2,313,846 $5,786,086 $243,750 1st VC Distribution :-)
2016 $2,638,612 $5,210,121 $368,622 Startup Profitable :-)
2017 $6,422,053 $6,162,527 $802,590 Startup Acquired :-)
2018 $6,514,291 $7,805,654 $452,129 Paid Off Mortgages
2019 $8,202,434 $9,895,887 $561,954 3rd CEO Gig
2020 $8,079,164 $6,466,506 $801,151
2021 $7,414,909 $10,658,321 $998,761 Footnote #4 :-(
2022 $10,318,719 $9,457,050 $1,065,001 Strong Investment Returns
  1. I had an amazing thing happen about 18 months after university. I was working as a grunt in a consulting firm that had some acquisition interest from a large publicly traded company who was making aggressive moves into an area of technology where I had been tasked. The acquisition was moving fast and the firm needed to produce certain deliverables in a week that would normally require months. I stepped up and found a way to deliver the assets. The consultancy got acquired for what was a great outcome for the founder. Without expectation, he surprised me one day and offered to pay off my remaining $80K in student loans. I was hired by the acquiring company as a domain specialist and they doubled my income to $70K. The feeling can only be described as elation followed by a long cry. It was a powerful lesson in what the value of hard, dedicated work can bring.
  2. The dotcom boom and bust was another high and low time. The company that acquired me gave a nice pool of options. In the matter of a year, those options were worth nearly $4M at one point. It was intoxicating to watch the value increase nearly every day as the Nasdaq skyrocketed. I had cashed out some of the options when they were available, but most I did not. To make matters worse, I decided to exercise and hold a good chunk of the options which means that taxes were due on the paper profits. I ended up selling a bunch of options to pay those taxes to the tune of nearly $400K. At the time I was unaware of steps that I could take to protect the value of the options that were unvested or that insurance was available which could lock in their value. If I had known that I could spend 10-15% of the value of the options to lock in their value, I would have done it. But I was young and naïve and believing that stocks only go up. The company I was in had a public high of $98 and by the time the dotcom crash had settled they were down to $4. I was able to sell some of the options and netted a profit of around $300K and the government got to hold onto that $400K in early tax payments. It wouldn’t be until the financial crash in 2009 where I could finally reclaim most of these early tax payments to use as a deduction against income (see the next footnote).
  3. The financial crisis of 2008-2010 was a difficult time. I was sitting on three homes, had overpaid for the last home, and had mortgages on all three. When the housing crisis kicked in, I was nearly $750K under water across the three properties. You’ll note that my net worth somehow increased. I saved my bacon through research and a little help from the government. Turns out that if you can get a valid short sale offer in California then the bank will eat the losses on the underwater part of the mortgage. And further, Congress passed a law in 2008 or 2009 that allowed taxpayers to write off the loss for up to two years (the $750K mortgage write off is normally taxed as income). It effectively allowed me to sell two of the homes, walk away from the mortgages, and not owe any taxes. This turned into one boost to my net worth as I was starting to carry the losses against the net worth. The consequence was a massive hit to my credit which lasted 7 years. I had no plans to open new credit cards in that time frame, so felt like a good compromise. The other boost to the net worth was the final reconciliation of what happened in Footnote 2, where Congress allowed taxpayers to take any pre-paid taxes from previous years and to deduct 50% of what’s remaining each of the next two years. This dramatically reduced the income on which I owed taxes, gave me a huge refund for two years, and then boosted the net worth.
  4. While the stock market had one of its best years in a decade in 2021, it was one of my worst trading years at -21%. For reasons that will be described in future sections, most of my trading for IRAs and trading accounts (~85% of my liquid assets), are traded by selling volatility which is somewhat anti-correlated to buy-and-hold. Strong, unrelenting bull markets that have no price relief are difficult for this style of trading to do well and, thus, the performance hit. In spite of this negative performance, the year was a positive net worth year because of distributions from VC funds, the surprise sale of two angel investments, and a small secondary event (the opportunity to sell a portion of my equity) from the company for which I currently run.
My Investment Philosophy
Here are the cumulative returns across my investment accounts, 401K, and IRAs. These are all investments where I personally direct and control the nature of how the funds should be deployed.
Year Return Material Events
1997 0%
1998 0%
1999 17.8% 401k
2000 9.5%
2001 (5.9%)
2002 1.4%
2003 7.8% Open first trading account
2004 5.9%
2005 16.2% Hired money manager
2006 12.9%
2007 14.2%
2008 (32.1%) Fired money manager
2009 31.1%
2010 2.1%
2011 12.9% Started volatility selling
2012 24.39% >80% of investable assets now in volatility selling
2013 3.93%
2014 (8.3%)
2015 57.5%
2016 24.04%
2017 (.6%)
2018 (.1%)
2019 32.7%
2020 (2.8%)
2021 (31.3%) Horrible year for volatility selling
2022 62.9% Great year for volatility selling
My investment philosophy has shifted over 25 years. My current approach, which was enacted in its fullest amount in 2012, involves:
  1. 401K. Maximize my participation and get any employer match. These funds go into a fairly conservative 2030 fund which is mostly bonds a little bit of stocks. This currently accounts for 8% of my liquid investable net worth.
  2. IRA. Whenever I leave one job, I immediately rollover any 401K funds into a non-ROTH IRA. This accounts for 22% of my investable funds. The IRA trades by selling volatility through iron condors against broad-based indexes like NDX or SPX.
  3. Cash. I rotate my checking and emergency cash by investing into tbills, treasuries, and ibonds through Treasury Direct. This has yielded 0.2% to 5% depending upon how interest rates are fluctuating. I mostly do 8 week short term rollovers. It slows in the winter to make any cash needed for taxes available. This equates to 9% of my liquid investable assets.
  4. Brokerage. This is all of my other investable liquid assets. The brokerage trades by selling volatility through naked leveraged strangles in a portfolio margin account. This was a strategy that I developed a long time ago after spending dozens of weekends reading and learning about options. Selling volatility isn’t for the faint of heart, but if managed well you can reliably return 16% / year while assuming above average, but not “destroy you” risk. Over the years, I have tried to ‘tweak’ how I sell volatility to boost the returns and this generally has backfired. In 2020 during the down turn I decided to alter the approach in a way which would penalize me if the market were to climb aggressively. And, well, that is what it did for 18 months and I took it on the chin. Selling volatility is very good in soft down and flat markets, such as what we are experiencing in 2022. And, thus, it’s been a spectacular year of returns. While there are no guarantees of the future, I expect to moderate how volatility is sold so that I can more reliably return 15% / year with fewer massive up / down years: ie, lower returns with lower results volatility.
If you have done the math, I have 83% of my investable liquid assets in volatility, which is leveraged, and higher risk. It’s also generally anti-correlated to the stock market. In years that the market does well, volatility will not do as well. Why? A few reasons: a) My job and illiquid assets are heavily correlated to how the NASDAQ will perform with many factors beyond my control, b) volatility is a form of anti-correlation to most of my assets creating a blended return which (over time) adds to a combined net worth, c) I am a horrible public markets stock picker; almost every buy-and-hold bet I make doesn’t yield good results; selling volatility is an approach that allows me to not have to make a judgement on fair value or price of the index; therefore it is programmatic in what is needed rather than having to endlessly study 1000s of public market companies to make investment bets.
If 30-year treasuries ever breach 10% again like in the 70s, I will put everything I have into them and call it a day. No need to deal with selling volatility if that scenario plays out. Yes, inflation would be monstrous in that scenario, but it would be nice to know that a 10% rate of return is guaranteed for 30 years. And chances are the value of those debt instruments will increase over that time frame yielding a total return higher than 10%.
As mentioned previously, even if my expectation for selling volatility is 18% / year on average, then it would economically make sense to have a mortgage or HELOC on my properties, especially when their interest rate was <2%. The arbitrage on a $1M mortgage is over 15% / year and that is before you factor the mortgage interest tax deduction. In my 20s and 30s, this would have been a must-do imperative. Unfortunately, it took me 20 years to realize that the financial gain from the arbitrage doesn’t cover the mental stress of having debt with a creditor who takes a senior lien position.
My Expense Pattern
I’ve tried to structure my “run rate” expenses to comfortable sit below my after tax W2 income. Investment gains and other assets generally should not be sourced for funding the normal lifestyle of which I live. My wife and I are generally minimalists, though for the few things we own or experience, we are comfortable in purchasing a premium product or experience. This especially includes vacations, for which we will attempt to do one 4 week trip every few years, and a number of 5 day and 8 day trips each year.
I consider my “run rate” expenses to include mortgages, insurance, food, fuel, utilities, vacations, furniture, electronics, medical bills, clothes, jewelry. Generally, anything that we need to spend money on that isn’t considered an investment or necessary for us to live.
To better reflect the spending patterns, I am excluding any lump sum payments such as a down payment made for a mortgage. The reverse is also true, excluding any lump sum payment received when selling a home.
My historical tax rate has been ~32% across federal and state taxes after netting out any credits and deductions. I’ve been generally tax inefficient during my income years as I’ve always seen that the steps necessary to lower the tax rate meaningfully were too much of an inconvenience to warrant the potential gains. I expect our effective tax rate to inch towards 38% in the coming years.

Year Expenses % W2 Income Comments
1997 $12,555 89% College years
1998 $22,194 86%
1999 $42,904 41%
2000 $47,777 38%
2001 $41,150 18%
2002 $55,208 38%
2003 $106,086 37% Mortgages add up
2004 $139,899 67%
2005 $84,790 61%
2006 $72,874 38%
2007 $106,163 52%
2008 $118,023 51%
2009 $104,085 45%
2010 $192,593 45% Expensive vacations
2011 $190,074 49%
2012 $168,302 189% $0 startup salary for 6 months.
2013 $180,788 71% 4 intl vacations
2014 $155,078 67%
2015 $188,987 78%
2016 $185,309 50%
2017 $201,109 25% Lifestyle creep
2018 $267,725 59% Pilot training is expensive
2019 $204,598 36% Paid off mortgages
2020 $97,512 12% COVID lock down == little spend
2021 $134,398 13% Paid off plane mortgage
2022 $167,189 16%
My Work History
I only consistently made $250K of W2 income starting in 2016. At this time, my net worth was $2.6M with another $5.2M in illiquid assets. Our average income over those previous 16 years was $235K with 8 years making less than $200K. While $200K is a very generous income and above the average of most people, my key point is that the combined net worth of $7.8M is far above the $3.8M in taxable income earned over that same period.
A persistent, hard working family that chooses to spend below their earnings that intelligently invests their savings is able to build significant worth beyond the limits of what their job provides.
Like the stock market, my career has its ups and downs.
Interestingly, it’s marked by a number of short stints interspersed among long stints. I’ve worked in large publicly traded companies and as employee #1 in a startup. In my 25-year working career, the longest period of not having a W2 paying job has been 3 months.
I have only maintained a single W2 paying job at one time. I am, however, allowed to simultaneously angel invest, be a VC scout, sit on boards, and consult for companies across the tech ecosystem while I perform my primary function as employee. All of these additional activities help to build my portfolio of additional illiquid assets. I am earning sweat equity rather than having to outlay significant cash to build these positions.

Period Role Comments
1997-2003 Engineer, Tech Expert Joined 15-person startup, acquired by public company after 12 months, multiple geeky roles at the acquirer.
2003-2004 CEO Ran a 10-person consulting company specializing in geekery. Fire sale acquisition by another consulting company & I was not hired.
2004 Product Joined a hot data startup to run product. Culture fail as the founder was a jerk. Quit after 1 week. This company eventually sold 2 years later for $900M! It would have been a big payday. No regrets, though.
2005-2011 Product Mid-sized, fast growing public company.
2011 Product VP @ very large public company. Reported to famous visionary. Resigned after 3 months (famous person was a jerk). Offered $1M / yr to stay and declined. No regrets, though.
2011-2017 CEO Started tech company. Sold to a large public company. Almost bankrupt 3 times before finding fit, growing revenues, and becoming profitable.
2017-2019 GM Ran $100M business unit that included my startup for the company that acquired us.
2019-2022 CEO Hired as CEO of private company. 500 employees, profitable, setting sights on $100M in revs.
My Evolving View Of Financial Independence
While young, my view of financial worth was measured by net worth. “Will I ever be worth 1 MILLION dollars?!?”, as if that number held a magical quality that, if achieved, suddenly made one financially well-off. The day I became a millionaire was anti-climatic other than the entertainment value of seeing two commas on my tracking sheet. And that financial milestone was quickly discarded in favor of achieving the next million because I didn’t feel safe / stable / protected with just having one. And then the next one, and next one after that.
Net worth is not a good way to quantify your financial independence.
I’m familiar with the 4% SWR, and it’s always struck me as a challenging measure of whether someone has the financial means to retire early. There are too many challenges: how long do you live, changing macro conditions, unknowns about social safety nets, and so on. But even worse, the 4% SWR is a model where, generally, your net worth is likely to decline over those years depending upon how the investment portfolio performs.
As a way to deal with this anxiety, I’ve shifted my definition of financial independence to be defined by my ability to continue living my current lifestyle through gains made from investable assets. For 2023, this limited view would generate ~$600K (after netting taxes) for spending against a lifestyle run rate which is effectively $200K.
Selling volatility has a lot of risk associated since it is leveraged. A financial independence definition that depends upon leveraged risk introduces some peace of mind issues. This is the definition I currently use in order to claim that I am financially independent.
However, I also track a definition of financial independence that is virtually risk free: FI is when my run rate of life expenses is below the interest that can be earned from buying 30-year treasuries. At 4% yield this would generate ~$190K after taxes. The net after tax payments would benefit from not having state income tax and our family being in a lower average tax bracket. With my life expenses under $200K due to a lack of mortgage, I am currently bumping along on this threshold. Half of my annual expenses are vacations and luxury items (plane maintenance is not cheap) which could easily be eliminated if we decided we wanted to retire early and spend well under the interest generated threshold.
But we won’t.
We will probably carry on because we love our work. As our investable assets increase, we will allow lifestyle creep wine, vacations, and hobbies over the coming years.
Lessons and Observations
  1. Perseverance Yields Results. Having a long history of steady savings can lead to big outcomes. While the sale of my company did create a boost in my wealth, the benefit of compounding savings over decades has lead to a greater contribution to the overall wealth. I’ve never been one to chase quick profits or fads (crypto, though I do own $2K of Bitcoin), and instead see that the professional and technology skills that I can acquire through self-study and life experiences pay larger dividends than with gambling investments.
  2. Always Have A Project. Whether it’s becoming an expert in a new technology, learning the nuances of how strategic business development is orchestrated, or earning a pilot’s license, having 2-3 ongoing passion projects creates contentment, builds worldly skills, and opens work / financial opportunities that I was not seeking or aware of.
  3. Culturally Fail Fast. I’ve been in 4 work scenarios where there was a culture mismatch. Either the people around were unpleasant or there was a limited interest in peers to socially connect. Get out of those situations as fast as possible, within days if necessary. I’ve been fortunate to listen to my inner voice and the longest I was in an unpleasant environment was 9 months. In two of these fail fast scenarios, had I stayed for more than 4 years, I would have earned more than $5M in each scenario. They were economic mistakes but like successes.
  4. Peace Of Mind Matters More Than Profit. It took me the better part of my young adulthood, but I sleep peacefully by structuring my finances and earnings in such a way where I have the maximal peace of mind given my risk tolerance. The things that eat at me would be consistently having expenses above my income and a financial independence strategy that required my net worth to decline due to withdrawals.
  5. Over Sacrificing Will Sabotage Important Relationships. Being aggressive in your career and sacrificing time with family, friends, and lovers hasn’t created enough of leapfrog in my FI journey that warrants the cost (often sabotage) that will come to those relationships. I was a relentless worker in my early years. Now I am a wise worker with a structured balance between work and play.
  6. Maintain A War Time Mindset With Investing. Invest assuming that your worst-case nightmare scenario will happen. With this mindset, every investment has risk mitigations (both in my mindset and structurally). By thinking this way, you will be prepared emotionally and skill wise to act when negative scenarios occur. I used to be apprehensive about selling volatility with reasonable risk. It requires me to do things such as selling naked calls. Most traders hear the oft repeated words, "naked calls have unlimited loss potential!" and immediately run for the hills. I worked for months to avoid ever having a naked call go in the money as that would be the nightmare. Well, one time it happened, they were in the money, and I was frozen. But the nightmare was much worse in my dreams, learned how to trade out of it, and recognized that trading as if everything was always in the money made everything easier to absorb. So that is how I invest and trade - it's war time, nothing will go right, and have a plan for every possible contingency.
submitted by Able-FI-4906 to financialindependence [link] [comments]

Top 5 Leverage Forex Brokers In Malaysia

Top 5 Leverage Forex Brokers In Malaysia

Top 5 Leverage Forex Brokers In Malaysia
Leverage Forex Is The Capital That You Borrow From Your Broker For The Short-term Which Enables You To Control A Big Position With A Relatively Small Capital And Maximise Your Profits.
Who are High Leverage Brokers?
Forex Trading Is Known For Its Leveraged Trading, Which Allows Trader To Use The Leverage Strategy Or “borrowed” Capital As Its Funding Source And Operate Larger Volume And Trade Currency Pairs Through An Initially Small Balance.
Leverage Method Expands Trading Base And Multiplying The Initial Trading Account Balance In Certain Number Of Times Depending On The Leverage Level, In Return Leverage Leads To Potential Bigger Returns, Yet Magnifies Higher Risks Of Losses As Well

Best High Leverage Forex Brokers

There Are Only A Regulated Few Brokers Remaining With High Leverage Ratios (Such As Xtrade Broker), We Found Them And Made A List Of Best Regulated High Leverage Forex Brokers And Ranked Best In Category.

Risk of Excessive Real Leverage in Forex Trading

This Is Where The Double-edged Sword Comes In, As Real Leverage Has The Potential To Enlarge Your Profits Or Losses By The Same Magnitude. The Greater The Amount Of Leverage On The Capital You Apply, The Higher The Risk That You Will Assume. Note That This Risk Is Not Necessarily Related To Margin-based Leverage Although It Can Influence If A Trader Is Not Careful.

Benefits of Trading with High Leverage

The Main Benefits Of Trading With High Leverage Are Discussed Below:
Ideal For Traders On A Budget Leverage Is Highly Suitable For Skilled Traders That Wish To Make A Living From Their Investment Endeavors But Do Not Have A Suitable Amount Of Capital.
  • For Instance, Let’s Say That A Trader Is Able To Make Average Gains Of 4% Per Month Over The Course Of A Year.
  • While At First Glance This Is An Impressive Feat, An Initial Starting Balance Of Just $500 Would Not Make The Process Worthwhile.
  • After All, In Real Terms, This Amounts To A Monthly Profit Of Just $20.


This Guide Has Compared The Overall Best High Leverage Brokers To Consider.
When Choosing A Suitable Platform, It Is Important To Focus On Metrics Other Than Just Maximum Leverage Limits. On The Contrary, The Investor Should Explore Fees, Supported Markets, Customer Service, Regulation, And More.
To Conclude, We Found That The Overall Best High Leverage Broker Is The Platform Not Only Offers Tight Spreads And 0% Commissions, But Thousands Of Markets In A Fully Regulated Trading Environment.
submitted by Forextigress to u/Forextigress [link] [comments]

Forex and equity weekly - 20/11/2009 How to Trade Options: A Beginners Introduction to Trading ... How to make money on the Forex market? - YouTube Professional Forex Trading Course Lesson 1 By Adam Khoo ... Latency Arbitrage algorithm & РОБОТ ... - YouTube Here's why you'll NEVER make money in Forex. The Forex ... Etoro Trading Platform Tour

Ripple CEO Says China Leads the United States in Crypto Regulatory Perspective The Strategy Center includes the ability to back test strategies against historical data and then activate them to generate buy and sell signals in real time.'s inhouse FOREXTrader platform. Click to enlarge . The comprehensive research and analysis includes round-the-clock updates from our expert in-house research team, real-time concise headlines from Reuters News, and professional ... Binomo forex brokers review Compare Forex Brokers Forex Trading with the Best Brokers in UK Forex Brokers A conclusione di questa breve nota, desidero quindi complimentarmi con Gian Paolo Bazzani e con Saxo Bank e ringraziarli per il prezioso contributo che hanno voluto e saputo offrire a tanti traders con questo lavoro ed auguro a tutti i lettori della "Guida al Forex ed alle Tecniche di Trading" buona lettura e, soprattutto, buona operativit. Michele Calzolari Presidente Assosim Milano ... Forex trading on margin accounts is the most common form of retail forex trading. This article explains what ‘margin’ is, shows a margin calculator or ‘formula’ and how to use this free margin safely. Understanding margin requirements, and how leverage levels affect it, is a key part of trading forex successfully. The forex weekend trading strategy that capitalises on gaps is about anticipating Sunday’s opening price will have returned to Friday’s closing price. The ‘gap’ is simply the price differential between the price when the traditional forex market closes on a Friday evening, and the price when it reopens on a Sunday. A major news story, for example, could trigger a gap. Binomo Platform; 80% bonus up to $4000. Read Review. Sign Up Here. LCG. . up to 1:1000 Leverage; Practice Accounts Available MT4, Web Trader Platform; 10% bonus up to $10000. Read Review. Sign Up Here. XTB. 200:1 Leverage; Practice Accounts Available xStation 5, MT4 Platform; 0% bonus up to $0. Read Review. Sign Up Here. FBS. $5 No Deposit Bonus Up to 500 ...

[index] [24927] [28932] [22447] [15601] [22094] [28891] [19991] [22441] [11523] [2258]

Forex and equity weekly - 20/11/2009

Learn more here: Here' why you'll never make money in Forex. It's all because of the Forex cycle of doom. Many aspiring traders who ar... 🔴 ПРЕДСТАВЛЯЕМ ВАШЕМУ ВНИМАНИЮ, ТОРГОВЫЙ РОБОТ АРБИТРАЖ НА ОПЦИОНАХ ☑️ КОНТАКТЫ: [email protected] ☑️ ОТЧЕТ ... If you want to create an additional source of income or to trade Forex professionally to replace your job, this Professional Forex Trading course will give y... How to EARN Passive Income in Forex using Etoro - Duration: 12 ... Saxo Bank Review By FX Empire - Duration: 9:20. FX Empire 4,692 views. 9:20. Binary Options Strategy 2020 100% WIN GUARANTEED ... Watch our video to find out the basic processes taking place on the foreign exchange market and how you can benefit from them. In addition, you will learn ho... Saxo Bank's Market Strategist Mads Koefoed speaks to Trading Floor Editor Andrew Arnold about this week's risk on-risk off trading. What does this mean for the fourth quarter ... NEW COURSE: An introduction to Stock Options trading. This webinar is intended to give Beginners an introduction...