Johanes trader's profile
Johanes
Info
| Nombre | Johanes |
Bio:
PAMM 1601077265
A PAMM at FXCM LTD UK (NYSE)
September 2012.
Account 1890940285
Mapped to TradeLeaders at Currensee, Inc and made available to Currensee's Community at CitiFX Pro, FXDD, FXCM, MARKETS.COM, directFX.com, alpari, AdmiralMarkets, INSTITUTIONAL Liquidity, FOREXYARD and AVATRADE. Commenced in September 26, 2012.
A PAMM at FXCM LTD UK (NYSE)
September 2012.
Account 1890940285
Mapped to TradeLeaders at Currensee, Inc and made available to Currensee's Community at CitiFX Pro, FXDD, FXCM, MARKETS.COM, directFX.com, alpari, AdmiralMarkets, INSTITUTIONAL Liquidity, FOREXYARD and AVATRADE. Commenced in September 26, 2012.
Estilo de trading:
Equilibrium Trading Strategy Interior the Time Series Interest Rate Differential Basd Exchange Rate Targets and Currency Band.
The strategy is built-in into central bank's policy on exchange rate targets and currency band.
The strategy is built-in into central bank's policy on exchange rate targets and currency band.
Lema:
Consistent High Return and Long-Term Commercial Operation - Trinity for Liberty
| Experiencia | Más de 5 años |
| Ubicación |
| Patrocinadores | 0 |
| Inscrito | Sep 24, 2011 at 12:27 |
| Usuarios bloqueados | 0 |
en Johanes feed
Oct 16, 2012 at 09:01
en Johanes feed
Oct 12, 2012 at 09:06
en Johanes feed
Oct 08, 2012 at 13:09
en Johanes feed
Oct 08, 2012 at 12:30
Gráfico
Systems by Johanes
| Nombre | Ganancia | Disminución | Pips | Trading | Apalancamiento | Tipo |
|---|---|---|---|---|---|---|
| JOHANES L. SITANGGANG | 13.31% | 24.92% | 541.3 | Manual | 1:200 | Real |
| JOHANES L. SITANGGANG | 8.86% | 16.47% | 519.5 | Manual | 1:200 | Real |
en Australian Currency Band Forecast and Performance - Basic Trading
Oct 07, 2012 at 17:42
en Australian Currency Band Forecast and Performance - Basic Trading
Oct 07, 2012 at 17:42
en EA programmer wanted
Oct 03, 2012 at 07:10
Johanes
Oct 16, 2012 at 09:01
AUSTRALIAN CURRENCY BAND
October 16, 2012: By Johanes L. Sitanggang
The performance of AUD/USD and AUD/JPY interior the AUD currency band remains to confirm that both USD- and JPY-based fund managers are still holding their investment in AUD currency and AUD-denominated interest bearing securities. Their trading activity has been strongly to defend the AUD/USD and AUD/JPY at their central currency bands. The slower capital outflow from AUD currency and AUD-denominated interest bearing securities have impacted the performance of global currency band, AUD currency band in particular.
Unless AUD/USD and AUD/JPY to be under pressured down to their previous or new lower currency bands then the turning points (disequilibrium-equilibrium exchange rates (EERs)) for the AUD-positive and negative pairs will not be measurable. Accordingly, the AUD-negative pairs (EUR/AUD and GBP/AUD) remains to be corrected to upward direction and the AUD-positive pairs (AUD/CHF, AUD/CAD, AUD/NZD, to include AUD/USD and AUD/JPY) remains to be corrected to downward direction.
And, unless the measured equal lowest average traded weighted rates for AUD-positive pairs equal to the measured equal highest average traded weighted rates for AUD-negative pairs, then any trading positions on AUD-pairs to be at moderate to high risk.
The performance of AUD currency band may pressure RBA to cut the rate for another 0.25 % during the next meeting to manage the performance of AUD currency band to manage the inflation band. The rate cutting will also to slower the Australian economic slowdown and to defend the continuing elevated unemployment rate. Beside, the current performance of the Australian currency band is indicating that the equilibrium internal rate of return of the Australian dynamic stochastic general equilibrium is imbalance. However, should the AUD/USD and AUD/JPY to be under pressure by the global fund managers before the next RBA's meeting, then RBA may not necessary to undertake rate cutting until the AUD pairs to be stabilized at their measured equilibrium exchange rates (EERs-disequilibrium).
Short positions on AUD/USD remains active to target their previous lower currency band at overnight rollover fee risk (swab).
October 16, 2012: By Johanes L. Sitanggang
The performance of AUD/USD and AUD/JPY interior the AUD currency band remains to confirm that both USD- and JPY-based fund managers are still holding their investment in AUD currency and AUD-denominated interest bearing securities. Their trading activity has been strongly to defend the AUD/USD and AUD/JPY at their central currency bands. The slower capital outflow from AUD currency and AUD-denominated interest bearing securities have impacted the performance of global currency band, AUD currency band in particular.
Unless AUD/USD and AUD/JPY to be under pressured down to their previous or new lower currency bands then the turning points (disequilibrium-equilibrium exchange rates (EERs)) for the AUD-positive and negative pairs will not be measurable. Accordingly, the AUD-negative pairs (EUR/AUD and GBP/AUD) remains to be corrected to upward direction and the AUD-positive pairs (AUD/CHF, AUD/CAD, AUD/NZD, to include AUD/USD and AUD/JPY) remains to be corrected to downward direction.
And, unless the measured equal lowest average traded weighted rates for AUD-positive pairs equal to the measured equal highest average traded weighted rates for AUD-negative pairs, then any trading positions on AUD-pairs to be at moderate to high risk.
The performance of AUD currency band may pressure RBA to cut the rate for another 0.25 % during the next meeting to manage the performance of AUD currency band to manage the inflation band. The rate cutting will also to slower the Australian economic slowdown and to defend the continuing elevated unemployment rate. Beside, the current performance of the Australian currency band is indicating that the equilibrium internal rate of return of the Australian dynamic stochastic general equilibrium is imbalance. However, should the AUD/USD and AUD/JPY to be under pressure by the global fund managers before the next RBA's meeting, then RBA may not necessary to undertake rate cutting until the AUD pairs to be stabilized at their measured equilibrium exchange rates (EERs-disequilibrium).
Short positions on AUD/USD remains active to target their previous lower currency band at overnight rollover fee risk (swab).
Johanes
Oct 08, 2012 at 13:09
GLOBAL INTEREST RATE EQUILIBRIUM STRUCTURE
October 8, 2012: By Johanes L. Sitanggang
The RBA rate cutting for 0.25 % in October 2, 2012 to lower the interest rate down to the level of 3.25 % does not change the global interest rate equilibrium structure. The AUD remains the highest interest rate currency amongst the major currencies. However, the rate cutting has been tightening the interest rate differentials that ultimately to change and affect the major inter-currencies capital outflow and inflow.
The current interest rate differentials however remain to place the AUD, NZD and CAD as the high interest rate and followed by EUR and GBD as the moderate and USD, JPY and CHF as the low interest rates. Interest rate differential based capital outflow and inflow analysis interior the global equilibrium currency band remains to confirm that AUD, NZD and CAD currency bands performance will be the determinant for the EUR, GBP, USD, JPY and CHF currency band’s projection. And the combined performances of the AUD, NZD, CAD, EUR and GBP currency bands are the determinant for the USD, JPY and CHF currency band’s projection. Accordingly, the AUD, NZD and CAD currency band’s performance will continue to lead the FX market movements and followed by the EUR and GBP whilst USD, JPY and CHF are the followers.
As a result, AUD currency band performance will continue to be the strongest and the most consistent and in harmony for their movements from disequilibrium to equilibrium as well as from equilibrium to disequilibrium and followed by the NZD and CAD currency bands indentified by using Brownian motion process theory. Consequently, EUR and GBP currency band performance will not and will never to move in harmony from disequilibrium to equilibrium or from equilibrium to disequilibrium. Or, the EUR and GBP currency pairs will move to upward or downward directions at the same time against the equilibrium theory. The USD, JPY and CHF currency band performance is depending to the performance of AUD, NZD, CAD, EUR and GBP.
In summary, trading the AUD-, NZD- and CAD-currency pairs offer the lowest risk and moderate risk for USD-, JPY- and CHF-currency pairs. Trading the EUR- and GBP-currency pairs is at high risk.
October 8, 2012: By Johanes L. Sitanggang
The RBA rate cutting for 0.25 % in October 2, 2012 to lower the interest rate down to the level of 3.25 % does not change the global interest rate equilibrium structure. The AUD remains the highest interest rate currency amongst the major currencies. However, the rate cutting has been tightening the interest rate differentials that ultimately to change and affect the major inter-currencies capital outflow and inflow.
The current interest rate differentials however remain to place the AUD, NZD and CAD as the high interest rate and followed by EUR and GBD as the moderate and USD, JPY and CHF as the low interest rates. Interest rate differential based capital outflow and inflow analysis interior the global equilibrium currency band remains to confirm that AUD, NZD and CAD currency bands performance will be the determinant for the EUR, GBP, USD, JPY and CHF currency band’s projection. And the combined performances of the AUD, NZD, CAD, EUR and GBP currency bands are the determinant for the USD, JPY and CHF currency band’s projection. Accordingly, the AUD, NZD and CAD currency band’s performance will continue to lead the FX market movements and followed by the EUR and GBP whilst USD, JPY and CHF are the followers.
As a result, AUD currency band performance will continue to be the strongest and the most consistent and in harmony for their movements from disequilibrium to equilibrium as well as from equilibrium to disequilibrium and followed by the NZD and CAD currency bands indentified by using Brownian motion process theory. Consequently, EUR and GBP currency band performance will not and will never to move in harmony from disequilibrium to equilibrium or from equilibrium to disequilibrium. Or, the EUR and GBP currency pairs will move to upward or downward directions at the same time against the equilibrium theory. The USD, JPY and CHF currency band performance is depending to the performance of AUD, NZD, CAD, EUR and GBP.
In summary, trading the AUD-, NZD- and CAD-currency pairs offer the lowest risk and moderate risk for USD-, JPY- and CHF-currency pairs. Trading the EUR- and GBP-currency pairs is at high risk.
Johanes
Oct 08, 2012 at 12:30
GLOBAL INTEREST RATE EQUILIBRIUM STRUCTURE
Johanes
Oct 08, 2012 at 07:43
GENERAL TERMS AND CONDITIONS OF PAMM 1601077265
Description:
The global investors may participate to invest into a PAMM in small, medium to large size of investments. The percent allocation management module (PAMM) is a technical solution provided to global investors and allowing them to have their accounts managed by a trader appointed by them on the basis of a limited trading power of attorney. PAMM solution allows the trader on one trading platform to manage simultaneously unlimited quantity of managed accounts. Managed accounts can be funded in different currencies and deposited with different institutions. Depending on the size of the deposit each managed account has its own ratio in PAMM. Total sum of all ratios under one PAMM account is always equal to 100%. Trader’s activity results (trades, profit & loss) are allocated between managed accounts according to ratio. PAMM trading has no difference in comparison with self trader platforms, all 3 types are available.
There are several functions of PAMM, a possibility to add and/or remove funds and accounts without interrupting trading activity; ability to manage through one trading platform unlimited quantity of multi currency accounts; choice of base currency for the trader’s platform; immediate trade allocation between managed accounts; performance fee calculation functionality; ability to block trading facilities for particular managed accounts; interactive functionality to accept/decline new managed accounts.
Lets assume that there are 3 managed accounts under trader’s management:
USD account with deposit of $ 100.000 and ratio 9,3%;
EUR account with deposit of ? 400.000 and ratio 49,5%;
GBP account with deposit of £ 300.000 and ratio 41,2%;
Depending on funded amounts different ratios are applied for managed account (for ratio calculation all amounts are converted in USD equivalent based on market rate).
In case if, for example, Trader/Money Manager decides to buy/long 10 mio EURUSD, PAMM allocates the order between managed accounts according to its ratio. Each managed account has its own part of position and corresponding profit & loss. In current example first managed account will get position long 930.000 EUR/USD, second - long 4.950.000 EUR/USD and third – long 4.120.000 EUR/USD. Resulting profit & loss will be automatically calculated for each account depending on market prices.
PAMM ID:
1601077265
PAMM Broker:
Forex Capital Markets LTD
Nothern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Tel: + 0808 234 8789 UK Residents + 1 212 897 7660 US and International
Fax: + 0800 014 8154 UK Residents + 1 212 897 7669 US and International
E-mail:[email protected] http://www.fxcm.co.uk
PAMM/Money Manager: Johanes L. Sitanggang
PAMM Administrator:
Forex Capital Markets LTD
Nothern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Tel: + 0808 234 8789 UK Residents + 1 212 897 7660 US and International
Fax: + 0800 014 8154 UK Residents + 1 212 897 7669 US and International
E-mail:[email protected] http://www.fxcm.com
Custodian Banks:
USD Deposits
Bank: BANK OF AMERICA, N.A.
150 Broadway, New York, NY 10038, United States
ABA: 026009593
SWIFT Code: BOFAUS3N
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 483024234411
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
EUR Deposits
Bank: HSBC BANK PLC
8 Canada Square, London E14 5HQ, United Kingdom
Sort Code: 40-05-15
SWIFT Code: MIDLGB22
IBAN: GB70MIDL40051558617374
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 58617374
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
JPY Deposits
Bank: BARCLAYS BANK PLC
155 Bishopsgate London EC2M 3XA England
SWIFT Code: BARCGB22
IBAN: GB10BARC20675962676433
Sort Code: 206759
Beneficiary: Forex Capital Markets LTD
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Account #: 62676433
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
GBP Deposits
Bank: HSBC BANK PLC
20 Eastcheap (Eastcheap Branch), London EC3M 1ED, United Kingdom
Sort Code: 40-02-31
SWIFT Code: MIDLGB22
IBAN: GB11MIDL40023181336045
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 81336045
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
CAD Deposits
Bank: HSBC BANK PLC
8 Canada Square, London E14 5HQ, United Kingdom
Sort Code: 40-05-15
SWIFT Code: MIDLGB22
IBAN: GB35MIDL40051571060194
Beneficiary: Forex Capital Markets LTD
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 71060194
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
CHF Deposits
Bank: BANK OF AMERICA N.A.
Bank Code: (Clearing nummer) 89113
SWIFT Code: BOFAGB3SSWI
IBAN: CH6508726000030783016
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 30783016
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
NZD Deposits
Bank: HSBC BANK PLC
8 Canada Square, London E14 5HQ, United Kingdom
Sort Code: 40-05-15
SWIFT Code: MIDLGB22
IBAN: GB26MIDL40051568292073
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 68292073
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
Account Opening Link: https://secure4.fxcorporate.com/fxtr/?ib=JOHANES_SITANGGANG
Methodology and Strategy: Equilibrium Trading Interior the Time Series Interest Rate Differential Based Exchange Rate Targets and Currency Band
Target of Fund: $ 100,000,000 (One Hundred Million United State Dollar)
Minimum Investment: $ 1,000 (One Thousand United States Dollar) or the equivalent in EUR, JPY, GBP, CAD, CHF, NZD, subject to change overtime to $ 10,000
Target of Return: 60.00 % to 200.00 % quarterly
Maximum Total Risk Assumed: 30.00 % quarterly based high watermark
Profit Sharing: 35/65, quarterly based high watermark
Profit Drawdown: 100.00 %
Reinvestment: Allowed
Principal Drawdown: 30 days prior written notice
Description:
The global investors may participate to invest into a PAMM in small, medium to large size of investments. The percent allocation management module (PAMM) is a technical solution provided to global investors and allowing them to have their accounts managed by a trader appointed by them on the basis of a limited trading power of attorney. PAMM solution allows the trader on one trading platform to manage simultaneously unlimited quantity of managed accounts. Managed accounts can be funded in different currencies and deposited with different institutions. Depending on the size of the deposit each managed account has its own ratio in PAMM. Total sum of all ratios under one PAMM account is always equal to 100%. Trader’s activity results (trades, profit & loss) are allocated between managed accounts according to ratio. PAMM trading has no difference in comparison with self trader platforms, all 3 types are available.
There are several functions of PAMM, a possibility to add and/or remove funds and accounts without interrupting trading activity; ability to manage through one trading platform unlimited quantity of multi currency accounts; choice of base currency for the trader’s platform; immediate trade allocation between managed accounts; performance fee calculation functionality; ability to block trading facilities for particular managed accounts; interactive functionality to accept/decline new managed accounts.
Lets assume that there are 3 managed accounts under trader’s management:
USD account with deposit of $ 100.000 and ratio 9,3%;
EUR account with deposit of ? 400.000 and ratio 49,5%;
GBP account with deposit of £ 300.000 and ratio 41,2%;
Depending on funded amounts different ratios are applied for managed account (for ratio calculation all amounts are converted in USD equivalent based on market rate).
In case if, for example, Trader/Money Manager decides to buy/long 10 mio EURUSD, PAMM allocates the order between managed accounts according to its ratio. Each managed account has its own part of position and corresponding profit & loss. In current example first managed account will get position long 930.000 EUR/USD, second - long 4.950.000 EUR/USD and third – long 4.120.000 EUR/USD. Resulting profit & loss will be automatically calculated for each account depending on market prices.
PAMM ID:
1601077265
PAMM Broker:
Forex Capital Markets LTD
Nothern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Tel: + 0808 234 8789 UK Residents + 1 212 897 7660 US and International
Fax: + 0800 014 8154 UK Residents + 1 212 897 7669 US and International
E-mail:[email protected] http://www.fxcm.co.uk
PAMM/Money Manager: Johanes L. Sitanggang
PAMM Administrator:
Forex Capital Markets LTD
Nothern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Tel: + 0808 234 8789 UK Residents + 1 212 897 7660 US and International
Fax: + 0800 014 8154 UK Residents + 1 212 897 7669 US and International
E-mail:[email protected] http://www.fxcm.com
Custodian Banks:
USD Deposits
Bank: BANK OF AMERICA, N.A.
150 Broadway, New York, NY 10038, United States
ABA: 026009593
SWIFT Code: BOFAUS3N
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 483024234411
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
EUR Deposits
Bank: HSBC BANK PLC
8 Canada Square, London E14 5HQ, United Kingdom
Sort Code: 40-05-15
SWIFT Code: MIDLGB22
IBAN: GB70MIDL40051558617374
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 58617374
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
JPY Deposits
Bank: BARCLAYS BANK PLC
155 Bishopsgate London EC2M 3XA England
SWIFT Code: BARCGB22
IBAN: GB10BARC20675962676433
Sort Code: 206759
Beneficiary: Forex Capital Markets LTD
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Account #: 62676433
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
GBP Deposits
Bank: HSBC BANK PLC
20 Eastcheap (Eastcheap Branch), London EC3M 1ED, United Kingdom
Sort Code: 40-02-31
SWIFT Code: MIDLGB22
IBAN: GB11MIDL40023181336045
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 81336045
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
CAD Deposits
Bank: HSBC BANK PLC
8 Canada Square, London E14 5HQ, United Kingdom
Sort Code: 40-05-15
SWIFT Code: MIDLGB22
IBAN: GB35MIDL40051571060194
Beneficiary: Forex Capital Markets LTD
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 71060194
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
CHF Deposits
Bank: BANK OF AMERICA N.A.
Bank Code: (Clearing nummer) 89113
SWIFT Code: BOFAGB3SSWI
IBAN: CH6508726000030783016
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 30783016
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
NZD Deposits
Bank: HSBC BANK PLC
8 Canada Square, London E14 5HQ, United Kingdom
Sort Code: 40-05-15
SWIFT Code: MIDLGB22
IBAN: GB26MIDL40051568292073
Beneficiary: Forex Capital Markets Ltd.
Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom
Beneficiary Account #: 68292073
REF: Client’s Name and Account Number (Account Number to be provided on account opening application)
Account Opening Link: https://secure4.fxcorporate.com/fxtr/?ib=JOHANES_SITANGGANG
Methodology and Strategy: Equilibrium Trading Interior the Time Series Interest Rate Differential Based Exchange Rate Targets and Currency Band
Target of Fund: $ 100,000,000 (One Hundred Million United State Dollar)
Minimum Investment: $ 1,000 (One Thousand United States Dollar) or the equivalent in EUR, JPY, GBP, CAD, CHF, NZD, subject to change overtime to $ 10,000
Target of Return: 60.00 % to 200.00 % quarterly
Maximum Total Risk Assumed: 30.00 % quarterly based high watermark
Profit Sharing: 35/65, quarterly based high watermark
Profit Drawdown: 100.00 %
Reinvestment: Allowed
Principal Drawdown: 30 days prior written notice
Johanes
Oct 08, 2012 at 07:49
High Risk Investment Warning
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor or the nearest central banks if you have any doubts. Do not invest unless you are prepared to risk !!!
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor or the nearest central banks if you have any doubts. Do not invest unless you are prepared to risk !!!
Johanes
Oct 07, 2012 at 20:51
BLOOMBERG JULY 7., 2012: OTC DERIVATIVE MARKET
Banks may have to meet minimum collateral rules for over-the-counter derivatives trades that aren’t centrally cleared as part of a push by global regulators to make the market safer.
The Basel Committee on Banking Supervision yesterday published a draft of the standards, which it said would prevent companies from exploiting rule differences between nations. The paper sets out a partial list of assets that can count as collateral, including gold and some equities.
“International consistency with regard to margin requirements and their implementation is crucial,” the Basel group said in an e-mailed statement. The measures, which are being published for public comment, would apply to trades involving financial-services companies and large businesses in other industries that trade these securities.
European Union and U.S. regulators are struggling to align rules for the $648 trillion market for OTC derivatives, which became a target for tougher oversight after the 2008 collapse of Lehman Brothers Holdings Inc. The Basel committee has already issued rules that would more than triple the capital banks must hold to protect against losses.
The draft document’s approach to margin standards “would lower the risk of financial entities, promote clearing and help avoid regulatory arbitrage,” Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, said in a separate statement yesterday.
Crippling Markets
Banks warn that inconsistencies in rule-making and overlapping requirements may increase costs and give foreign competitors an advantage. Lenders also say that making collateral rules too tough risks crippling markets by forcing traders to set aside the bulk of their high-quality assets.
Under today’s proposal, regulators would allow companies to use a range of instruments as collateral, including cash, government debt, “high-quality corporate and covered bonds,” gold and equities listed on “major” stock exchanges.
Extending the list of eligible collateral beyond “the most-liquid, highest-quality assets” reduces the risk of the rules damaging markets, according to the draft. The Basel committee will carry out a study on the plan’s impact.
The proposal gives a standard list of losses imposed on investors that should be applied to these securities, while still leaving traders scope to use internal models instead.
The International Swaps and Derivatives Association estimates that $3.6 trillion of collateral was in circulation in the uncleared OTC derivatives market at the end of 2011, an increase of 24 percent from the previous year.
The rise was attributed to developments including downgrades of banks by credit-ratings companies, the euro-area debt crisis and a decline in interest rates.
Margin Rules
The Basel committee, which drafted the paper in collaboration with the International Organization of Securities Commissions, will seek comment until Sept. 28. Basel rules have no legal force and must be implemented by nations before they can take effect.
According to the proposal, both parties to a trade should post so-called initial and variation margins.
Initial margin is collateral posted at the beginning of a trade. Variation margin may be exchanged daily to offset risk from incremental price movements.
The Basel group is weighing possible exemptions to the rule for smaller transactions, though its members are split over how such a threshold should be “designed and calibrated,” according to the draft.
‘Broad Consensus’
The Group of 20 nations called in 2009 for trades in standard types of OTC derivatives to take place through clearinghouses as part of an effort to make the market simpler and more robust. The G-20 then agreed in 2011 to set margin requirements for transactions that take place away from central clearing to boost the resilience of the financial system.
Today’s plans would also force firms to ring-fence and not re-use collateral so that it wouldn’t be lost to the company that posts it if a trader goes bankrupt.
There is a “broad consensus” among regulators that “the re-use of initial margin should be prohibited,” the committee said. Still, the U.S. Securities and Exchange Commission believes it should be allowed “in very limited circumstances.”
“The dealers are just going to squeal if that right gets taken away from them,” Christian A. Johnson, a University of Utah law professor, said yesterday in a telephone interview. “It’ll put tremendous pressure on dealers. It just exponentially raises the amount of collateral they’ll have to have.”
Foreign Exchange
The proposal on margins covers non-cleared credit, interest rate, commodity and foreign-exchange derivatives. In the U.S., the Treasury Department proposed an exemption for foreign- exchange swaps and forwards from most of the Dodd-Frank Act’s clearing and trading rules. The Treasury said there was less counterparty and settlement risk in foreign-exchange contracts than other types of derivatives.
“It is unclear whether these characteristics fully offset the need for margin requirements,” the Basel committee said in its report. The committee is seeking comment on whether to allow an exemption for foreign-exchange contracts, such as those with durations of less than a month or a year.
The Basel committee, which is headquartered at the Bank for International Settlements, brings together banking regulators from 27 nations including the U.S., U.K. and China.
Madrid-based IOSCO brings together national market regulators from more than 100 countries to coordinate rules and share information.
Banks may have to meet minimum collateral rules for over-the-counter derivatives trades that aren’t centrally cleared as part of a push by global regulators to make the market safer.
The Basel Committee on Banking Supervision yesterday published a draft of the standards, which it said would prevent companies from exploiting rule differences between nations. The paper sets out a partial list of assets that can count as collateral, including gold and some equities.
“International consistency with regard to margin requirements and their implementation is crucial,” the Basel group said in an e-mailed statement. The measures, which are being published for public comment, would apply to trades involving financial-services companies and large businesses in other industries that trade these securities.
European Union and U.S. regulators are struggling to align rules for the $648 trillion market for OTC derivatives, which became a target for tougher oversight after the 2008 collapse of Lehman Brothers Holdings Inc. The Basel committee has already issued rules that would more than triple the capital banks must hold to protect against losses.
The draft document’s approach to margin standards “would lower the risk of financial entities, promote clearing and help avoid regulatory arbitrage,” Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, said in a separate statement yesterday.
Crippling Markets
Banks warn that inconsistencies in rule-making and overlapping requirements may increase costs and give foreign competitors an advantage. Lenders also say that making collateral rules too tough risks crippling markets by forcing traders to set aside the bulk of their high-quality assets.
Under today’s proposal, regulators would allow companies to use a range of instruments as collateral, including cash, government debt, “high-quality corporate and covered bonds,” gold and equities listed on “major” stock exchanges.
Extending the list of eligible collateral beyond “the most-liquid, highest-quality assets” reduces the risk of the rules damaging markets, according to the draft. The Basel committee will carry out a study on the plan’s impact.
The proposal gives a standard list of losses imposed on investors that should be applied to these securities, while still leaving traders scope to use internal models instead.
The International Swaps and Derivatives Association estimates that $3.6 trillion of collateral was in circulation in the uncleared OTC derivatives market at the end of 2011, an increase of 24 percent from the previous year.
The rise was attributed to developments including downgrades of banks by credit-ratings companies, the euro-area debt crisis and a decline in interest rates.
Margin Rules
The Basel committee, which drafted the paper in collaboration with the International Organization of Securities Commissions, will seek comment until Sept. 28. Basel rules have no legal force and must be implemented by nations before they can take effect.
According to the proposal, both parties to a trade should post so-called initial and variation margins.
Initial margin is collateral posted at the beginning of a trade. Variation margin may be exchanged daily to offset risk from incremental price movements.
The Basel group is weighing possible exemptions to the rule for smaller transactions, though its members are split over how such a threshold should be “designed and calibrated,” according to the draft.
‘Broad Consensus’
The Group of 20 nations called in 2009 for trades in standard types of OTC derivatives to take place through clearinghouses as part of an effort to make the market simpler and more robust. The G-20 then agreed in 2011 to set margin requirements for transactions that take place away from central clearing to boost the resilience of the financial system.
Today’s plans would also force firms to ring-fence and not re-use collateral so that it wouldn’t be lost to the company that posts it if a trader goes bankrupt.
There is a “broad consensus” among regulators that “the re-use of initial margin should be prohibited,” the committee said. Still, the U.S. Securities and Exchange Commission believes it should be allowed “in very limited circumstances.”
“The dealers are just going to squeal if that right gets taken away from them,” Christian A. Johnson, a University of Utah law professor, said yesterday in a telephone interview. “It’ll put tremendous pressure on dealers. It just exponentially raises the amount of collateral they’ll have to have.”
Foreign Exchange
The proposal on margins covers non-cleared credit, interest rate, commodity and foreign-exchange derivatives. In the U.S., the Treasury Department proposed an exemption for foreign- exchange swaps and forwards from most of the Dodd-Frank Act’s clearing and trading rules. The Treasury said there was less counterparty and settlement risk in foreign-exchange contracts than other types of derivatives.
“It is unclear whether these characteristics fully offset the need for margin requirements,” the Basel committee said in its report. The committee is seeking comment on whether to allow an exemption for foreign-exchange contracts, such as those with durations of less than a month or a year.
The Basel committee, which is headquartered at the Bank for International Settlements, brings together banking regulators from 27 nations including the U.S., U.K. and China.
Madrid-based IOSCO brings together national market regulators from more than 100 countries to coordinate rules and share information.
Johanes
Oct 07, 2012 at 20:51
Canadian derivatives investors will be allowed to process trades through new global clearinghouses that are being created to curb the risk of another financial squeeze, the country’s central bank said.
The Bank of Canada said improvements in the new trading systems are sufficient to protect financial markets, according to a statement from Ottawa today. Canada has also developed a domestic clearinghouse.
A global overhaul of rules governing derivatives contracts mandates the use of central counterparties by derivatives traders. Regulators have sought tougher rules for over-the- counter derivatives since the collapse in 2008 of Lehman Brothers Holdings Inc. and the rescue of American International Group Inc. (AIG), two of the largest traders of credit-default swaps.
“Canadian authorities are committed to clearing standardized over-the-counter derivative contracts, subject to appropriate exemptions, through central counterparties, CCPs,” the Bank of Canada said. “Canadian authorities judge that global CCPs will provide a safe, robust and resilient environment for clearing OTC derivatives.”
The Bank of Canada said improvements in the new trading systems are sufficient to protect financial markets, according to a statement from Ottawa today. Canada has also developed a domestic clearinghouse.
A global overhaul of rules governing derivatives contracts mandates the use of central counterparties by derivatives traders. Regulators have sought tougher rules for over-the- counter derivatives since the collapse in 2008 of Lehman Brothers Holdings Inc. and the rescue of American International Group Inc. (AIG), two of the largest traders of credit-default swaps.
“Canadian authorities are committed to clearing standardized over-the-counter derivative contracts, subject to appropriate exemptions, through central counterparties, CCPs,” the Bank of Canada said. “Canadian authorities judge that global CCPs will provide a safe, robust and resilient environment for clearing OTC derivatives.”
Johanes
Oct 07, 2012 at 20:52
CME Group Inc. (CME), owner of the world’s biggest futures exchange, plans a derivatives market in London by the middle of 2013, setting up in competition with Eurex and Liffe, the largest venues.
CME will start with currency futures for all of the G-7 nations, Phupinder Gill, the company’s chief executive officer said in an interview today. The new exchange, to be called CME Europe, will be led by Robert Ray as chief executive officer. CME Globex will be the electronic trading system for the new London exchange and CME Clearing Europe will process the transactions. Chicago-based CME plans to file with the U.K. securities regulator this week as the first step in the process. Ten years after going public, CME Group has become the most valuable exchange operator in the world, capitalizing on the higher profitability of derivatives while the value of equity trading has declined. The company controls 98 percent of the U.S. futures market and gets more than 20 percent of its business outside U.S. trading hours. It opened a London-based clearinghouse, CME Clearing Europe, last year.
“CME is looking to expand globally at a time when the over-the-counter derivatives markets are seeing considerable reform” via new U.S. and European regulations, Richard Perrott, exchange analyst at Berenberg Bank, said today. “Expanding into Europe ahead of these changes makes sense given that close to half of global OTC activity occurs in London.”
The new exchange represents competition for Liffe and Eurex, whose owners, NYSE Euronext (NYX) and Deutsche Boerse AG (DB1), had their plan to merge blocked by European antitrust authorities in February.
Merger Delay
CME has been working on the project for about two years. It was delayed while NYSE Euronext and Deutsche Boerse held merger talks, according to people familiar with the situation who also revealed plans for the new exchange. Regulators scrutinizing the NYSE-Deutsche Boerse deal were focused on whether sufficient competition in derivatives existed in Europe and whether CME might become “a significant player” there.
CME was also sidetracked by the bidding war for the London Metal Exchange because acquiring the venue would have given it a European exchange to build on, the people said. As CME was unsuccessful in its LME bid, it decided to forge ahead with the project, the people said.
Regulatory Environment
“It’s not the regulatory environment for ourselves, but the regulatory environment for our clients,” Gill said today in an interview. “There are particular clients that are comfortable doing business in one jurisdiction,” he added.
Eurex is Europe’s largest derivatives exchange and London- based Liffe is second. Intercontinental Exchange Inc., the second-largest U.S. futures market, owns ICE Futures Europe exchange in London. Trading at ICE Futures Europe exchange set a second-quarter record.
“We have the deepest liquidity pool with about $140 billion traded a day in notional FX,” Gill said. “And we have a potential client base that don’t trade it for various reasons. We are doing it to meet their needs and we are wanted to have an initial focus.”
The exchange expects it to take about six months to gain approval from the U.K.’s Financial Services Authority, he said.
During the year it spent fighting for its deal, NYSE argued that its greatest competitor in derivatives is CME, not Deutsche Boerse. It cited an 89 percent membership overlap between CME and Liffe and rivalry in trading Euribor and Eurodollar futures. CME last year offered Euribor futures and options on its electronic trading platform, pitting itself directly against Liffe, which dominates the market for co-called short-term interest rate products.
“Would we invest in a new exchange based in Europe?” Andrew Lamb, chief executive officer of CME Clearing Europe, said in a January interview. “Yes, but based on tangible client demand.”
CME will start with currency futures for all of the G-7 nations, Phupinder Gill, the company’s chief executive officer said in an interview today. The new exchange, to be called CME Europe, will be led by Robert Ray as chief executive officer. CME Globex will be the electronic trading system for the new London exchange and CME Clearing Europe will process the transactions. Chicago-based CME plans to file with the U.K. securities regulator this week as the first step in the process. Ten years after going public, CME Group has become the most valuable exchange operator in the world, capitalizing on the higher profitability of derivatives while the value of equity trading has declined. The company controls 98 percent of the U.S. futures market and gets more than 20 percent of its business outside U.S. trading hours. It opened a London-based clearinghouse, CME Clearing Europe, last year.
“CME is looking to expand globally at a time when the over-the-counter derivatives markets are seeing considerable reform” via new U.S. and European regulations, Richard Perrott, exchange analyst at Berenberg Bank, said today. “Expanding into Europe ahead of these changes makes sense given that close to half of global OTC activity occurs in London.”
The new exchange represents competition for Liffe and Eurex, whose owners, NYSE Euronext (NYX) and Deutsche Boerse AG (DB1), had their plan to merge blocked by European antitrust authorities in February.
Merger Delay
CME has been working on the project for about two years. It was delayed while NYSE Euronext and Deutsche Boerse held merger talks, according to people familiar with the situation who also revealed plans for the new exchange. Regulators scrutinizing the NYSE-Deutsche Boerse deal were focused on whether sufficient competition in derivatives existed in Europe and whether CME might become “a significant player” there.
CME was also sidetracked by the bidding war for the London Metal Exchange because acquiring the venue would have given it a European exchange to build on, the people said. As CME was unsuccessful in its LME bid, it decided to forge ahead with the project, the people said.
Regulatory Environment
“It’s not the regulatory environment for ourselves, but the regulatory environment for our clients,” Gill said today in an interview. “There are particular clients that are comfortable doing business in one jurisdiction,” he added.
Eurex is Europe’s largest derivatives exchange and London- based Liffe is second. Intercontinental Exchange Inc., the second-largest U.S. futures market, owns ICE Futures Europe exchange in London. Trading at ICE Futures Europe exchange set a second-quarter record.
“We have the deepest liquidity pool with about $140 billion traded a day in notional FX,” Gill said. “And we have a potential client base that don’t trade it for various reasons. We are doing it to meet their needs and we are wanted to have an initial focus.”
The exchange expects it to take about six months to gain approval from the U.K.’s Financial Services Authority, he said.
During the year it spent fighting for its deal, NYSE argued that its greatest competitor in derivatives is CME, not Deutsche Boerse. It cited an 89 percent membership overlap between CME and Liffe and rivalry in trading Euribor and Eurodollar futures. CME last year offered Euribor futures and options on its electronic trading platform, pitting itself directly against Liffe, which dominates the market for co-called short-term interest rate products.
“Would we invest in a new exchange based in Europe?” Andrew Lamb, chief executive officer of CME Clearing Europe, said in a January interview. “Yes, but based on tangible client demand.”
Johanes
Oct 05, 2012 at 09:34
CAPITAL OUTFLOW WILL RESUME TO WEAKEN NEW ZEALAND DOLLAR IN THE CAPITAL MARKET
October 5: By Johanes L. Sitanggang
NZD-currency and NZD-denominated interest bearing securities are the second target for investment amongst the major currencies by the carry- and the macro-traders to look for profits from the NZD appreciation plus the yields. After printing about 1000 PIPs during the 3rd quarter of 2012, the CHF-carry traders started to liquidate their investment from NZD-currency and NZD-interest bearing securities for profit. Similarly, after printing about 750 PIPs during the same period, JPY-carry traders started to liquidate their investment from the same currency. They are followed by the macro-traders.
Global fund managers however are in difficult time to shift their assets from NZD currency and NZD-denominated interest bearing securities. This result the slower liquidation activity and consequently to cause the weakening of NZD is slower than expected in the capital market in favor of RBNZ. Although significant investment made by the NZD-based global fund managers into EUR and GBP currencies and their denominated interest bearing securities, the outflow remains smaller than inflow and on hold quantitatively. If this condition to be prolonged, NZD will remains strong until CHF and JPY carry traders and theUSD macro-traders undertake large liquidation from New Zealand and to shift their funds into their home currencies.
In the past, RBNZ allowed their currency to be over-valued in the market for almost 20 % from its fundamental price (equilibrium exchange rate) and market sterilization to be undertaken by RBNZ only after advised by the IMF for RBNZ to commit for maintaining the global equilibrium for global price stability. In today's economic and financial crisis, RBNZ is expected not to repeat the same. The prolonged NZD to be strengthened in the capital market will increase the inflationary pressure and destabilize the New Zealand's dynamic stochastic general equilibrium. In medium to long-term this will jeopardize the New Zeland economy and may put RBNZ at a very costly market sterilization cost to equalize the economic input and output potentials.
Accordingly, RBNZ and the dealers shall undertake soft-market intervention at very lowest cost of operation and to be followed by largest market participants. This effort will resume the NZD to be weakened in the capital market and to maintain the NZD currency band at pre-determined economic exchanger rate target zone and to harmonize the capital inflow and outflow interior their currency band for maintaining global equilibrium. This effort should be undertaken shortly which will be supportive to the effort undertaken by RBA for their rate cutting and further to support the ECB and GBP's efforts.
October 5: By Johanes L. Sitanggang
NZD-currency and NZD-denominated interest bearing securities are the second target for investment amongst the major currencies by the carry- and the macro-traders to look for profits from the NZD appreciation plus the yields. After printing about 1000 PIPs during the 3rd quarter of 2012, the CHF-carry traders started to liquidate their investment from NZD-currency and NZD-interest bearing securities for profit. Similarly, after printing about 750 PIPs during the same period, JPY-carry traders started to liquidate their investment from the same currency. They are followed by the macro-traders.
Global fund managers however are in difficult time to shift their assets from NZD currency and NZD-denominated interest bearing securities. This result the slower liquidation activity and consequently to cause the weakening of NZD is slower than expected in the capital market in favor of RBNZ. Although significant investment made by the NZD-based global fund managers into EUR and GBP currencies and their denominated interest bearing securities, the outflow remains smaller than inflow and on hold quantitatively. If this condition to be prolonged, NZD will remains strong until CHF and JPY carry traders and theUSD macro-traders undertake large liquidation from New Zealand and to shift their funds into their home currencies.
In the past, RBNZ allowed their currency to be over-valued in the market for almost 20 % from its fundamental price (equilibrium exchange rate) and market sterilization to be undertaken by RBNZ only after advised by the IMF for RBNZ to commit for maintaining the global equilibrium for global price stability. In today's economic and financial crisis, RBNZ is expected not to repeat the same. The prolonged NZD to be strengthened in the capital market will increase the inflationary pressure and destabilize the New Zealand's dynamic stochastic general equilibrium. In medium to long-term this will jeopardize the New Zeland economy and may put RBNZ at a very costly market sterilization cost to equalize the economic input and output potentials.
Accordingly, RBNZ and the dealers shall undertake soft-market intervention at very lowest cost of operation and to be followed by largest market participants. This effort will resume the NZD to be weakened in the capital market and to maintain the NZD currency band at pre-determined economic exchanger rate target zone and to harmonize the capital inflow and outflow interior their currency band for maintaining global equilibrium. This effort should be undertaken shortly which will be supportive to the effort undertaken by RBA for their rate cutting and further to support the ECB and GBP's efforts.
Johanes
Oct 05, 2012 at 09:35
correction, not market intervention but market sterilization. correction, not ECB and GBP's efforts but ECB and BOE's efforts.
Johanes
Oct 06, 2012 at 07:28
NEW ZEALAND CURRENCY BAND
OCTOBER 6, 2012: JOHANES L. SITANGGANG
Much turbulence experienced by the New Zealand currency band, the second the highest interest rate but the smallest size of economy amongst the major currencies. However, despite of excessive volatility was experienced, the New Zealand currency band continues to perform consistently although most of the measured stop losses were broken (NZD/JPY and GBP/NZD) in term of spikes and resumed quickly to the equilibrium state.
The New Zealand currency band is moving from disequilibrium to disequilibrium trading zones. The NZD-pegged derivatives continue to move by following the equilibrium state and leaving the Dodd Franc Act behind for Washington DC’s policy makers. The NZD-negative pairs (EUR/NZD and GBP/NZD) will continue to move to upward direction to visit their estimated upper currency bands (1.6500 and 2.0500). The NZD-positive pairs, NZD/CHF has broken its central currency band (0.7600) and will continue to move to downward direction down to the level of 0.7100. Both NZD/USD and NZD/JPY are moving from their near upper currency bands to central currency bands and will continue to their lower currency bands and they represent the most feasible to target but at very high swab costs (overnight rollover fees). Although EUR/NZD and GBP/NZD remains feasible, their swab costs are larger than NZD/USD and NZD/JPY. However, NZD/USD and NZD/JPY will remains at excessive volatility in the market, thus stop loss shall be placed larger than measurable rates to anticipate possible spikes.
The current performance of New Zealand currency band has confirmed the continuing capital outflow inline to global equilibrium. The band is moving forward and meeting the central bankers and largest market players’ expectations.
OCTOBER 6, 2012: JOHANES L. SITANGGANG
Much turbulence experienced by the New Zealand currency band, the second the highest interest rate but the smallest size of economy amongst the major currencies. However, despite of excessive volatility was experienced, the New Zealand currency band continues to perform consistently although most of the measured stop losses were broken (NZD/JPY and GBP/NZD) in term of spikes and resumed quickly to the equilibrium state.
The New Zealand currency band is moving from disequilibrium to disequilibrium trading zones. The NZD-pegged derivatives continue to move by following the equilibrium state and leaving the Dodd Franc Act behind for Washington DC’s policy makers. The NZD-negative pairs (EUR/NZD and GBP/NZD) will continue to move to upward direction to visit their estimated upper currency bands (1.6500 and 2.0500). The NZD-positive pairs, NZD/CHF has broken its central currency band (0.7600) and will continue to move to downward direction down to the level of 0.7100. Both NZD/USD and NZD/JPY are moving from their near upper currency bands to central currency bands and will continue to their lower currency bands and they represent the most feasible to target but at very high swab costs (overnight rollover fees). Although EUR/NZD and GBP/NZD remains feasible, their swab costs are larger than NZD/USD and NZD/JPY. However, NZD/USD and NZD/JPY will remains at excessive volatility in the market, thus stop loss shall be placed larger than measurable rates to anticipate possible spikes.
The current performance of New Zealand currency band has confirmed the continuing capital outflow inline to global equilibrium. The band is moving forward and meeting the central bankers and largest market players’ expectations.
Johanes
Oct 04, 2012 at 16:04
OCTOBER 4: A PLAN FOR PAMM ESTABLISHMENT WITH CITIBANK N.A
A negotiation is underway with CITIBANK N.A for establishing a PAMM in early 2013 for global commercialization of the new model and strategy of equilibrium trading strategy.
CITIBANK NA will be acting as the PAMM Broker as well as PAMM Administrator. For that purpose, CITIBANK N.A is monitoring the performance of the PAMM 1601077265 which will be useful reference for improvement on the terms and conditions of the PAMM.
Tentatively, the fund at inception will be made at $ 1,000,000 to commence the commercial operation. A minimum investment per investor not lesser than $ 100,000 or the equivalent in other currencies. The PAMM is proposed to be set at lower reward to risk ratio expectation when compared to PAMM 1601077265. Target of fund will be established after detailed evaluation of the targetd market segments. The PAMM will be negotiated to be marketed jointly by the established team together with Citibank's global network in 160 countries.
A familiarization of the CITIBANK's software, CitiFX Pro Trader, powered by Saxo Bank, is underway and setting to January 2013 at which month the PAMM to be commenced for commercial operation.
Partnership with largest banks, such as CITIBANK is one of the most appropriate method for global commercialization of the methodology and strategy to reach the global investment community by empowering the Citibank's global networks.
Johanes L. Sitanggang
A negotiation is underway with CITIBANK N.A for establishing a PAMM in early 2013 for global commercialization of the new model and strategy of equilibrium trading strategy.
CITIBANK NA will be acting as the PAMM Broker as well as PAMM Administrator. For that purpose, CITIBANK N.A is monitoring the performance of the PAMM 1601077265 which will be useful reference for improvement on the terms and conditions of the PAMM.
Tentatively, the fund at inception will be made at $ 1,000,000 to commence the commercial operation. A minimum investment per investor not lesser than $ 100,000 or the equivalent in other currencies. The PAMM is proposed to be set at lower reward to risk ratio expectation when compared to PAMM 1601077265. Target of fund will be established after detailed evaluation of the targetd market segments. The PAMM will be negotiated to be marketed jointly by the established team together with Citibank's global network in 160 countries.
A familiarization of the CITIBANK's software, CitiFX Pro Trader, powered by Saxo Bank, is underway and setting to January 2013 at which month the PAMM to be commenced for commercial operation.
Partnership with largest banks, such as CITIBANK is one of the most appropriate method for global commercialization of the methodology and strategy to reach the global investment community by empowering the Citibank's global networks.
Johanes L. Sitanggang
Johanes
Oct 04, 2012 at 07:15
EQUILIBRIUM TRADING STRATEGY IN PRACTICE
Equilibrium trading strategy (ETS) is to long the currency pairs from their measured equilibrium exchange rate (EERs) to target their measured equilibrium interest rate (EIRs). Or, the opposite direction from their measured EIRs to their measured EERs. The EERs also called "disequilibrium" and EIRs also called "equilibrium". The measured volatility between the EERs and EIRs is called "exchange rate target zone". EERs also known as exchange rate at fundamental and EIRs also known as exchange rate at interest rate. EIRs also called as "clear rate" or "clearing rate" by market participants.
Many models and equations have been introduced for the measurement of EERs and EIRs. Most of the models fail due to the lack of the baseline for the measurement. The introduced currency band theory provides an improvement for the measurement of EERs and EIRs but remains at very high tolerance due to the currency pairs are dynamics. Applying the models and equations introduced on interest rate differential currency band is too complicated and may not appropriate for less educated economists. And, further the central bank's apply and practice different models of currency bands.
A new model of "time series interest rate differential based exchange rate targets and currency band" introduced and tested. This model provide more accurate data for the measuremet of EERs and EIRs. The model also provide justification and rationalization for the measurement of EERs or EIRs for selected currency pairs are inter-related and inter-dependant to other. Accordingly, the currency band to be grouped into AUD-, NZD-, EUR-, GBP-, USD-, JPY-, CHF- and CAD-currency bands. These bands are inter-related and inter-dependant to each other by their currency pairs. For example, the relationship between AUD-, USD- and GBP-currency bands is represented by the presence of AUD/USD and GBP/USD in USD-currency band, and the presence of GBP/AUD in both AUD and GBP currency bands. Since currency bands are inter-related and inter-dependant to each other, then their performance could be monitored continuously by using "global currency band". Thus, the new model is comprising (1) global currency band - global equilibrium, (2) AUD currency band, (3) NZD currency band, (4) EUR currency band, (5) GBP currency band, (6) USD currency band, (7) JPY currency band, (8) CHF currency band, and (9) CAD currency band. All currency pairs (inter-related and inter-dependant) move in harmony and disharmony interior their each currency band and identified by using Brownian motion process. These currency bands provide real time information which currency/currency pairs are being manipulated, under priced, over priced, under market sterilization, under market intervention, and so on. As well as to determine to whether the currency pairs of targeted currency bands are being moved from "disequilibrium to equilibrium" or the opposite direction from "equilibrium to disequilibrium". These currency bands further to indicate and to confirm the capital inflow and outflow as the result of investment and liquidation activities by the market participants.
The equations developed and tested for the measurement of the EERs and EIRs as the market entry and exit rates decision making tools. Both EERs and EIRs are subject to be maintained by central banks by applying and practicing market sterilization together with their dealers. In the case they are under attack and not defendable (out of band), then central bank may undertake market intervention individually, unilaterally or in coordinated effort by communicating to each other, the inter-central bank's communications.
Trading Practice:
Trading the targeted currency pairs (long/short) from their measured EERs to target their measured EIRs is at overnight rollover fee risk free, subject to market interest rate. This is similar to carry trading practice and such trading position become commendable to hold for two source of profits, the appreciation of the purchased currency plus their interest rate differential. The time required by a currency pair to move from EERs to EIRs could be 30 days to 90 days or more. Thus, when the trading is entered from EERs to EIRs then the positions could be hold without the risk for overnight rollover fee (swab). When the trade is being undertaken from EERs to EIRs, one of the indicator in account will be the "equity" always larger then "balance".
Trading the targeted currency pairs (long/short) from their measured EIRs to target their measured EERs is subject to overnight rollover fee (swab), and subject to market interest rate. And, the time required by the currency pair to move from EIRs to EERs could be 30 days to 90 days or more. Thus, holding the trading position is subject to continuously to be charged for overnight rollover fee (swab). And, therefore, one of the appropriate practice is to enter and exit the market in multiple times or similar to technical trading approach, but however, consistent direction of trading. When trade is being undertaken from EIRs to EERs, one of the indicator in account will be mixed performance of equity and balance.
Stop loss generally to be placed below or above the EERs and EIRs and represent the strongest levels as the EERs and EIRs are subject to central bank's market sterilization to maintain the currency pairs to move within their established and measured exchange rate target zones. Overtime, the stop loss to be adjusted for break-even and to protect floating profit to allow for compounding.
The two accounts that displayed in this static.mfbcdn.net are managed by using this new model and strategy. Commercial cooperation is open for discussion directly with the principal researcher and developer, Johanes L. Sitanggang
Equilibrium trading strategy (ETS) is to long the currency pairs from their measured equilibrium exchange rate (EERs) to target their measured equilibrium interest rate (EIRs). Or, the opposite direction from their measured EIRs to their measured EERs. The EERs also called "disequilibrium" and EIRs also called "equilibrium". The measured volatility between the EERs and EIRs is called "exchange rate target zone". EERs also known as exchange rate at fundamental and EIRs also known as exchange rate at interest rate. EIRs also called as "clear rate" or "clearing rate" by market participants.
Many models and equations have been introduced for the measurement of EERs and EIRs. Most of the models fail due to the lack of the baseline for the measurement. The introduced currency band theory provides an improvement for the measurement of EERs and EIRs but remains at very high tolerance due to the currency pairs are dynamics. Applying the models and equations introduced on interest rate differential currency band is too complicated and may not appropriate for less educated economists. And, further the central bank's apply and practice different models of currency bands.
A new model of "time series interest rate differential based exchange rate targets and currency band" introduced and tested. This model provide more accurate data for the measuremet of EERs and EIRs. The model also provide justification and rationalization for the measurement of EERs or EIRs for selected currency pairs are inter-related and inter-dependant to other. Accordingly, the currency band to be grouped into AUD-, NZD-, EUR-, GBP-, USD-, JPY-, CHF- and CAD-currency bands. These bands are inter-related and inter-dependant to each other by their currency pairs. For example, the relationship between AUD-, USD- and GBP-currency bands is represented by the presence of AUD/USD and GBP/USD in USD-currency band, and the presence of GBP/AUD in both AUD and GBP currency bands. Since currency bands are inter-related and inter-dependant to each other, then their performance could be monitored continuously by using "global currency band". Thus, the new model is comprising (1) global currency band - global equilibrium, (2) AUD currency band, (3) NZD currency band, (4) EUR currency band, (5) GBP currency band, (6) USD currency band, (7) JPY currency band, (8) CHF currency band, and (9) CAD currency band. All currency pairs (inter-related and inter-dependant) move in harmony and disharmony interior their each currency band and identified by using Brownian motion process. These currency bands provide real time information which currency/currency pairs are being manipulated, under priced, over priced, under market sterilization, under market intervention, and so on. As well as to determine to whether the currency pairs of targeted currency bands are being moved from "disequilibrium to equilibrium" or the opposite direction from "equilibrium to disequilibrium". These currency bands further to indicate and to confirm the capital inflow and outflow as the result of investment and liquidation activities by the market participants.
The equations developed and tested for the measurement of the EERs and EIRs as the market entry and exit rates decision making tools. Both EERs and EIRs are subject to be maintained by central banks by applying and practicing market sterilization together with their dealers. In the case they are under attack and not defendable (out of band), then central bank may undertake market intervention individually, unilaterally or in coordinated effort by communicating to each other, the inter-central bank's communications.
Trading Practice:
Trading the targeted currency pairs (long/short) from their measured EERs to target their measured EIRs is at overnight rollover fee risk free, subject to market interest rate. This is similar to carry trading practice and such trading position become commendable to hold for two source of profits, the appreciation of the purchased currency plus their interest rate differential. The time required by a currency pair to move from EERs to EIRs could be 30 days to 90 days or more. Thus, when the trading is entered from EERs to EIRs then the positions could be hold without the risk for overnight rollover fee (swab). When the trade is being undertaken from EERs to EIRs, one of the indicator in account will be the "equity" always larger then "balance".
Trading the targeted currency pairs (long/short) from their measured EIRs to target their measured EERs is subject to overnight rollover fee (swab), and subject to market interest rate. And, the time required by the currency pair to move from EIRs to EERs could be 30 days to 90 days or more. Thus, holding the trading position is subject to continuously to be charged for overnight rollover fee (swab). And, therefore, one of the appropriate practice is to enter and exit the market in multiple times or similar to technical trading approach, but however, consistent direction of trading. When trade is being undertaken from EIRs to EERs, one of the indicator in account will be mixed performance of equity and balance.
Stop loss generally to be placed below or above the EERs and EIRs and represent the strongest levels as the EERs and EIRs are subject to central bank's market sterilization to maintain the currency pairs to move within their established and measured exchange rate target zones. Overtime, the stop loss to be adjusted for break-even and to protect floating profit to allow for compounding.
The two accounts that displayed in this static.mfbcdn.net are managed by using this new model and strategy. Commercial cooperation is open for discussion directly with the principal researcher and developer, Johanes L. Sitanggang
Johanes
Oct 01, 2012 at 13:44
EQUILIBRIUM TRADING STRATEGY
A VERY COMPLEX FX ENGINEERING DESIGN OF THE GLOBAL FINANCIAL STRUCTURE
Equilibrium trading strategy is not new, however it is remaining confidential. It is a very complex on a packaging of FX engineering design on the structure of the global financial system. It is established for the global harmony and to establish closer cooperation amongst the developed nations’ central bankers by strengthening the inter-central bank communications for the global price, banking and economic stability.
George Soros has been practicing equilibrium trading strategy for several years and he promoted his theory of equilibrium. Below is the information on George Soros quoted from wikipedia (http://en.wikipedia.org/wiki/George_Soros) and could be searched by the readers.
Reflexivity, financial markets, and economic theory
Economist Paul Krugman is critical of Soros' effect on financial markets. Soros' writings focus heavily on the concept of reflexivity, where the biases of individuals enter into market transactions, potentially changing the perception of fundamentals of the economy. Soros argues that different principles apply in markets depending on whether they are in a "near to equilibrium" or a "far from equilibrium" state. He argues that, when markets are rising or falling rapidly, they are typically marked by disequilibrium rather than equilibrium, and that the conventional economic theory of the market (the 'efficient market hypothesis') does not apply in these situations. Soros has popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions.
He has stated that his own financial success has been attributable to the edge accorded by his understanding of the action of the reflexive effect.
Reflexivity is based on three main ideas.
1. Reflexivity is best observed under special conditions where investor bias grows and spreads throughout the investment arena. Examples of factors that may give rise to this bias include (a) equity leveraging or (b) the trend-following habits of speculators.
2. Reflexivity appears intermittently since it is most likely to be revealed under certain conditions; i.e., the character of the equilibrium process is best considered in terms of probabilities.
3. Investors' observation of and participation in the capital markets may at times influence valuations and fundamental conditions or outcomes.
A current example of reflexivity in modern financial markets is that of the debt and equity of housing markets. Lenders began to make more money available to more people in the 1990s to buy houses. More people bought houses with this larger amount of money, thus increasing the prices of these houses. Lenders looked at their balance sheets which not only showed that they had made more loans, but that their equity backing the loans – the value of the houses, had gone up (because more money was chasing the same amount of housing, relatively). Thus they lent out more money because their balance sheets looked good, they were guaranteed by the Federal Government, and prices went up more.
This was further amplified by public policy. Many governments see home ownership as a positive outcome and so first home owners grant and other financial subsidies – or influences to buy a home such as the exemption of a primary residence from capital gains taxation – mean that house purchases were seen as a good thing. Prices increased rapidly, and lending standards were relaxed. The salient issue regarding reflexivity is that it explains why markets gyrate over time, and do not just stick to equilibrium – they tend to overshoot or undershoot.
Soros’ trading model is specifically addressed to target the market from disequilibrium to equilibrium and he popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions to be set as the market entry levels by ignoring the feasibility from equilibrium to disequilibrium.
Johanes L. Sitanggang’s Research and Development Resume 2004 to 2012
The theory of managed exchange rate regime significantly to be advanced by the Krugman’s seminal paper on currency band (1991), an explicit solution for the path of the exchange rate within a band in a continuous time stochastic framework. The model assumed that the monetary authorities adopted a passive stance to the targeting of the exchange rate so long as the rate remained strictly within the interior of the band. Only when the rate reached the margins of the band would the authorities intervene in order to prevent the rate from moving outside its permitted range. In particular, intermittent and state-contingent intervention was shown to stabilize the rate within the band, even when such intervention was not occurring. The anticipation of such activity by the market was sufficient to move the exchange rate closer to the center of the band.
Both George Soros and Johanes L. Sitanggang have the same source of currency band theory introduced by Robin Paul Krugman. Economist Paul Krugman is critical of Soros' effect on financial markets. Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.
Further study indicates that the terms of the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions popularized by George Soros are similar to the concepts of alignment and realignment on the lower and the upper currency bands popularized by Johanes L. Sitanggang at band’s margin. Central banks usually use the terms of alignment and realignment at band’s margin. George Soros model specifically designed for market entry at the disequilibrium trading zone and no specific explanation to hold to equilibrium trading zone, and by contrast, Johanes L. Sitanggang model specifically designed for market entry at both the disequilibrium trading zone and the equilibrium trading zone and by specifically to target from disequilibrium trading zone to equilibrium trading zone as well as from the equilibrium trading zone to the disequilibrium trading zone.
Currency band theory advanced by Lars E.O. Svensson using Interest Rate Differential in a Target Zones. Lars E. O. Svensson, is an Swedish economist on the faculty of Princeton University. He has published significant research in macroeconomics, especially monetary economics, international trade and general equilibrium theory. He is among the most influential economists in the world according to IDEAS/RePEc. He is a well-known proponent of inflation targeting, a topic on which he published significant research. Since 2007 he is on leave from the University as he took the position of deputy governor of the Sveriges Riksbank (the central bank of Sweden). He is also notable for advocating and implementing the world's first negative interest rate among central banks at the Riksbank in July 2009.
The interest rate differential model of currency band the later to be advanced and tested by Johanes L. Sitanggang by grouping the currency pairs into “positive interest rate differential currency pairs” and ‘negative interest rate differential currency pairs’ as the baseline for interest rate differential-based capital flow (cross currencies investment activity in a band). The performance of the positive and negative interest rate differential currency pairs interior the band may move in harmony and disharmony according to Brownian motion process theory and to validate the “equilibrium theory’ advanced by Alex Cuikerman. Alex Cukierman is Professor of Economics at Tel - Aviv University and Research Fellow at CEPR. He got his Phd in Economics from MIT. Cukierman is author or co-author of four books and over a hundred scientific articles in the areas of macroeconomics, monetary economics, political economy and monetary policy and institutions. His best known book is: Central Bank Strategy, Credibility and Independence – Theory and Evidence, MIT Press,1992.
Krugman and Miller, and Svensson had not addressed the real world decision regarding the characteristic of the currency band. In theory, most of the currencies are allowed to fluctuate as much as 15% from their assigned value. Williamson (1996) recommends a 7 – 10 percent range of either side. A. Cukierman provides further a precise framework for the analysis of the tradeoffs involved in the choice of unilateral exchange rate band. The model of the exchange rate band recommended in five models, the policymaker’s objective, the policymaker’s style, the sequence of events, the choice of nominal exchange rate change, and the expectation of the rate of change in the exchange rate. The models anticipate the expectation of movements at pre-determined performance. Several research papers have in depth analysis on the credibility of bands.
Alex Cuikerman, Yossi Spiegel, Leonardo Lediderman uses the equilibrium theory for the assessment and the measurement of the width of the currency band. Yossi Spiegel is an Associate Professor at the Recanati School of Business of Tel Aviv University and a research fellow at the CEPR. His fields of specialization and research include the Industrial Organization, Economics of Regulation and Antitrust, and Corporate Finance. Leonardo Leiderman is Professor of Economics at the Eitan Berglas School of Economics, Tel Aviv University, and the Chief Economic Advisor of Bank Hapoalim, the leading commercial bank in Israel. Previously, for two-and-a-half years up to October 2002, he served as Managing Director and Head of Emerging Markets Economics at Deutsche Bank. Prior to that, from 1996 to 2000 he was Senior Director and Head of the Research Department at the Bank of Israel.
Research undertaken by Johanes L. Sitanggang to G-8 central banks, i.e. the Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BOE), Bank of Canada (BOC), Bank of Japan (BOJ), Reserve Bank of Australia (RBA), Swiss National Bank (SNB), Reserve Bank of New Zealand (RBNZ) and other to evaluate the models of the band applied and practiced by those central banks. Finding has confirmed that they are practicing different models. BOJ apply narrow band and the Fed apply soft target zones by allowing the exchange rate to move within wide margins in the short run, but within narrow margins in the long run. The Fed in the opinion that the soft target zones are significantly less vulnerable to speculative attacks than “hard” target zones. BOC apply the target zone models with band realignment (imperfect credibility) and sticky prices. A simple model also developed for inflation targeting within the band. ECB sets fluctuation band about 15 % and to carryout unrestricted intervention at critical levels of the band. Reserve Bank of Australia operated with the width of band, 15 %. Other global central banks are practicing varying models and some of them based on the policymaker’s objectives.
A new model developed and tested by Johanes L. Sitanggang to accommodate the different on the models that applied and practiced by those central banks. Federal Reserve suggested that ‘different policies on currency bands but common goal – equilibrium”. In real application however, different models will result different prices of the exchange rates and they may not suitable to be used as indicator for equation development and to cause very high tolerance. A time series is the appropriate model to accommodate the different models used by those central banks, and at such, the original theory of currency band introduced by Kruman and advanced to interest rate differential currency band by Svensson to be re-advanced into ‘time series interest rate differential based currency band’ the later to be popularized as ‘time series interest rate differential based exchange rate targets and currency band’.
The new model tested and their performance interior the band validated by using Brownian motion process theory with positive to positive and negative to negative interest rate differential currency pairs. Renzo Avesani uses the Brownian motion process in his research paper Endogenously Determined Target Zones and Optimal Demand for International Reserve. His research paper was integral part in setting the Exchange Rate Targets, Currency Bands and Policy that finally accepted by OECD, IMF and G-8 central banks for global central banks’ policy (G-8) by 1991. The paper supports the theory of exchange rate targets and currency bands introduced by Paul R. Krugman in constructing the global financial system. Renzo G. Avesani is a senior economist for Financial Supervision and Regulation Division at the Monetary and Financial Systems Department of the International Monetary Fund (IMF). Prior to joining the IMF, he served as the head of Risk Management of Banca Intesa, Italy. Previously, he was an associate professor of Finance and Macroeconomics at the University of Brescia, Italy.
The performance of the model confirms the feasibility of the model to accommodate the different on the models of currency bands applied and practiced by central banks on their exchange rate targets and currency band policy. The performance of the model also evaluated from time to time on the impact of the “with’ and ‘without’ central bank’s market sterilization as well as “with’ and ‘without’ central bank’s market intervention. The model also tested to response to central bank’s monetary policy changes and macro- and micro-economic performance changes. Findings have confirmed that the model is capable to predict and anticipate the central bank’s monetary policy changes, to include market sterilization and market intervention implementation. Further performance review of the model has confirmed the capability of the model to indicate cross-border capital inflow and outflow in relation to trading activity, their impacts, as well as long-term performance of the currencies’ economies. Accordingly, the time series interest rate differential based exchange rate targets and currency band theory become useful as the primary indicator for market entry and exit rates in FX trading and FX-linked debt security trading.
The market entry and exit equations are developed and tested. The equations are constructed into the principle of equilibrium. According to equilibrium theory, the long and short run of movements in exchange rates will represent an equilibrium, because, in absence of a bubble, the volume of trading in foreign exchange market will drive the system toward equilibrium. It is useful to know where the current exchange rates stand within a credible exchange rate targets and currency bands relative to the term measure of equilibrium.
Based on the interest rate differential approach, the exchange rates move to their interest rate differential equilibrium from their interest rate differential disequilibrium. It means, the exchange rates move toward their “equilibrium” from their “disequilibrium”, an interest rate differential-based disequilibrium and equilibrium model. Positive interest rate differentials tend to move to upward direction - equilibrium and the negative interest rate differential tend to move to downward direction - equilibrium. It could be summarized that at equilibrium, the currency pairs with positive interest rate differentials stand at the central to upper currency band and the negative interest rate differentials stand at the central to lower currency band. They are monitored by using Brownian motion process.
By opposite, at disequilibrium the currency pairs with positive interest rate differentials stand at the central to lower currency band and the negative interest rate differentials stand at the central to upper currency band. What drives the currency pairs to move from their disequilibrium to equilibrium could be explained by the loanable funds theory of interest and the asset market theory of equilibrium as well as the market participants’ activities in exchange rates. They are all motivated by the economic and financial return-oriented investment activities. In today’s size of the global financial assets in circulation, speculation and price manipulation will have temporary and minor impact into the market.
According to loanable funds theory, the theory stated that disequilibrium (equilibrium exchange rate –EERs or disequilibrium interest rate) is the exchange rate at which the demand for a currency and the supply for the same currency are equal. The prices of exchanging the two currencies are “stable”. Equilibrium (equilibrium interest rate -EIRs) is that point at which the demand for money by borrowers equal to the supply of money by lenders. The supply and demand of interest bearing instruments are “stable”, and result the exchange rates to be stable.
According to loanable funds theory of the rate of interest posits that interest rates are determined by the supply and demand of loanable funds in the capital markets. Loanable funds theory of the rate of interest suggests that investments and savings determine the long-term level of interest rates, whereas short-term rates are determined by financial and monetary conditions in the economy. Loanable fund theory introduced by Knut Wicksell. Johan Gustaf Knut Wicksell (December 20, 1851 in Stockholm – May 3, 1926 in Stocksund) was a leading Swedish economist of the Stockholm school. His economic contributions would influence both the Keynesian and Austrian schools of economic thought. For many years, the Federal Reserve has used influence on short-term interest rates to contain inflationary pressure in the American economy and promote growth and employment. The genesis of this approach and its theoretical foundation both lie in the work of Knut Wicksell, one of the 20th century’s more colorful and eclectic economists. Wicksell was a free thinker, a lifelong socialist, a mentor to several justifiably famous Swedish economists who followed him, and one of the most influential economists of his time. His ongoing exchanges over the role of money in generating changes in prices—a dispute in which he and American economist Irving Fisher were the central players—predated the mid-20th century clash between Keynesian and monetarist views of business cycles and correct price stabilization policy.
Those theories allow the setting of lower and upper currency bands as the baseline to establish an indicator for the measurement of the equilibrium exchange rate – disequilibrium and the equilibrium interest rate – equilibrium. This equation however remains at very high tolerance for individual currency pair. A currency pair is inter-related and inter-dependant to other and currency correlation theory become one of the indicators for establishing the equations. The term of inter-related and inter-dependant represent the weighing average of the currency pairs of the same currency band and this terminology to be used for the design of the average traded weighted rates (ATWR). Testing and performance of the currency pairs interior the bands have confirmed that the uses of average traded weighted rates (ATWR) represent the strongest rates to be used as the indicator for the measurement of the equilibrium exchange rates (EERs) - disequilibrium and the equilibrium interest rates (EIRs) - equilibrium at the lower or the upper currency bands by following the equilibrium theory and validated by using the Brownian motion process. The developed equations by using the ATWR tested and confirmed to be the most accurate indicators, and lead to the market entry decision making tools. This indicator represents the actual turning points from disequilibrium to equilibrium and the opposite.
George Soros did not explain the rationale market movement with his theory. Rather than practical theories, he described with assumption. By contrast, Johanes L. Sitanggang justify and rationale the exchange rate movements interior the currency band by using practical theories. The movements of the exchange rates interior the band to be validated by using Brownian motion process, however their movement could be confirmed by the loanable fund theory. Daniel L. Thorntorn (1982) explained the connection between discount rate and market interest rates. Dallas L. Batten (1982) explained in more details the relationship between the discount rate, interest rates and foreign exchange rates, where the exchange rates was termed as an asset. The papers specifically explained the relationship between interest rate differentials and exchange rate movements, and the discount rate changes and exchange rate movements and contribute to the justification and rationalization on the background of the exchange rate movements inside the currency bands.
The new model of time series interest rate differential based exchange rate targets and currency band is the primary indicator to measure the exchange rates at disequilibrium and at the equilibrium as the exchange rate target zone set by the central banks. However, it is dynamics, self-driven and self-adjustment. The band is driven by the market activity and it is dynamic in responding to the macro- and micro-economic performances, and further, it is self-adjustment in responding to the central bank’s monetary policies, but the presented indicators are the most accurate for measuring the market entry and exit rates at the lowest risk when compared to any models and equations available in the market. Thus, consistent high return and consistent for long-term commercial operation is realistic, justified and rationale by applying and practicing the new model.
DEUTSCHE BUNDESBANK concluded, "in practice, the link between exchange rate movements and interest rate differentials are much more complex than is usually assumed in simple models". It is resolved by Johanes L. Sitanggang by the introduction of time series interest rate differential based exchange rate targets and currency band.
A VERY COMPLEX FX ENGINEERING DESIGN OF THE GLOBAL FINANCIAL STRUCTURE
Equilibrium trading strategy is not new, however it is remaining confidential. It is a very complex on a packaging of FX engineering design on the structure of the global financial system. It is established for the global harmony and to establish closer cooperation amongst the developed nations’ central bankers by strengthening the inter-central bank communications for the global price, banking and economic stability.
George Soros has been practicing equilibrium trading strategy for several years and he promoted his theory of equilibrium. Below is the information on George Soros quoted from wikipedia (http://en.wikipedia.org/wiki/George_Soros) and could be searched by the readers.
Reflexivity, financial markets, and economic theory
Economist Paul Krugman is critical of Soros' effect on financial markets. Soros' writings focus heavily on the concept of reflexivity, where the biases of individuals enter into market transactions, potentially changing the perception of fundamentals of the economy. Soros argues that different principles apply in markets depending on whether they are in a "near to equilibrium" or a "far from equilibrium" state. He argues that, when markets are rising or falling rapidly, they are typically marked by disequilibrium rather than equilibrium, and that the conventional economic theory of the market (the 'efficient market hypothesis') does not apply in these situations. Soros has popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions.
He has stated that his own financial success has been attributable to the edge accorded by his understanding of the action of the reflexive effect.
Reflexivity is based on three main ideas.
1. Reflexivity is best observed under special conditions where investor bias grows and spreads throughout the investment arena. Examples of factors that may give rise to this bias include (a) equity leveraging or (b) the trend-following habits of speculators.
2. Reflexivity appears intermittently since it is most likely to be revealed under certain conditions; i.e., the character of the equilibrium process is best considered in terms of probabilities.
3. Investors' observation of and participation in the capital markets may at times influence valuations and fundamental conditions or outcomes.
A current example of reflexivity in modern financial markets is that of the debt and equity of housing markets. Lenders began to make more money available to more people in the 1990s to buy houses. More people bought houses with this larger amount of money, thus increasing the prices of these houses. Lenders looked at their balance sheets which not only showed that they had made more loans, but that their equity backing the loans – the value of the houses, had gone up (because more money was chasing the same amount of housing, relatively). Thus they lent out more money because their balance sheets looked good, they were guaranteed by the Federal Government, and prices went up more.
This was further amplified by public policy. Many governments see home ownership as a positive outcome and so first home owners grant and other financial subsidies – or influences to buy a home such as the exemption of a primary residence from capital gains taxation – mean that house purchases were seen as a good thing. Prices increased rapidly, and lending standards were relaxed. The salient issue regarding reflexivity is that it explains why markets gyrate over time, and do not just stick to equilibrium – they tend to overshoot or undershoot.
Soros’ trading model is specifically addressed to target the market from disequilibrium to equilibrium and he popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions to be set as the market entry levels by ignoring the feasibility from equilibrium to disequilibrium.
Johanes L. Sitanggang’s Research and Development Resume 2004 to 2012
The theory of managed exchange rate regime significantly to be advanced by the Krugman’s seminal paper on currency band (1991), an explicit solution for the path of the exchange rate within a band in a continuous time stochastic framework. The model assumed that the monetary authorities adopted a passive stance to the targeting of the exchange rate so long as the rate remained strictly within the interior of the band. Only when the rate reached the margins of the band would the authorities intervene in order to prevent the rate from moving outside its permitted range. In particular, intermittent and state-contingent intervention was shown to stabilize the rate within the band, even when such intervention was not occurring. The anticipation of such activity by the market was sufficient to move the exchange rate closer to the center of the band.
Both George Soros and Johanes L. Sitanggang have the same source of currency band theory introduced by Robin Paul Krugman. Economist Paul Krugman is critical of Soros' effect on financial markets. Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.
Further study indicates that the terms of the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions popularized by George Soros are similar to the concepts of alignment and realignment on the lower and the upper currency bands popularized by Johanes L. Sitanggang at band’s margin. Central banks usually use the terms of alignment and realignment at band’s margin. George Soros model specifically designed for market entry at the disequilibrium trading zone and no specific explanation to hold to equilibrium trading zone, and by contrast, Johanes L. Sitanggang model specifically designed for market entry at both the disequilibrium trading zone and the equilibrium trading zone and by specifically to target from disequilibrium trading zone to equilibrium trading zone as well as from the equilibrium trading zone to the disequilibrium trading zone.
Currency band theory advanced by Lars E.O. Svensson using Interest Rate Differential in a Target Zones. Lars E. O. Svensson, is an Swedish economist on the faculty of Princeton University. He has published significant research in macroeconomics, especially monetary economics, international trade and general equilibrium theory. He is among the most influential economists in the world according to IDEAS/RePEc. He is a well-known proponent of inflation targeting, a topic on which he published significant research. Since 2007 he is on leave from the University as he took the position of deputy governor of the Sveriges Riksbank (the central bank of Sweden). He is also notable for advocating and implementing the world's first negative interest rate among central banks at the Riksbank in July 2009.
The interest rate differential model of currency band the later to be advanced and tested by Johanes L. Sitanggang by grouping the currency pairs into “positive interest rate differential currency pairs” and ‘negative interest rate differential currency pairs’ as the baseline for interest rate differential-based capital flow (cross currencies investment activity in a band). The performance of the positive and negative interest rate differential currency pairs interior the band may move in harmony and disharmony according to Brownian motion process theory and to validate the “equilibrium theory’ advanced by Alex Cuikerman. Alex Cukierman is Professor of Economics at Tel - Aviv University and Research Fellow at CEPR. He got his Phd in Economics from MIT. Cukierman is author or co-author of four books and over a hundred scientific articles in the areas of macroeconomics, monetary economics, political economy and monetary policy and institutions. His best known book is: Central Bank Strategy, Credibility and Independence – Theory and Evidence, MIT Press,1992.
Krugman and Miller, and Svensson had not addressed the real world decision regarding the characteristic of the currency band. In theory, most of the currencies are allowed to fluctuate as much as 15% from their assigned value. Williamson (1996) recommends a 7 – 10 percent range of either side. A. Cukierman provides further a precise framework for the analysis of the tradeoffs involved in the choice of unilateral exchange rate band. The model of the exchange rate band recommended in five models, the policymaker’s objective, the policymaker’s style, the sequence of events, the choice of nominal exchange rate change, and the expectation of the rate of change in the exchange rate. The models anticipate the expectation of movements at pre-determined performance. Several research papers have in depth analysis on the credibility of bands.
Alex Cuikerman, Yossi Spiegel, Leonardo Lediderman uses the equilibrium theory for the assessment and the measurement of the width of the currency band. Yossi Spiegel is an Associate Professor at the Recanati School of Business of Tel Aviv University and a research fellow at the CEPR. His fields of specialization and research include the Industrial Organization, Economics of Regulation and Antitrust, and Corporate Finance. Leonardo Leiderman is Professor of Economics at the Eitan Berglas School of Economics, Tel Aviv University, and the Chief Economic Advisor of Bank Hapoalim, the leading commercial bank in Israel. Previously, for two-and-a-half years up to October 2002, he served as Managing Director and Head of Emerging Markets Economics at Deutsche Bank. Prior to that, from 1996 to 2000 he was Senior Director and Head of the Research Department at the Bank of Israel.
Research undertaken by Johanes L. Sitanggang to G-8 central banks, i.e. the Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BOE), Bank of Canada (BOC), Bank of Japan (BOJ), Reserve Bank of Australia (RBA), Swiss National Bank (SNB), Reserve Bank of New Zealand (RBNZ) and other to evaluate the models of the band applied and practiced by those central banks. Finding has confirmed that they are practicing different models. BOJ apply narrow band and the Fed apply soft target zones by allowing the exchange rate to move within wide margins in the short run, but within narrow margins in the long run. The Fed in the opinion that the soft target zones are significantly less vulnerable to speculative attacks than “hard” target zones. BOC apply the target zone models with band realignment (imperfect credibility) and sticky prices. A simple model also developed for inflation targeting within the band. ECB sets fluctuation band about 15 % and to carryout unrestricted intervention at critical levels of the band. Reserve Bank of Australia operated with the width of band, 15 %. Other global central banks are practicing varying models and some of them based on the policymaker’s objectives.
A new model developed and tested by Johanes L. Sitanggang to accommodate the different on the models that applied and practiced by those central banks. Federal Reserve suggested that ‘different policies on currency bands but common goal – equilibrium”. In real application however, different models will result different prices of the exchange rates and they may not suitable to be used as indicator for equation development and to cause very high tolerance. A time series is the appropriate model to accommodate the different models used by those central banks, and at such, the original theory of currency band introduced by Kruman and advanced to interest rate differential currency band by Svensson to be re-advanced into ‘time series interest rate differential based currency band’ the later to be popularized as ‘time series interest rate differential based exchange rate targets and currency band’.
The new model tested and their performance interior the band validated by using Brownian motion process theory with positive to positive and negative to negative interest rate differential currency pairs. Renzo Avesani uses the Brownian motion process in his research paper Endogenously Determined Target Zones and Optimal Demand for International Reserve. His research paper was integral part in setting the Exchange Rate Targets, Currency Bands and Policy that finally accepted by OECD, IMF and G-8 central banks for global central banks’ policy (G-8) by 1991. The paper supports the theory of exchange rate targets and currency bands introduced by Paul R. Krugman in constructing the global financial system. Renzo G. Avesani is a senior economist for Financial Supervision and Regulation Division at the Monetary and Financial Systems Department of the International Monetary Fund (IMF). Prior to joining the IMF, he served as the head of Risk Management of Banca Intesa, Italy. Previously, he was an associate professor of Finance and Macroeconomics at the University of Brescia, Italy.
The performance of the model confirms the feasibility of the model to accommodate the different on the models of currency bands applied and practiced by central banks on their exchange rate targets and currency band policy. The performance of the model also evaluated from time to time on the impact of the “with’ and ‘without’ central bank’s market sterilization as well as “with’ and ‘without’ central bank’s market intervention. The model also tested to response to central bank’s monetary policy changes and macro- and micro-economic performance changes. Findings have confirmed that the model is capable to predict and anticipate the central bank’s monetary policy changes, to include market sterilization and market intervention implementation. Further performance review of the model has confirmed the capability of the model to indicate cross-border capital inflow and outflow in relation to trading activity, their impacts, as well as long-term performance of the currencies’ economies. Accordingly, the time series interest rate differential based exchange rate targets and currency band theory become useful as the primary indicator for market entry and exit rates in FX trading and FX-linked debt security trading.
The market entry and exit equations are developed and tested. The equations are constructed into the principle of equilibrium. According to equilibrium theory, the long and short run of movements in exchange rates will represent an equilibrium, because, in absence of a bubble, the volume of trading in foreign exchange market will drive the system toward equilibrium. It is useful to know where the current exchange rates stand within a credible exchange rate targets and currency bands relative to the term measure of equilibrium.
Based on the interest rate differential approach, the exchange rates move to their interest rate differential equilibrium from their interest rate differential disequilibrium. It means, the exchange rates move toward their “equilibrium” from their “disequilibrium”, an interest rate differential-based disequilibrium and equilibrium model. Positive interest rate differentials tend to move to upward direction - equilibrium and the negative interest rate differential tend to move to downward direction - equilibrium. It could be summarized that at equilibrium, the currency pairs with positive interest rate differentials stand at the central to upper currency band and the negative interest rate differentials stand at the central to lower currency band. They are monitored by using Brownian motion process.
By opposite, at disequilibrium the currency pairs with positive interest rate differentials stand at the central to lower currency band and the negative interest rate differentials stand at the central to upper currency band. What drives the currency pairs to move from their disequilibrium to equilibrium could be explained by the loanable funds theory of interest and the asset market theory of equilibrium as well as the market participants’ activities in exchange rates. They are all motivated by the economic and financial return-oriented investment activities. In today’s size of the global financial assets in circulation, speculation and price manipulation will have temporary and minor impact into the market.
According to loanable funds theory, the theory stated that disequilibrium (equilibrium exchange rate –EERs or disequilibrium interest rate) is the exchange rate at which the demand for a currency and the supply for the same currency are equal. The prices of exchanging the two currencies are “stable”. Equilibrium (equilibrium interest rate -EIRs) is that point at which the demand for money by borrowers equal to the supply of money by lenders. The supply and demand of interest bearing instruments are “stable”, and result the exchange rates to be stable.
According to loanable funds theory of the rate of interest posits that interest rates are determined by the supply and demand of loanable funds in the capital markets. Loanable funds theory of the rate of interest suggests that investments and savings determine the long-term level of interest rates, whereas short-term rates are determined by financial and monetary conditions in the economy. Loanable fund theory introduced by Knut Wicksell. Johan Gustaf Knut Wicksell (December 20, 1851 in Stockholm – May 3, 1926 in Stocksund) was a leading Swedish economist of the Stockholm school. His economic contributions would influence both the Keynesian and Austrian schools of economic thought. For many years, the Federal Reserve has used influence on short-term interest rates to contain inflationary pressure in the American economy and promote growth and employment. The genesis of this approach and its theoretical foundation both lie in the work of Knut Wicksell, one of the 20th century’s more colorful and eclectic economists. Wicksell was a free thinker, a lifelong socialist, a mentor to several justifiably famous Swedish economists who followed him, and one of the most influential economists of his time. His ongoing exchanges over the role of money in generating changes in prices—a dispute in which he and American economist Irving Fisher were the central players—predated the mid-20th century clash between Keynesian and monetarist views of business cycles and correct price stabilization policy.
Those theories allow the setting of lower and upper currency bands as the baseline to establish an indicator for the measurement of the equilibrium exchange rate – disequilibrium and the equilibrium interest rate – equilibrium. This equation however remains at very high tolerance for individual currency pair. A currency pair is inter-related and inter-dependant to other and currency correlation theory become one of the indicators for establishing the equations. The term of inter-related and inter-dependant represent the weighing average of the currency pairs of the same currency band and this terminology to be used for the design of the average traded weighted rates (ATWR). Testing and performance of the currency pairs interior the bands have confirmed that the uses of average traded weighted rates (ATWR) represent the strongest rates to be used as the indicator for the measurement of the equilibrium exchange rates (EERs) - disequilibrium and the equilibrium interest rates (EIRs) - equilibrium at the lower or the upper currency bands by following the equilibrium theory and validated by using the Brownian motion process. The developed equations by using the ATWR tested and confirmed to be the most accurate indicators, and lead to the market entry decision making tools. This indicator represents the actual turning points from disequilibrium to equilibrium and the opposite.
George Soros did not explain the rationale market movement with his theory. Rather than practical theories, he described with assumption. By contrast, Johanes L. Sitanggang justify and rationale the exchange rate movements interior the currency band by using practical theories. The movements of the exchange rates interior the band to be validated by using Brownian motion process, however their movement could be confirmed by the loanable fund theory. Daniel L. Thorntorn (1982) explained the connection between discount rate and market interest rates. Dallas L. Batten (1982) explained in more details the relationship between the discount rate, interest rates and foreign exchange rates, where the exchange rates was termed as an asset. The papers specifically explained the relationship between interest rate differentials and exchange rate movements, and the discount rate changes and exchange rate movements and contribute to the justification and rationalization on the background of the exchange rate movements inside the currency bands.
The new model of time series interest rate differential based exchange rate targets and currency band is the primary indicator to measure the exchange rates at disequilibrium and at the equilibrium as the exchange rate target zone set by the central banks. However, it is dynamics, self-driven and self-adjustment. The band is driven by the market activity and it is dynamic in responding to the macro- and micro-economic performances, and further, it is self-adjustment in responding to the central bank’s monetary policies, but the presented indicators are the most accurate for measuring the market entry and exit rates at the lowest risk when compared to any models and equations available in the market. Thus, consistent high return and consistent for long-term commercial operation is realistic, justified and rationale by applying and practicing the new model.
DEUTSCHE BUNDESBANK concluded, "in practice, the link between exchange rate movements and interest rate differentials are much more complex than is usually assumed in simple models". It is resolved by Johanes L. Sitanggang by the introduction of time series interest rate differential based exchange rate targets and currency band.
Johanes
Oct 01, 2012 at 07:19
PAMM 1601077265 NEWS (VERY IMPORTANT)
October 1, 2012
Commencing from October 2012, PAMM 1601077265 to be managed to target the volatility of the traded currency pairs from their lower to central and may up to upper currency bands, and or from the upper to central and may up to the lower currency bands to target the exchange rate target zones.
At such, the portfolios will be allowed to to down pressure and down to the level of 12.50 % risk assumed until the set of target to be achieved. Accordingly, the live monitoring charts at http://ta.fxcorporate/, static.mfbcdn.net, www.currensee.com as well as the trading accounts at www.myfxcm.com could be down-pressured down to the level of 12.50 % during the portfolios to be hold to targets.
The current portfolios managed with margin utilization < 5.00 % from the beginning balance of the 4th quarter 2012 (by assuming that all profits during the September 2012 or the 3rd quarter of 2012 to be withdrawn by investors during this October 1-5, 2012). These portfolios set for assumed risk < 10.00 % and to target > 60 % profit expectation. All the traded currency pairs are "derivatives" with the largest volatility in the market and portfolios could be up and down in minute to hour.
The traded currency pairs however subject to overnight rollover fee risk. This risk will be mitigated by adding small portfolio for daily to weekly holding period to off-set the overnight rollover fee.
Should the current portfolios to be manageable at risk free, then additional portfolios to be traded to increase the profit expectation by maintaining the risk assumed not larger than 12.50 %.
Johanes L. Sitanggang.
PAMM Manager
October 1, 2012
Commencing from October 2012, PAMM 1601077265 to be managed to target the volatility of the traded currency pairs from their lower to central and may up to upper currency bands, and or from the upper to central and may up to the lower currency bands to target the exchange rate target zones.
At such, the portfolios will be allowed to to down pressure and down to the level of 12.50 % risk assumed until the set of target to be achieved. Accordingly, the live monitoring charts at http://ta.fxcorporate/, static.mfbcdn.net, www.currensee.com as well as the trading accounts at www.myfxcm.com could be down-pressured down to the level of 12.50 % during the portfolios to be hold to targets.
The current portfolios managed with margin utilization < 5.00 % from the beginning balance of the 4th quarter 2012 (by assuming that all profits during the September 2012 or the 3rd quarter of 2012 to be withdrawn by investors during this October 1-5, 2012). These portfolios set for assumed risk < 10.00 % and to target > 60 % profit expectation. All the traded currency pairs are "derivatives" with the largest volatility in the market and portfolios could be up and down in minute to hour.
The traded currency pairs however subject to overnight rollover fee risk. This risk will be mitigated by adding small portfolio for daily to weekly holding period to off-set the overnight rollover fee.
Should the current portfolios to be manageable at risk free, then additional portfolios to be traded to increase the profit expectation by maintaining the risk assumed not larger than 12.50 %.
Johanes L. Sitanggang.
PAMM Manager
Yeni Widayanti Rahayu, Malang, Indonesia
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Ridwan Agus Mulyono, Tangerang, Indonesia
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Hadi Winardi, Surabaya, Indonesia
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Bobby Tanex, Bitung, Indonesia
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I.I Tioliani, Sidoardjo, Indonesia
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Monika Widjaya, Bandung, Indonesia
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Yudi Setiawan, Kediri, Indonesia
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Gerda Sianipar, Jakarta, Indonesia
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Octo Kusuma, Bandung, Indonesia
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Meiliana Koesnadi, Surabaya, Indonesia
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Juliawati Sentosa, Surabaya, Indonesia
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Tito Pardede, Jakarta, Indonesia
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Rini Suhargo, Lumajang, Indonesia
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Teddy Hans Jauwerissa, Surabaya, Indonesia
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Ariawan Adiputra, Bali, Indonesia
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