Blog Posts

US dollar liquidity refers to the amount of dollars available in the commercial banking system. The US Federal Reserve lends dollars to other central banks through swap lines, which the commercial banks in those other countries can use as a funding source. Many traders believe the US dollar will decline in the coming months. Speculative […]

Cryptocurrencies are a fledgling asset class that has produced, and is continuing to produce, mainstream speculative interest. Their widespread run-up in price throughout 2017 brought large-scale public attention. However, whether you’re a day trader, active swing trader, or buy-and-hold investor, trading is a business. In order to trade well, you have to know asset classes […]

Gold is a type of shadow currency with a valuation proportional to currency and financial asset reserves in circulation divided by global gold reserves. Put another way, it can be considered the sum of a weighted average of the yields of all global financial assets relative to their volumes divided by the global gold stock. […]

The Trump administration recently upped the ante on tariffs with China, putting another 10% rate on $300 billion worth of goods. A general trading principle is that whenever one country imposes tariffs on another country with a floating exchange rate, that’s an adverse shock that will cause that country’s currency to fall. Whenever a new […]

Last Friday, the Wall Street Journal published a very important article regarding the rampant accounting fraud, financial reporting improprieties, and securities infractions that occurs in the Chinese capital markets. For many day traders, prop traders, and high-frequency algorithmic trading operations, fundamentals are often of secondary importance. However, fundamentals are part of it and accurate derivations […]

The developed world is awash in low interest rates and is about to get rates that are even lower. Traders look heavily toward the US Federal Reserve and other central banks for clues on where asset markets will go. This has been covered in other posts on the blog, such as “Why Day Traders Need […]

The idea that computer- or algorithmic-driven trading (sometimes called ‘quant trading’) will drive out human traders, or at least make it extremely difficult for them to compete in the markets, is not new. Computers react to news and information within milliseconds that no human trader could ever do. For this reason, it’s practically impossible to […]

Risk should always be proportional to reward. Therefore, one of the most basic ways to determine whether market trends are sustainable is to look at the comparative yields between cash, bonds, and stocks. Stocks should provide a positive expected yield above bonds, and bonds should provide a positive expected return over cash, and by the […]

In interest rate swap contracts, traders betting on rates declining will do what’s called “receiving” – or receive the fixed rate while paying the floating rate. Those who bet on interest rates rising will “pay” – pay the fixed rate and receive the floating rate. Central banks throughout the developed world are in an easing […]

Markets are sensitive to bank problems, given the scenario that transpired in 2008. Deutsche Bank is currently shaking up its operations, one of the largest bank restructurings since the financial crisis. So, there are all the natural questions that would emanate from the Deutsche scenario: 1) Will they go under? 2) Does this mean the […]