This rant was inspired by a clip of the bridge collapse over the Skagit River in the USA.
IMHO, this bridge collapse represents in one small event, everything that is wrong with Modern America.
For example, the US Society of Civil Engineers thinks it would cost about $26 Billion USD to fix the USA's infrastructure by 2020. That is less than a third of the money that is given every month to large banks by the Federal Reserve. Repairing the ageing infrastructure of the USA would create thousands of much needed jobs, all across the country, but no, the powers that be have decided that only the rich can get the money.
Why? you may ask. Well, it's quite simple.
You see, the main thing that causes inflation is known as 'the velocity of money' in other words, how many times a dollar changes hands for goods and services. To put it another way, if they gave that $85 billion a month to the poor, then they would start spending it on goods and services and inflation would rise, which would be followed by a rise in wages, then more inflation. The USG is keeping the rate of inflation artificially depressed by deliberately slowing the velocity of money.
The main way that they do this is by giving money to the banks, who then leave it with the Fed on deposit, or use it to buy equities, thus propelling the DJIA to new heights. However, the other way that you can spend money while making sure that it doesn't get re-spent is by spending it on bombs and missiles. Those are the best, since they are destroyed upon use and thus the money that was used to make them is also destroyed. To a lesser extent though, all military equipment takes money out of the hands of the public, since the military is not allowed to sell the equipment to the public, thus decreasing the velocity of money.
With real US inflation hovering at something like 10%, this is a very real danger. If they just started giving money to the poor, the dollar would inflate rapidly. However, there is one more problem with giving money to the poor.
See, if you give money to the poor, then they are no longer poor, which negates many of the advantages of being rich, such as the ability to make a waiter fawn over you for a $5 tip, or the ability to pick up a child prostitute who will let you fuck her for $10 so she can score her heroin.
The difference between rich and poor is not about money, it is about power and it always has been. The framers of the American constitution imagined the abolition of slavery, but alas, slavery is all too alive and well in the world today. If you don't believe me, consider this. It costs only $1 million USD to buy a congressman and only $5 million to buy a president. See, it works on all levels. In the same way that the fat stockbroker wants poor people at his beck and call, constantly hungry for the pittance that he gives them, the politicians are also hungry for what they see as the pittance that they are given by the Billionaires of the world. It's a cycle as old as humanity itself and as history teaches us, it eventually unwinds. When, no one can say, only that it does eventually unwind, since those at the top surround themselves with yes men. As many of the powerful can brook no opposition to their genius, they eventually fall foul of either the anger of those they oppress, or another powerful figure looking for a meal. Either way, you can bet that their paid advisers will still be telling them what they want to hear, right up until their destruction, because the toady knows that if he disagrees with his master, he is in danger. It is this fervent impulse to please, driven by the threat of punishment or death, that is, in truth, the greatest enemy of any holder of power. Since there is no way that the powerful can run their empire entirely by themselves and since they inevitably eliminate any voices who dare speak to them the truth, they wind up surrounded by a chorus of people telling them how wonderful they are, how well things are going and how every problem will soon be dealt with.
The irony, of course, is that the more aggressive, narcissistic and psychopathic the leader is, the more quickly he exterminates any people who would dare tell him the desperately important truth that could actually save them. A quick look through history at the world's greatest tyrants will bear this observation out. However, IMHO, what people fail to realise is that for every Hitler, there are a hundred semi-Hitlers and for every one of them, a hundred demi-semi-hitlers, every one of them focused on their own power and nothing else. It seems to me that this is a plague that has stalked humanity for it's entire existence and not one I see ending any time soon.
You can watch the video that inspired this rant [ here ]
A Blog about the constantly moving world of finance with a focus on the struggle between the paper gold and physical gold markets and the manipulations used by large banks to keep precious metals prices down. I believe these events will eventually lead to the collapse of the paper fiat economy, leaving anyone who is holding paper instead of physical commodities totally broke. Now is not the time to own paper.
Tuesday 28 May 2013
Monday 27 May 2013
Massive Protests against Monsanto
Last weekend was a world wide protest to stop Monsanto and it's poisonous GMO's.
95% of American Corn, Wheat and Soy is now GM. This means essentially, that US population is participating in a genocide that will make AIDS look like a small cough.
Think about it. These foods cause cancer. Cancer is now one of the leading causes of death in the western world, but particularly in the USA. This is of course exacerbated by the medical professions refusal to use any cancer treatment that cannot be patented (such as the Gerson treatment).
If you are living in the USA, then for gods sake, try and eat organic, even though it may now be too late, since the genes in the food crops will have now cross pollinated will all the remaining natural seed. You see, there is a funny laws about genetics is that all genes are either moving to a stage where every creature has them, (100%) or none, (0%) In genetics, a trait (if it is useful) will gradually spread to 100% of the population, while a gene that is not useful will gradually decline to 0%.
Now, from a survival perspective, edible crops, because they are harvested cannot really evolve protection from being eaten by man, unless they become poisonous to man. 'Weeds' on the other hand (or to put it another way, plants that we do not eat) have a tremendous survival advantage by assimilating the glysophate (Roundup) resistance gene, since it will mean that they can no longer be killed by that pesticide. Already, there are cases where entire fields have had to be abandoned because of 'superweeds' that are resistant to every known pesticide. However, if you think that is bad, consider this. Hardly anyone knows how GMO's are made. If you talk to most people, what you get is an impression that the scientist snips the DNA in exactly the right place and slips in the gene.
WRONG.
That is the kind of fantasy stuff you see on CSI.
This is how you really make a transgenic cell.
1. Use PCR (Polymerase Chain Reaction) to make billions of copies of the gene. Attached to the gene they are trying to insert is another gene which enables the cell to resists a certain anti-biotic (this is called the 'marker gene')
2. They then use a specialised 'gun' to fire millions of small gold flakes, covered with the assembled genre they are trying to insert, into a petri dish filled with thousands of cells of the kind they wish to engineer.
3. After a while, the anti-biotic that the instered gene has been coded to resist is introduced into the petri dish. After a while, they look at the dish under a microscope. If a cell survives, then you know that the gene has been encoded, because the organism now also has resistance to the anti-biotic which is why it didn't kill it.
In other words, they have no idea where in the genome the new gene is inserted and not only that, but they also give the new organism a gene that protects them from antibiotics. If this sounds fucking risky, then you are right, it is.
4. The plant is then grown outdoors. Despite the Biotech Industry telling you that the reason they need GMO crops is to 'feed the world' this is bullshit for two reasons. Firstly, we already make enough food to feed everyone on the planet. The problem is that humans are selfish pricks. Secondly, NO GMO crop has EVER displayed increased yield. In fact, quite the opposite. Most GM crops have at least 20% less yield than their natural counterparts.
As if all this shit wasn't scary enough, Monsanto has developed the 'Terminator Seed' and it is much scarier than the film. Essentially, this is a seed that will sprout once, then commit suicide, meaning that the farmers will have to buy more seeds from Monsanto, because there will not be any seeds in their crop. Now obviously, the reason that this was invested was to hold countries to ransom and gain control of the food supply chain. However, I believe that the Terminator Seed was also invented for the purposes of biological warfare. However, like all biological weapons, this one is very tricky and the risk of blowback is incredible. The consequences if what would happen if the terminator gene were were released into the general population would be staggering. Every plant that expressed the gene would be sterile and produce no offspring, thus many plant species could be rendered extinct in the blink of an eye.
In short, you are what you eat. GMO food not only gives you cancer, but is incredibly bad for your immune system, meaning you are more likely to get sick. Especially in the US, this can be a life destroying incident. Organic food may be more expensive, but it's less expensive than cancer surgery.
Incidentally, if you wish to know more about the GMO debate in depth, then please watch Seeds of Death.
The youtube link is [ here ]
95% of American Corn, Wheat and Soy is now GM. This means essentially, that US population is participating in a genocide that will make AIDS look like a small cough.
Think about it. These foods cause cancer. Cancer is now one of the leading causes of death in the western world, but particularly in the USA. This is of course exacerbated by the medical professions refusal to use any cancer treatment that cannot be patented (such as the Gerson treatment).
If you are living in the USA, then for gods sake, try and eat organic, even though it may now be too late, since the genes in the food crops will have now cross pollinated will all the remaining natural seed. You see, there is a funny laws about genetics is that all genes are either moving to a stage where every creature has them, (100%) or none, (0%) In genetics, a trait (if it is useful) will gradually spread to 100% of the population, while a gene that is not useful will gradually decline to 0%.
Now, from a survival perspective, edible crops, because they are harvested cannot really evolve protection from being eaten by man, unless they become poisonous to man. 'Weeds' on the other hand (or to put it another way, plants that we do not eat) have a tremendous survival advantage by assimilating the glysophate (Roundup) resistance gene, since it will mean that they can no longer be killed by that pesticide. Already, there are cases where entire fields have had to be abandoned because of 'superweeds' that are resistant to every known pesticide. However, if you think that is bad, consider this. Hardly anyone knows how GMO's are made. If you talk to most people, what you get is an impression that the scientist snips the DNA in exactly the right place and slips in the gene.
WRONG.
That is the kind of fantasy stuff you see on CSI.
This is how you really make a transgenic cell.
1. Use PCR (Polymerase Chain Reaction) to make billions of copies of the gene. Attached to the gene they are trying to insert is another gene which enables the cell to resists a certain anti-biotic (this is called the 'marker gene')
2. They then use a specialised 'gun' to fire millions of small gold flakes, covered with the assembled genre they are trying to insert, into a petri dish filled with thousands of cells of the kind they wish to engineer.
3. After a while, the anti-biotic that the instered gene has been coded to resist is introduced into the petri dish. After a while, they look at the dish under a microscope. If a cell survives, then you know that the gene has been encoded, because the organism now also has resistance to the anti-biotic which is why it didn't kill it.
In other words, they have no idea where in the genome the new gene is inserted and not only that, but they also give the new organism a gene that protects them from antibiotics. If this sounds fucking risky, then you are right, it is.
4. The plant is then grown outdoors. Despite the Biotech Industry telling you that the reason they need GMO crops is to 'feed the world' this is bullshit for two reasons. Firstly, we already make enough food to feed everyone on the planet. The problem is that humans are selfish pricks. Secondly, NO GMO crop has EVER displayed increased yield. In fact, quite the opposite. Most GM crops have at least 20% less yield than their natural counterparts.
As if all this shit wasn't scary enough, Monsanto has developed the 'Terminator Seed' and it is much scarier than the film. Essentially, this is a seed that will sprout once, then commit suicide, meaning that the farmers will have to buy more seeds from Monsanto, because there will not be any seeds in their crop. Now obviously, the reason that this was invested was to hold countries to ransom and gain control of the food supply chain. However, I believe that the Terminator Seed was also invented for the purposes of biological warfare. However, like all biological weapons, this one is very tricky and the risk of blowback is incredible. The consequences if what would happen if the terminator gene were were released into the general population would be staggering. Every plant that expressed the gene would be sterile and produce no offspring, thus many plant species could be rendered extinct in the blink of an eye.
In short, you are what you eat. GMO food not only gives you cancer, but is incredibly bad for your immune system, meaning you are more likely to get sick. Especially in the US, this can be a life destroying incident. Organic food may be more expensive, but it's less expensive than cancer surgery.
Incidentally, if you wish to know more about the GMO debate in depth, then please watch Seeds of Death.
The youtube link is [ here ]
Sunday 19 May 2013
Hong Kong Mercantile Exchange to Cease Trading on Monday 20th May and Settle all outstanding contracts IN CASH.
The suppression of the price of gold seems to have claimed it's first major casualty. As of Monday 20th May, the HKMEx (Hong Kong Mercantile Exchange, basically an offshoot of the COMEX in Chicago) will cease trading and settle all open transactions IN CASH
What does this mean? Well, for one thing, if you were had invested in HKMEx Gold contracts and were expecting to get Gold on delivery, then forget it. Apparently, the only detail remaining to be worked out is 'what settlement price will be used' in other words, if you bought HKMEx Gold at say, $1700 and were planning on waiting for it to rise before getting out, forget it. Instead of gold, you will be getting paper fiat money.
I suspect that they will give their contract holders more money than the current spot price in order to stop the incredible howls of protest that would result if they decided to cash out all positions at the currently (artificially) depressed spot price.
However, make no mistake, people are going to lose money in this. If I had to make a guess, I would suspect that those people with connections will get back the money that they put in (ie, because they could not deliver the gold, they will pay you back the money you originally gave them.)
Of course, they don't have the money to do this for everyone, so unless you have a major legal team, a government or a central bank behind you, then they will probably give you something like current spot price, plus 10% in USD.
This is just the first domino to fall. Given the Chinese Government's massive bullion purchases, I am not surprised that HKMEx cannot find any gold. However, what is much more important is that whatever gold they can find will cost significantly more than the spot price (at least 25% more, imho.) This means that since HKMEx have no doubt sold more paper gold into the market than they have physical gold in their possession and they know that people will soon be queuing up to withdraw their physical gold, they have decided to take the first move shut down first.
The closing of the HKMEx will also have another important effect: it will remove all the paper gold and silver that has been sold by the exchange from the market. Since it is exactly this paper gold and silver that has been keeping the spot price down, expect rises in the price of Silver and Gold on Monday.
The big question, of course, is about the COMEX, which has already been caught short on failing to deliver on Gold forward contracts. If the same thing happens to the COMEX as is now happening to the HKMEx, then even more paper gold will evaporate from the market, again pushing up the price of Silver and Gold.
I know I have said this before, but I think it bears repeating.
If you don't have possession of your Precious Metals, then you do not really own them, and they can be taken from you if the company that is storing them for you goes under.
You can read the original article [ here ]
http://silverdoctors.com/hkmex-to-cease-trading-will-close-out-cash-settle-open-contracts-monday/
What does this mean? Well, for one thing, if you were had invested in HKMEx Gold contracts and were expecting to get Gold on delivery, then forget it. Apparently, the only detail remaining to be worked out is 'what settlement price will be used' in other words, if you bought HKMEx Gold at say, $1700 and were planning on waiting for it to rise before getting out, forget it. Instead of gold, you will be getting paper fiat money.
I suspect that they will give their contract holders more money than the current spot price in order to stop the incredible howls of protest that would result if they decided to cash out all positions at the currently (artificially) depressed spot price.
However, make no mistake, people are going to lose money in this. If I had to make a guess, I would suspect that those people with connections will get back the money that they put in (ie, because they could not deliver the gold, they will pay you back the money you originally gave them.)
Of course, they don't have the money to do this for everyone, so unless you have a major legal team, a government or a central bank behind you, then they will probably give you something like current spot price, plus 10% in USD.
This is just the first domino to fall. Given the Chinese Government's massive bullion purchases, I am not surprised that HKMEx cannot find any gold. However, what is much more important is that whatever gold they can find will cost significantly more than the spot price (at least 25% more, imho.) This means that since HKMEx have no doubt sold more paper gold into the market than they have physical gold in their possession and they know that people will soon be queuing up to withdraw their physical gold, they have decided to take the first move shut down first.
The closing of the HKMEx will also have another important effect: it will remove all the paper gold and silver that has been sold by the exchange from the market. Since it is exactly this paper gold and silver that has been keeping the spot price down, expect rises in the price of Silver and Gold on Monday.
The big question, of course, is about the COMEX, which has already been caught short on failing to deliver on Gold forward contracts. If the same thing happens to the COMEX as is now happening to the HKMEx, then even more paper gold will evaporate from the market, again pushing up the price of Silver and Gold.
I know I have said this before, but I think it bears repeating.
If you don't have possession of your Precious Metals, then you do not really own them, and they can be taken from you if the company that is storing them for you goes under.
You can read the original article [ here ]
http://silverdoctors.com/hkmex-to-cease-trading-will-close-out-cash-settle-open-contracts-monday/
Friday 10 May 2013
So, you wanna be a Trader huh?
After reading [ this article ] on the habits and considerations that people should adopt when trading FX, especially before they give up their regular job to trade from home, I thought I would write a little about my own experiences.
Many people dive into trading before they are ready.. WAY before they are ready. In my opinion, learning to trade effectively is always built on making a series of mistakes (like many things in life) the problem is, these mistakes can cost you alot of money and even more so if you decide to give up your job and trade from home, since you are no longer drawing a paycheck. There is an old maxim 'never trade with money you cannot afford to lose.' Ignore it at your peril.
Now although that is really good advice, many people get sucked into what I call the 'FX Myth'. I remember the first course I ever went to, I paid £2500 for a weekend course and you even had to bring your own lunch. (I was one of the lucky ones, I still remember a poor girl who was at the course with me. She had spent something like £20,000 on courses, hotels and air travel. In the lunch hour of the last day, I was still trying to explain how candlesticks worked to her. I remember seeing the panic in her eyes as she realised that she had blown most of the money her father had left her on courses that promised to make her rich, but instead just left her poor and confused.)
However, what sticks in my mind the most now, (apart from the panicked look in the young girl's eyes) was that it was the first time I heard the often repeated statistic that 95% of people blow their FX account within 6 months.
I heard this statistic repeated many times in the subsequent years and although I have never been presented with any solid proof for this claim, there is no doubt that the rate of failure for new traders is extraordinarily high. However, what stuck me the most was that every time this statistic was repeated, everyone in the seminar always thought that they were part of the 5% destined to strike it rich.
If we take the 95% statistic at face value, then remember, we are only talking about people who blow their account in the first 6 months, it doesn't take into account people who just break even, or even lose most of their money. Trading can be very, very risky and the level playing field is more like a vertical slope. Everyone in the market trades against you, including your own broker. Effectively, you are the 'dumb money'. Like a massive Ponzi scheme, every year the myth of making easy money through FX draws in many otherwise intelligent people.
This defect of human rationality is something that brokers count on, in the same way that casinos do. In both situations you are sold the line that although 95% of people lose all their money, YOU are one of the 'lucky ones'. The reason why this argument is swallowed by so many rational people is that like all great lies, it contains a grain of truth. The Laws of Probability state that if you roll a million dice, they will all come up with exactly 1/6th showing each face. Conversely, the laws of probability state that if you roll just one dice, then the result cannot be predicted. It works the same way with people. If you take a million people, then you will know exactly what percentage will lose, it's just that you can't tell exactly which people will win or lose beforehand.
However, in my opinion, you may actually be better off going to a casino than trading. At least at a casino you are playing a game that is not rigged (usually) whereas in trading, there are so many ways to rig the outcome that it's very much like playing at a crooked casino, except you would never know, because all the dice rolls are done out of sight.
Trading FX is in fact, very much like gambling (so similar, in fact, that FX companies in the UK had to get a special exemption to the gambling regulations in order to run their businesses.) This means that in certain people, this will bring out addictive and self destructive behaviour. However, most people do not think of FX as 'gambling'. For instance, many people who would never think of putting money on a horse race (because that is gambling) will happily trade 5 different currency pairs at once, without any formal training, based on some vague news they read in the financial press, people like this would probably have a better chance winning at a Casino, at least they would understand the rules of the game. It's no wonder these people blow all their money, they have NO IDEA how the market really works or the rules behind it's operation.
However, since it has been proven that gambling addicts get the same thrill that most people get by winning then they almost win, but lose, this can be a deadly cocktail. It is so easy to double down in FX trading, especially if you are operating under the misguided illusion (as I was for some time) that economic fundamentals are actually relevant to the way the market moves. The market is now a creature in it's own, devoid from reality, since all the numbers that price discovery are based on are cooked or just plain false. These days, whenever the US releases economic data, even if it is bad, the USD goes up. This means that people who are reading market fundamentals and saying things like 'why the hell does anyone support the USD?' or 'why the hell is silver so low' have missed the point, since all the numbers that market valuations are made on, such as the DJIA (which now only covers 25% of the total volume of shares that make up the index.) LIBOR, ISDAfix, the Gold and Silver fixes, etc are false, the entire market is merely smoke and mirrors, kept in a state of constant volatility by and for the benefit of the big HFT firms. Because they take such small bets (in large numbers) they only need the market to correct by 30-50 points and they are out of there. Becoming a trader is not easy, however, becoming a sucker is. Before you quit your job and start trading, there is one very important question you should ask yourself, and it's not the one people are expecting. It is 'are you good with computers?'
Since the entire market is now controlled by computers and 70% of US / UK volume is traded by machines, if you do not understand computers, you will be eaten alive. No one I have ever met has a fool proof system, except being able to see the future, which is known as insider trading (unless you do it by buying a private data stream and a co-located server so you can see the news half a second before everyone else (half a second is an eternity in computer time, since it is now possible to turn around trades in milliseconds.) in which case, it is perfectly legal. Always remember, that to the large banks, you are cattle. They believe that if you are too stupid to understand the consequences of your actions, then you deserve it. However, the truth is distorted by all these brokers trying to get new clients, telling them 'it's fun, it's easy and you only have to work for 1 hour a day'. However, if you read the fine print, you will always find something like this:
'Trading currencies can be a potentially risky activity, you may lose all or part of your money, make sure you always contact a professional adviser before making an investment, you hereby indemnify Broker ABC from any financial losses incurred from your trading'
Of course, most people cannot afford professional advisers, so they talk to the people who work at their broker, come to the free meet and greet sessions and chat to other people who share the same opinions as they do, which is reinforced by the staff, which is that everything is fine, you may be losing now, but soon you will become sucessful, just follow our strategy, sign up to our newsletter and subscribe to our paid tips service. However, after going to a number of these meetings, I noticed that the most successful men in the room were usually not the traders, but the people who own the spreadbetting companies and the people who tour the lecture circuit, selling their get rich quick books and seminars at inflated prices. There is an old trick to this, which I have seen used many times.
If you can convince someone that you have information that can make them a million USD, then tell them you are selling it for the low, low price of $60k, then you also tell them that 'the amount you are paying to get this knowledge will be far outweighed by the profits you will make once you have this knowledge', then some of them will believe you. You don't need many of these people to keep a business churning over. The funny thing is that they are paying you for something that cannot be demonstrated to work. Firstly, because you know nothing about trading, and second, because you have to start trading yourself after you have paid the money to find out if the training was any good.
Why do we do this? Well, we are brainwashed to think that if bankers are making money on Wall St, then we can too. The problem, of course, if that you are not a banker. You don't have massive interest free government loans, a room full of supercomputers next to the stock exchange and a department of math whiz kids. However, it seems that the average person really has been brainwashed to believe that 'anyone can make it trading.' Of course, as the statistics show, this is simply not true.
So the next time someone offers to sell you a book on some ground breaking system that cannot fail, ask him why he is selling books, or speaking a lecture tour instead of having retired at the age of 35 with the masses of money he made by using his 'special plan'? This is always a really great question to ask by the way, because they usually do not expect it, so occasionally the shock will let drop a nugget of truth. The usual answers are: 'I am doing this as my 'primary' income, so I can spreadbet tax free' (apparently, according to UK tax law, you DO have to pay income tax if trading is you 'primary' occupation.) the other common one (and in my opinion the most truthful) is that they have gone through an 'unlucky' patch and they are teaching until they get enough money together to start trading again. This answer should raise serious red flags for anyone who hears it. After all, if their trading system is so great, then how is it that they managed to blow their account? If you press this point, they will usually tell you that they misjudged some major economic event, which hardly ever happens, but the system still works. Again, this should also raise a red flag. After all, if the person teaching you was caught by surprise by a major economic event and blew their account, then there is a very good chance that the same could happen to you.
The best way around this bullshit, of course, is to educate yourself (at least to the point where you can tell the difference between a legitimate educational course and a scam). I personally recommend www.babypips.com for good advice. However, make sure that you do not base your choice upon something that only one person has told you, since they may turn out to be a 'sockpuppet' employed by the very people who are trying to sell you their course. Incidentally, the company that ripped me off used to be called Knowledge to Action, but they have now changed their name to something like 'Learn to Trade'. These companies charge anywhere from £2500 for a weekend seminar, to £80,000 for a month, depending on how gullible the person in question is. Both are run by a guy called Greg Secker who is a firm believer and spreader of 'the FX myth.' just put his name into google to find out what most people have experienced at his courses. They attract people with 'free seminars' in hotel lobbies around London where they tell you that you are part of a special group that will receive a discount on your training only if you sign up right away, because they are starting up a training centre in another country. After talking to other people who attended the same course, I discovered that they tell this to everyone and it is merely a tool to pressure you into making a decision before you have enough time to fully think about it. My personal advice would be to avoid them the the plague, however, don't take my word for it, google is your best friend is such a situation, since all complaints from people who feel that the course was not worth the money will be on there.
By the same token, if you are signing up for a course, ALWAYS check the reputation of the company online first (google is usually the best place to start. If you see many pages with complaints or arguments about a certain company, then that is a definite red flag. Also, as I said before, beware of sockpuppets, or people who are employed by the company and who are impersonating as 'impartial observers'. I was fooled by one once when enquiring about a course because I had become concerned about all the bad publicity I read on google. After posting a question about whether this company could be trusted, a user messaged me privately, pretended to be my friend and managed to convince me that he had been to the course in question and it was good value. Needless to say, it wasn't, and I was not the only person fooled in such a way. Once it happens to you, it is easy to spot, but if you have never had it happen to you before, such tactics can be very effective in getting you to ignore negative publicity written by other people. Always be wary of people who message you privately, instead of in public, since private messages cannot be commented on by other people. If you are unsure, just post your question and the private reply you received in a public forum and see what other people say.
Simply put? Be careful out there people, think long and hard before you give up a steady paying job to trade, I have met many brilliant traders who eventually had to take jobs with banks because the market is no so far removed from reality that none of the techniques for predicting the market, be they technical or fundamental, work any more.
As if the complete separation from reality of the numbers that the market is based upon was not enough, you also have to contend with a myriad of other factors working against you, such as HFT, the complex nature of the current trading landscape and the increasingly cut-throat nature of the business as more and more players chase after a steadily shrinking pie.
In other words, it's a dangerous world out there and it's only getting worse.
Good Luck.
Many people dive into trading before they are ready.. WAY before they are ready. In my opinion, learning to trade effectively is always built on making a series of mistakes (like many things in life) the problem is, these mistakes can cost you alot of money and even more so if you decide to give up your job and trade from home, since you are no longer drawing a paycheck. There is an old maxim 'never trade with money you cannot afford to lose.' Ignore it at your peril.
Now although that is really good advice, many people get sucked into what I call the 'FX Myth'. I remember the first course I ever went to, I paid £2500 for a weekend course and you even had to bring your own lunch. (I was one of the lucky ones, I still remember a poor girl who was at the course with me. She had spent something like £20,000 on courses, hotels and air travel. In the lunch hour of the last day, I was still trying to explain how candlesticks worked to her. I remember seeing the panic in her eyes as she realised that she had blown most of the money her father had left her on courses that promised to make her rich, but instead just left her poor and confused.)
However, what sticks in my mind the most now, (apart from the panicked look in the young girl's eyes) was that it was the first time I heard the often repeated statistic that 95% of people blow their FX account within 6 months.
I heard this statistic repeated many times in the subsequent years and although I have never been presented with any solid proof for this claim, there is no doubt that the rate of failure for new traders is extraordinarily high. However, what stuck me the most was that every time this statistic was repeated, everyone in the seminar always thought that they were part of the 5% destined to strike it rich.
If we take the 95% statistic at face value, then remember, we are only talking about people who blow their account in the first 6 months, it doesn't take into account people who just break even, or even lose most of their money. Trading can be very, very risky and the level playing field is more like a vertical slope. Everyone in the market trades against you, including your own broker. Effectively, you are the 'dumb money'. Like a massive Ponzi scheme, every year the myth of making easy money through FX draws in many otherwise intelligent people.
This defect of human rationality is something that brokers count on, in the same way that casinos do. In both situations you are sold the line that although 95% of people lose all their money, YOU are one of the 'lucky ones'. The reason why this argument is swallowed by so many rational people is that like all great lies, it contains a grain of truth. The Laws of Probability state that if you roll a million dice, they will all come up with exactly 1/6th showing each face. Conversely, the laws of probability state that if you roll just one dice, then the result cannot be predicted. It works the same way with people. If you take a million people, then you will know exactly what percentage will lose, it's just that you can't tell exactly which people will win or lose beforehand.
However, in my opinion, you may actually be better off going to a casino than trading. At least at a casino you are playing a game that is not rigged (usually) whereas in trading, there are so many ways to rig the outcome that it's very much like playing at a crooked casino, except you would never know, because all the dice rolls are done out of sight.
Trading FX is in fact, very much like gambling (so similar, in fact, that FX companies in the UK had to get a special exemption to the gambling regulations in order to run their businesses.) This means that in certain people, this will bring out addictive and self destructive behaviour. However, most people do not think of FX as 'gambling'. For instance, many people who would never think of putting money on a horse race (because that is gambling) will happily trade 5 different currency pairs at once, without any formal training, based on some vague news they read in the financial press, people like this would probably have a better chance winning at a Casino, at least they would understand the rules of the game. It's no wonder these people blow all their money, they have NO IDEA how the market really works or the rules behind it's operation.
However, since it has been proven that gambling addicts get the same thrill that most people get by winning then they almost win, but lose, this can be a deadly cocktail. It is so easy to double down in FX trading, especially if you are operating under the misguided illusion (as I was for some time) that economic fundamentals are actually relevant to the way the market moves. The market is now a creature in it's own, devoid from reality, since all the numbers that price discovery are based on are cooked or just plain false. These days, whenever the US releases economic data, even if it is bad, the USD goes up. This means that people who are reading market fundamentals and saying things like 'why the hell does anyone support the USD?' or 'why the hell is silver so low' have missed the point, since all the numbers that market valuations are made on, such as the DJIA (which now only covers 25% of the total volume of shares that make up the index.) LIBOR, ISDAfix, the Gold and Silver fixes, etc are false, the entire market is merely smoke and mirrors, kept in a state of constant volatility by and for the benefit of the big HFT firms. Because they take such small bets (in large numbers) they only need the market to correct by 30-50 points and they are out of there. Becoming a trader is not easy, however, becoming a sucker is. Before you quit your job and start trading, there is one very important question you should ask yourself, and it's not the one people are expecting. It is 'are you good with computers?'
Since the entire market is now controlled by computers and 70% of US / UK volume is traded by machines, if you do not understand computers, you will be eaten alive. No one I have ever met has a fool proof system, except being able to see the future, which is known as insider trading (unless you do it by buying a private data stream and a co-located server so you can see the news half a second before everyone else (half a second is an eternity in computer time, since it is now possible to turn around trades in milliseconds.) in which case, it is perfectly legal. Always remember, that to the large banks, you are cattle. They believe that if you are too stupid to understand the consequences of your actions, then you deserve it. However, the truth is distorted by all these brokers trying to get new clients, telling them 'it's fun, it's easy and you only have to work for 1 hour a day'. However, if you read the fine print, you will always find something like this:
'Trading currencies can be a potentially risky activity, you may lose all or part of your money, make sure you always contact a professional adviser before making an investment, you hereby indemnify Broker ABC from any financial losses incurred from your trading'
Of course, most people cannot afford professional advisers, so they talk to the people who work at their broker, come to the free meet and greet sessions and chat to other people who share the same opinions as they do, which is reinforced by the staff, which is that everything is fine, you may be losing now, but soon you will become sucessful, just follow our strategy, sign up to our newsletter and subscribe to our paid tips service. However, after going to a number of these meetings, I noticed that the most successful men in the room were usually not the traders, but the people who own the spreadbetting companies and the people who tour the lecture circuit, selling their get rich quick books and seminars at inflated prices. There is an old trick to this, which I have seen used many times.
If you can convince someone that you have information that can make them a million USD, then tell them you are selling it for the low, low price of $60k, then you also tell them that 'the amount you are paying to get this knowledge will be far outweighed by the profits you will make once you have this knowledge', then some of them will believe you. You don't need many of these people to keep a business churning over. The funny thing is that they are paying you for something that cannot be demonstrated to work. Firstly, because you know nothing about trading, and second, because you have to start trading yourself after you have paid the money to find out if the training was any good.
Why do we do this? Well, we are brainwashed to think that if bankers are making money on Wall St, then we can too. The problem, of course, if that you are not a banker. You don't have massive interest free government loans, a room full of supercomputers next to the stock exchange and a department of math whiz kids. However, it seems that the average person really has been brainwashed to believe that 'anyone can make it trading.' Of course, as the statistics show, this is simply not true.
So the next time someone offers to sell you a book on some ground breaking system that cannot fail, ask him why he is selling books, or speaking a lecture tour instead of having retired at the age of 35 with the masses of money he made by using his 'special plan'? This is always a really great question to ask by the way, because they usually do not expect it, so occasionally the shock will let drop a nugget of truth. The usual answers are: 'I am doing this as my 'primary' income, so I can spreadbet tax free' (apparently, according to UK tax law, you DO have to pay income tax if trading is you 'primary' occupation.) the other common one (and in my opinion the most truthful) is that they have gone through an 'unlucky' patch and they are teaching until they get enough money together to start trading again. This answer should raise serious red flags for anyone who hears it. After all, if their trading system is so great, then how is it that they managed to blow their account? If you press this point, they will usually tell you that they misjudged some major economic event, which hardly ever happens, but the system still works. Again, this should also raise a red flag. After all, if the person teaching you was caught by surprise by a major economic event and blew their account, then there is a very good chance that the same could happen to you.
The best way around this bullshit, of course, is to educate yourself (at least to the point where you can tell the difference between a legitimate educational course and a scam). I personally recommend www.babypips.com for good advice. However, make sure that you do not base your choice upon something that only one person has told you, since they may turn out to be a 'sockpuppet' employed by the very people who are trying to sell you their course. Incidentally, the company that ripped me off used to be called Knowledge to Action, but they have now changed their name to something like 'Learn to Trade'. These companies charge anywhere from £2500 for a weekend seminar, to £80,000 for a month, depending on how gullible the person in question is. Both are run by a guy called Greg Secker who is a firm believer and spreader of 'the FX myth.' just put his name into google to find out what most people have experienced at his courses. They attract people with 'free seminars' in hotel lobbies around London where they tell you that you are part of a special group that will receive a discount on your training only if you sign up right away, because they are starting up a training centre in another country. After talking to other people who attended the same course, I discovered that they tell this to everyone and it is merely a tool to pressure you into making a decision before you have enough time to fully think about it. My personal advice would be to avoid them the the plague, however, don't take my word for it, google is your best friend is such a situation, since all complaints from people who feel that the course was not worth the money will be on there.
By the same token, if you are signing up for a course, ALWAYS check the reputation of the company online first (google is usually the best place to start. If you see many pages with complaints or arguments about a certain company, then that is a definite red flag. Also, as I said before, beware of sockpuppets, or people who are employed by the company and who are impersonating as 'impartial observers'. I was fooled by one once when enquiring about a course because I had become concerned about all the bad publicity I read on google. After posting a question about whether this company could be trusted, a user messaged me privately, pretended to be my friend and managed to convince me that he had been to the course in question and it was good value. Needless to say, it wasn't, and I was not the only person fooled in such a way. Once it happens to you, it is easy to spot, but if you have never had it happen to you before, such tactics can be very effective in getting you to ignore negative publicity written by other people. Always be wary of people who message you privately, instead of in public, since private messages cannot be commented on by other people. If you are unsure, just post your question and the private reply you received in a public forum and see what other people say.
Simply put? Be careful out there people, think long and hard before you give up a steady paying job to trade, I have met many brilliant traders who eventually had to take jobs with banks because the market is no so far removed from reality that none of the techniques for predicting the market, be they technical or fundamental, work any more.
As if the complete separation from reality of the numbers that the market is based upon was not enough, you also have to contend with a myriad of other factors working against you, such as HFT, the complex nature of the current trading landscape and the increasingly cut-throat nature of the business as more and more players chase after a steadily shrinking pie.
In other words, it's a dangerous world out there and it's only getting worse.
Good Luck.
Subscribe to:
Posts (Atom)