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August 12, 2015 | Traders: What (Specifically) are you ‘Trading’?

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

Do our cyber traders understand what they are trading today? Today, our currency traders trade mostly for ‘pips’ in their on-line trading account. Traders power-up their trading software and click their mouse for new trading transactions and strategies. All this is now done within Cyberspace and all our currencies are now mostly cyber/digital/bit units (part of a traders extended consciousness). Are traders aware that they are trading within their imagination as they trade mostly imaginary units of currency. Today, there are some 168 currencies circulating within our cyber markets. Cyber currencies are not tangible or material as our prior paper/metal currencies. They are units of our extended consciousness. So what meaning does trading of these imaginary units reveal?

Today, traders trade cyber money within our cyber markets! What kind of trading is this?

Traders trade some $5 trillion of cyber/bit currencies daily on our Forex markets. The main currencies are the dollar, euro, pound, yen, and franc. There are no paper or metals traded today in our Forex currency markets. Paper and metal are tangible/material objects which can not circulate in cyberspace. Only bits/bytes derived from our Central bank administrators are allowed to circulate. Bit money is now the default currency for all trading and money transactions. Some 200,000 traders in the USA use computer trading platforms to execute their trades. The trend is now towards automated (algorithmic) trading where one’s computer software does all the trading…using an algorithm for execution.

Automated trading using algorithms is the procedure of choice for most traders today!

Our speed of light markets operate 24/7 as our bit/cyber currencies flow (stream) from computer to computer. Traders power-up their trading software and execute their trades in real-time as they accumulate ‘pips’ in their trading account. Pips can be defined as: Pips represent the smallest movement that a currency pair can make. Typically this is equal to 1 basis point. When you trade is positive in pips, you are making a profit. When its negative, your trade is under water. These imaginary ‘pips’ can result in huge trading gains when our markets or a currency is valued positively (when the movement/flow favors the traders position). But what specifically is being traded today?

Trading for ‘pips’ is the new activity for our robot/algorithmic traders today!

To comprehend this question, visualize millions of traders (with their computer/laptop/or smart phone) clicking keys or allowing their algorithm to execute a trade. Traders can execute a trade as a buyer/seller or their algorithm can execute a trade with no human click of the mouse. Trading software now allows automated trading and algorithms are the tool which can execute a trade in milliseconds or microseconds. Silver and gold speculators/investors can now use their software/automated robot to manipulate the cyber prices (called the spot price) of gold and silver. This can be accomplished on any of our electronic markets in real-time and there is no actual exchange of physical silver or gold in most of these digital transactions.

Our media pundits and gold/silver newsletter writers call the above chart a Paper Market! Is this logic sound? No paper is generated as trades are now electronic and within cyberspace!

Traders and computers can artificially increase the imaginary Supply of digital/cyber gold/silver in these cyber markets (say a futures market like the Globex) and this then creates a change in the spot price for the physical metal (which is not being exchanged/delivered). Most gold/silver pundits call this the Paper Market. In reality, however, imaginary/virtual contracts create this imaginary Supply (when a naked short is executed) and this suppresses the spot price of a physical metal like silver or gold in real-time. Most of us call this price manipulation but others (the vast majority of gold/silver producers and media pundits) call this process…the forces of Supply and Demand.

A naked short transaction can drop the spot price of silver within milliseconds! Where is the Paper? What specifically is being traded in these cyber markets? Imagination?

Imaginary transactions occur in our cyber markets (where no exchange of any physical item happens) and this creates this artificial/imaginary Supply when a naked short is executed by a trader or a computer algorithm. The so-called Paper silver/gold market is the terminology used (by all the media pundits) even though there is no actual Paper exchanged. This same confused logic is used when our media pundits talk about our Central Banks and their printing of currencies. Listen to any popular pundit and listen for the words ‘printing’ when they refer to actions of our Central Bank administrators. This confused logic implies that our currencies today are actual ‘printed’ paper notes. In reality, this is not accurate!

Actual ‘printed’ currencies now represent only some 4% of all monetary transactions on our planet! Our printed currencies do not trade within Cyberspace! Note this difference!

Look at your computer screen and look at the actions which I/You take when we execute a trade today. Is there any Paper being exchanged between a buyer and seller (when I click my mouse button to buy or sell). What about between a computer algorithm and another computer algorithm at the other end of the trade? All that happens in our cyber markets are the exchange of imaginary bits and bytes (called by the name ‘money’). All is a trade within our imagination using virtual/imaginary units of currency for the exchange. Is this meaningful economics? Is this meaningful trading? I would suggest that this entire system is a Casino activity within a Ponzi system. Think about what traders are doing today! What are they actually trading? Does any of this make any sense for our economy or for economic growth and prosperity?

The above represents today’s Cyber trading. All is global, interconnected, and 24/7. Where is the Paper and the Printing? Is it now time to update our thinking on what traders do?

What is likely to happen going forward is a change in the confidence level of traders as they become aware of what they are doing and what they are trading. I leave for Las Vegas in October for another Trading Conference. The last years conference was very enlightening as I learned all about Automated Trading and Algorithms. What will be new this year? You can attend this trading conference by calling this number: Take your investing or trading skills to the next level by registering to attend now. It’s fast, it’s easy, and best of all, it’s free! Register Free 1-800-970-4355. Enjoy! I am:

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August 12th, 2015

Posted In: Kingdom Economics

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