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Stress In Trading: Manage The State Of Your Mind

Good preparation, good comprehensive knowledge of the system and practicing it in a multitude of equal situations is the best recipe for good results and low stress. Because you will be very, very, very well prepared.

⁕ FULL Text ⁕Cryptocurrency Analysis

How to stop price declines? How to trigger increases?

The FTX scandal caused a real storm around the world and strong declines on BTC. Recently, the markets have returned to the upside, however, after a close look, the upside is not as strong as the previous declines. The question of whether this is a real reversal or just a temporary upward correction remains open.

All the more reason to look at the macro factors that cause price changes on BTC and the factors that may lead to further declines. Because, unfortunately, the latter are quite numerous.

For now, I don’t have any good news, we have before us potentially three groups of problems threaten the price of Bitcoin. In the following article, I will first discuss the four most dangerous problems I see, and then show how to solve them (or at least in what direction to look for a solution) so that price increases return. I believe that the overall goal of action taken should be to bring BTC price increases to levels of 500,000+, a rallying target that is very ambitious and requires the activation of many strong mechanisms.

Problems #1 and #2: Negative news tsunami multiplied by two

The events surrounding FTX have exposed many of the weaknesses and pathologies that exist in the crypto industry. Many companies that held their money in FTX are at risk, some of them likely to go bankrupt. Each of these developments is reflected immediately in Bitcoin price declines.

The keywords that will appear are: fraud, embezzlement, theft of billions of dollars, buying residences with customers’ money. This kind of news usually scares retail investors, there is an outflow of small capital from the market.

Currently there have been increases, but… ahead is the trial of Elon Musk, the richest man in the world. The Musk – Johnson trial over the value of Doge will attract media attention from around the world. Many journalists will carefully read the two lawsuits (there are already two, a basic one and an extended one) and find dozens of quotes from various influential figures. All of them are negative.

Well-known investors, heads of large funds, directors of central banks, there is even a Nobel laureate in economics. They will find many negative keywords: financial pyramid, Bitcoin and cryptocurrencies are worthless, scam, fraud, Ponzi scheme, speculative bubble about to burst. Such content will poison news cycles for weeks.

Again.

In this wave of negative information, opponents of cryptocurrencies will become active again. Particularly dangerous are politicians, heads of central banks, for whom bitcoin and crypto are competitors because they are beyond their control. As a result, this will be a good breeding ground for the most dangerous phenomenon for the entire industry: negative regulations, limiting or completely banning Bitcoin and others.

Bitcoin’s ban is currently most feasible in the US and Canada

Problem #3: Possible outright ban on BTC in the US, Canada and the EU.

It has long been known that digging and transactions are energy intensive. The annual energy consumption of all crypto is often compared to those of medium-sized countries: Australia, Argentina. About 80% of this is consumed by bitcoin.

Currently, crypto in the US consumes between 0.9 and 1.7% of annual energy consumption. For the US government, greenhouse gas emissions are very important. One BTC transaction is equal to 1,712,000 Visa transactions. Or the energy consumption of an average household for 47.49 days. That’s a huge amount of energy. With rising energy prices, this topic is becoming political in both the US and Europe. In September of this year, a White House report on the climate and energy implications of cryptocurrency mining (Climate and Energy Implications of Crypto-Assets in the United States) appeared, listing the five most serious problems posed by cryptocurrency mining:

– energy consumption (the data quoted above is from the report),
– excessive load on power grids,
– high greenhouse gas emissions,
– contributing to rising energy prices,
– deterioration of the financial and energy situation of the most vulnerable communities.

As a result, we have an increasingly tense political situation around cryptocurrencies, especially BTC. The solution that is realistically being considered is a ban on proof-of-work cryptocurrencies (such as BTC). No matter how much the BTC/crypto community outrages and protests against aggressive policy solutions, the U.S. government may simply cut off the electricity. This means a panic sell-off, for many (perhaps even most) miners – the end of profitability and the prospect of bankruptcy.

The same will happen in Europe. I live in the UK, electricity costs have more than doubled. If there are negative regulations in the US, practically within a month we will have similar solutions throughout Europe. For BTC, this will be a disaster. This is the prospect of a panic sell-off, a panicked flight from the markets. To put it in one sentence: if the US imposes a ban, almost certainly Europe will do the same.

There will be a domino effect – blocking mining and transactions. Disaster. We will be lucky if BTC stops somewhere around $2000. But if panic begins, it could go even lower. Those who have $1 million in BTC today will have $100,000. Or less.

Problem number 4: Wall Street and London City

As if all this wasn’t enough, we have a third factor. BTC has become too risky for big City and Wall Street investors, and there is an outflow of capital from the industry. Let’s start with a very simple truth in investing: capital inflows cause prices to rise (e.g., stocks or BTC), and outflows cause declines. Different types of institutional investors have the most capital: investment banks, hedge funds, family offices. Big players read the analyses of major investment banks and take their recommendations into account when making decisions.

Let’s look at one such analysis, issued by Goldman Sachs: Insights: “Beauty is not in the eye of the beholder.” Note that they do not distinguish between BTC and Altcoins, calling them all cryptocurrencies.

“We do not consider cryptocurrencies to be a strategic asset that adds value to our clients’ portfolios,” he says.

“After analyzing six different approaches, we believe it is virtually impossible to build a convincing framework for valuing cryptocurrencies.”

“We believe that an asset whose increase in value depends mainly on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients.

On valuation: “Using the same valuation method that the market uses to value other credit card payment systems, the price of Bitcoin is estimated to be around $22.” My comment: this is not a mistake, they value BTC not at $22,000, but at $22 (twenty-two dollars).

Without going into a deeper analysis of whether these calculations are right or wrong (easy to dispute in my opinion), let’s consider how such documents affect mainstream investors. Investors first read that BTC has no value, there is no valuation model, Bitcoin builds its price solely on psychological effect, politicians think about banning BTC, and then they see valuations at: $22. How do you think, after reading these analyses, will anyone feel like investing, for example, half a billion dollars in Bitcoin? If you answered no – you’re right.

Of course, major investors also read the press and government reports and know about the possibility of a ban. It’s a risk factor they certainly don’t overlook, and perhaps even take advantage of – playing for declines. To sum up, we have not one reason for the crash, but three (or even four), one worse than the other, which unhappily coincide at the same time.

The solution: it's time to get organized

Given the intensity and scope of the problems, there should be some kind of institutional solution. That is, some kind of organization, preferably a foundation, which will solve problems, counteract negative information, try to stop negative regulations. And on top of that, it will launch value-building projects for BTC

Traditional currencies have the state apparatus behind them, and BTC has no one. This must change, in my opinion, there should be such an organization that realistically looks after the interests of the industry. And to make sure that those who today have assets worth millions of dollars in BTC do not wake up in a few months with assets worth…. 1/10 of what they are today.

Today, you have to gather arguments, people, prepare strategies for action, then execute them and repeat as necessary. This is a job for a dozen, maybe a few dozen people. I think the whole industry is facing a broad discussion about the future and gathering reasonable ideas about what to do next.

Of course, major investors from Wall Street and London City should be invited to the discussion. Many very interesting ideas can come from their side. But above all, the hodlers themselves should be asked for their opinions. Below I will make some comments on what can and should be done about each of the problems described above.

Tsunami of negative news

What is needed is a group of people who will actively oppose the argument against BTC (and also Doge). Now and in the future.

The industry needs people who will be tasked every day with following, commenting, presenting counter-arguments where necessary: in the press, on the radio, on television. Television and the mainstream media are currently controlled by those with traditional views, and it’s time to change that.

It’s time to provide arguments contrary to the views of W. Buffet, Krugman, Goldman Sachs analysts, central bank heads and their ilk. This is not easy, it is a huge task, but it is possible. A list of counter-arguments is in the pipeline.

Similarly, with the written media and mainstream journalists, you need to reach out to those who will comment on the process and provide them with counter-arguments against the opponents of BTC. I have prepared a list of more than 50 contacts, producers and journalists of major programs in the US, this is definitely something to start with.

In addition to this, consider publishing articles about prospects, opportunities on major news networks to maintain a positive narrative on the subject.

In this area, it’s worth spending some time trying to take over the narrative and weave more and more positive content about BTC, since we’re already going to stop the bad things, it’s worth simultaneously promoting the good things with interest. I have a list of about 60 counter-arguments (and positive news), which I will develop.

Ban

This is the most dangerous issue. If there is a ban and a domino effect, it will be a matter of saving BTC from the 2000 – 3000 level, if we are lucky. To avoid such a situation, several things need to be done.

Review all the technical, political and social arguments that support a BTC ban. Prepare strategies and solutions for each of them. Why on all of them? If we address the energy consumption argument alone and the effects of greenhouse gas emissions, and, for example, prepare a program to transition to renewables, we may suddenly find that the grid load and social arguments become paramount. In politics, it often happens that the arguments presented are just a facade behind which the real decision is hidden.

I fear that this may also be the case in our case. And the decision to ban could benefit many big players who have shorts on BTC and cryptocurrencies. The ban will cause panic and allow them to come out with huge, multi-billion dollar profits. Too late to investigate whether such a situation exists, it is safer to assume that it does. And make every effort to ensure that politicians have no way to “reasonably justify” the decision to ban. That is, take every argument very seriously. In addition, closely follow the mainstream media and react to comments calling for a ban or treating it as a reasonable solution.

Aggregation of values

BTC is to grow to 100k, 200k and more, I see only one way. We have to figure out a way to do it together.

The main principle is this: only an influx of capital (and a lot of it) into the industry will increase the price of BTC and cryptocurrencies in general. I wrote about this above: it is necessary to create such a way for BTC to “aggregate” value, so that the new pricing model will be accepted by the largest investors. I have several proposals, but I think it is better to generate a large discussion and listen to the most diverse ideas, rather than limiting ourselves to one or two solutions. If we are successful, there should be a way to “add” and build value for BTC to the level of $500k-$1 million.

This should be our premise in this challenge. Ideally, the entire BTC/crypto community should start thinking about this. In addition to these challenges, it is worth adding a few others that will accelerate the development of BTC and cryptocurrencies in general, I have put them in two additional projects.

Project 1: Accelerating business adoption

To accelerate business adoption, we have several initiatives to choose from: information and training (on business development and BTC use) for companies that are considering BTC adoption, creating ready-made programs for universities to help introduce topics related to the modern economy and BTC into university curricula, exploring ways in which the BTC/crypto environment can positively influence corporations to introduce payments and develop access for their customers. In each area, it is worth creating a knowledge base, best practices to accelerate and facilitate adoption in traditional business.

Project 2: Facilitate BTC adoption by countries

Active networking strategies for countries looking to introduce BTC more widely, databases of best practices (what has worked and what hasn’t and why), Expand initiatives to use renewable energy sources for mining,

Discussion of geopolitical risks (in the U.S., they are concerned that BTC could threaten the position of the dollar, reduce the influence of the U.S. in the global economy. Such opinions are published in several foreign policy journals, so they should be taken seriously in order to gain as much favor for BTC and cryptocurrencies as possible).

Conclusion

We have entered a difficult period for BTC and cryptocurrencies. A tsunami of negative news, capital flight, possible banning – this is very bad news. It’s time to think about creating an institution that will protect the interests of the BTC industry, deal with stopping the ban, falling prices, deal with building an investment value for BTC that will be acceptable to mainstream investors and attract large capital. If you want to avoid being left with 10 cents of every BTC/crypto dollar, now is the time to act. Creating a foundation should be the first step.

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⁕ FULL Text ⁕MagazineTrading

[PL] Analiza: EURO Może Odrobić

Gregor Horvat 
– CEO i analityk w wavetraders.com

 

EURO może SPORO odrobić. Cykl podwyżek stóp procentowych Banku Centralnego US może zbliżać się do końca. W ciągu ostatnich kilku lat EUR doświadczyło silnego spadku w stosunku do USD, co było niedźwiedzim trendem, który przyspieszył przez pierwszą część 2021 roku, a kurs EUR/USD spadł poniżej parytetu i w pewnym momencie osiągnął nawet poziom 0,96.

Powodem tak silnego spadku w ubiegłym roku była jastrzębia polityka FOMC, który zazwyczaj jest pierwszym bankiem dokonującym dużych zmian w polityce. Nie jest zaskoczeniem, że inwestorzy i spekulanci stali się byczo nastawieni do USD, gdy Fed szybko podniósł stopy z 0 do 5%.

Podczas gdy inne banki centralne pozostawały w tyle, w końcu zaczęły działać z opóźnieniem. FED zasugerował jednak, że jastrzębia polityka może zbliżać się do pauzy, i to właśnie wtedy wiele walut, w tym EUR, zawróciło znacząco do 1,1 na początku 2023 r.

Widzimy to ożywienie jako wzór odwrócenia, ponieważ jest to ostry i silny ruch, zwany impulsem w terminologii fal Elliotta. Taka akcja cenowa zazwyczaj wskazuje, że rynek jest na dnie i że czasy się zmieniają.

Z tej perspektywy interesujące może być wznowienie tego nowego ożywienia po korekcie – retracement A-B-C. Porównując dane w czasie rzeczywistym z “podstawową strukturą” widzimy, że najprawdopodobniej para EUR/USD znajduje się obecnie w fazie korekcyjnej. W związku z tym uważamy, że odzyskiwanie może zostać wznowione po zakończeniu tego pullbacku.

Co to jest fala impulsowa? Formacja pięciofalowa, która porusza się w tym samym kierunku co trend wyższej skali.

Zasady:

– Fala 2 nie powinna przełamać się poniżej początku Fali 1.

– Fala 3 nie powinna być najkrótszą falą wśród fal 1, 3 i 5.

– Fala 4 nie powinna pokrywać się z Falą

EURUSD wykres tygodniowy – formacja bycza fali elliottowskiej 

Pomimo tej byczej struktury musimy wziąć pod uwagę to, co dzieje się na innych rynkach oraz fundamenty i poglądy makro, które mogą wspierać ideę silniejszego EUR w najbliższych miesiącach lub latach.

Jednym z najważniejszych czynników napędzających parę EUR/USD są stopy procentowe, w szczególności dyferencjał stóp. Istotne są również kontrakty terminowe na EURODOLARA, ponieważ reprezentują one dolary amerykańskie zdeponowane na zagranicznych rachunkach bankowych. To zawsze poruszało się w cyklach, a zainteresowanie trzymaniem USD w zagranicznych bankach jest mniejsze, jeśli Fed zamierza zatrzymać cykl podwyżek.

Analiza cyklu EURODOLAR, na tle notowań USA i pary EUR/USD

Zauważmy, że kontrakty terminowe na EURODOLAR zbliżają się do końca cyklu wieloletniego i dekadowego. Może to być znaczący okres dla nowej zmiany trendu, biorąc pod uwagę, że naszym zdaniem FED naprawdę spowolni cykl podwyżek ze względu na ryzyko recesji po ostatnim kryzysie bankowym.

Widzimy, że 10-letnia rentowność w USA również handluje przy horyzontalnym oporze, testując poprzednie minima, co wydaje się być tym samym wzorcem w porównaniu z 1989 i 2006 r.

Dlatego też, jeśli Fed zakończy swoje podwyżki lub nawet je ograniczy do końca 2023 r., niższe 10-letnie rentowności USA będą miały wpływ na kontrakty terminowe na EURODOLARY, a wtedy właśnie różnica stóp UE-USA może wysłać parę EUR/USD znacznie wyżej, tak jak miało to miejsce po 1989 i 2006 r. Za każdym razem po tym wczesnym dnie para EUR/USD odzyskiwała następnie około 30%. Mając to na uwadze, uważamy, że może istnieć przestrzeń dla EUR/USD do powrotu w rejon 1,3-1,4.

Drodzy czytelnicy, traderzy i inwestorzy, jestem szczęśliwy i zaszczycony, że zostałem zaproszony do udziału w tym niesamowitym magazynie. Mam nadzieję, że podobała Wam się ta lektura. Jeśli jesteś aktywnym inwestorem i interesujesz się analizą cyklu, sentymentu i fal Elliotta, sprawdź nasze usługi na www.WaveTraders.com

Gregor Horvat. CEO i analityk w wavetraders.com. Zwycięzca FXStreet.com za Najlepszą Analizę Forex w 2016 roku, plus Najlepszą Analizę Buy-Side w 2018 roku. Lubi uczyć i pomagać innym klientom oraz dzielić się swoją opinią na temat zasady fal Elliotta i psychologii tłumu w czasie rzeczywistym. Elliott wave jest jego pasją!

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⁕ FULL Text ⁕Artificial IntelligenceChatGPT in Trading

An Interview With ChatGPT About Trading

The ChatGPT-4 interview about trading, for simplicity’s sake, takes the form of a conversation with a live person. The development of AI will go through several stages, the first two of which are: treating AI as a tool and treating AI as a colleague. The latter we understand – treating as an assistant or colleague at work.

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⁕ FULL Text ⁕Funds & Investors

For Funds: Comments on the Risk of Losing Investors

Surprising events one afternoon brought me insight into the existence of a risk that few people talk about, although it raises serious concerns in virtually every fund.

It is the risk of large shareholders or investors leaving. The costs and consequences of leaving are large. It costs a lot of effort and money to acquire new clients too. There are many reasons for leaving but one of them is just plain foolish.

It all began innocuously enough. I wanted to gain a better understanding of market dynamics, including trends, innovative ideas and strategies employed by traders in different funds. My goal was to stay informed about what’s currently hot.

There is no better way to do this than to read letters and reports written by funds. Of course, no one will write the best details, but one will write some good stuff, another a little too, and all in all, after reading a certain amount, one has a pretty good picture of what is going on in the world.

Some traders do this routinely, get new ideas to increase profits, reduce risks, see new directions. I got this idea from a conversation with one such very experienced person.

This time, however, something completely surprising happened. But first a short introduction.

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A couple years ago I entered the publishing industry. So, out of necessity, I had to figure out the basics of editing to know what to require from people. Simply put, the publication must look well, it must make a good impression, not contain basic errors and, of course, I must be able to catch a large part of them.’

Back to our main topic: I have collected about 400 reports and letters to shareholders.

One afternoon over Italian coffee I got down to reading. After the first ten, I had a feeling that something wasn’t right. The content was OK, but something was wrong. After the next 20 I knew for sure. After reading about 100, I noticed that many (actually most of the funds) had a serious problem.

Most reports are very interesting and enjoyable to read. Great knowledge presented by professionals often with decades of experience.

But also most of them contain fundamental editorial errors. Before, I didn’t pay attention to fonts, margins, spacing, the way charts and photos are placed.

Suddenly I began to see how columns are misaligned, spacing and margins are a real nightmare (most documents cannot be printed because of this, the content will be outside the margins), paragraphs of text are badly transferred between pages. In some the font is so small as if someone specifically wanted to make it impossible to read. A mess. This is a serious communication problem.

And these were not exceptions. Such, unfortunately, was the majority! I’ll admit that I spent the rest of the evening in complete bewilderment as to how it is possible for so many funds to release such lax documents.

A small part looked like a text written in a simple word processor and converted to pdf. No graphics, no fund logo, all badly formatted. As a result, the whole thing made a bad impression, probably the worst of all possible – cheapness.

Why do I think this is a serious issue?

Let’s look at it through the eyes of an investor. Let’s think he brought $30 million into the fund. Every few months he gets a report or document that looks like it was done by a 12-year-old child. Careless. Done poorly. What kind of message does the investor get from this?

At the very least, it is a show of disrespect.

Of course, everyone will say that what matters most is results. That’s obvious. The result will always be king, no doubt.  

But let’s think of a situation when a fund has a weaker quarter or even a weaker year. And let’s think about the question whether these poor documents will help to keep the client or not?

When everything is OK and results are fine then a poorly prepared document is unlikely to be a problem. But in the case of a weak quarter, such things may begin to sting.

And the effort put in, the time, money, dinners and gifts can go to waste by having a weaker result presented in a weak, messy, sloppy document.

The second, equally important issue is new investors. Potential investors or their representatives are bound to read maybe dozens of old reports back to back. I think everyone does that.

What will they find in them? What image of the company will emerge from the content and the form? Will the company be seen as professionals or as amateurs?

It’s a really sad situation when the next document in a row contains basic communication errors, has a font that is too small, charts that are too small (a large proportion of people today read on tablets and even phones).

Those who print reports for themselves the old-fashioned way usually find the margins and top and sides cut off. Such a printout is unreadable and only fit for the round archive.

Some of the reports and letters give a bad impression. Carelessness. Lack of attention to form. Cheapness.

Over the past year I have read maybe 30 Goldman-Sachs reports. They are flawless, even exemplary. Someone there is certainly making sure the client doesn’t get anything lousy. This is a good example, worth following.

What does a Bentley or Maserati catalog look like? Is it superbly prepared graphically and editorially, or does it look like a collection of text and photos thrown into a word processor and turned into a pdf? Fund investors are used to the Bentley level so the gap is huge.

A few conclusions at the end

The advice I have is simple – it’s best to leave it to the professionals.

The investment industry is not a cheap one, clients here are used to good style, class and luxury. The documents that a company sends to them should reflect this.

They should be carefully written, crafted, and should take into account how the client will read them: whether on a PC, laptop or a tablet.

You need to communicate uniqueness, luxury and security. Fund customers are used to this.

Having read many reports, I must honestly say that there is top-notch content in them. 

It is really worth spending some amount of cash to make the editorial level similar, so that the two create harmony and show both a high level of the company and respect for the investor.

I’m not saying this to take an editor from Vogue right away (although it certainly wouldn’t hurt) but about a simple matter: to have the text, graphics and editing looked at by a professional.

For help with your documents, please check Alpha Lupi Media – the professionals.

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Artificial Intelligence in trading
Artificial Intelligence⁕ FULL Text ⁕Alternative Data

[Full] Artificial Intelligence: The lowest-hanging fruit. Part I

I recently spoke with an elderly gentleman – a trader and fund owner. This conversation inspired me to write an article about AI tools that are used in trading today.

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Trading Psychology⁕ FULL Text ⁕Trading

[Full] Suicide due to heavy market losses – the story that wasn’t there

We place our full range of talent and technology at the service of each and every client. We want to bring a splash of colour into a seemingly grey world and become a global leader in consultancy.