Carry Trade Index Dives with Oil Price Plummet

While everyone has been following the drama surrounding the price of oil falling since the most recent peak this summer, currency markets began feeling the effects of the turmoil more recently. We reported earlier a likely return of volatility in equities and forex markets more or less coinciding with the end of Quantitative Easing in November. After one last hurrah in mid-November, it would appear that volatility has in fact returned to markets and we are seeing the impact that has on asset prices: in most cases… downward.

What to Make of the Downward Price Movement of Oil

Oil is a very politicized commodity globally. Every once in a while the price rockets up somewhat out of control as speculators pile in during high-demand periods. Marginal producers find it economical to begin production from less-economical fields. For a while the global oil cartel tolerates this until socio-economic forces push end-consumers to cutback use (or at least slow growth rates) and demand begins to level or fall. One can see some of the demand for end use material in the St. Louis Federal Reserve “miles driven” chart – which cratered in 2008 post-Lehman and has basically flat-lined since (with gasoline demand falling with rising prices and greater fuel efficiency in vehicles).

It takes quite some time for large macro-moves to show up in asset prices – and when they do start to hit (like the fall in oil prices in summer 2014) and suppliers don’t react to keep supply/demand in balance… you get what we have been seeing the last few months: falling prices. The lowest-cost producer (Saudi Arabia) is perfectly happy to keep pumping oil at these reduced prices as it will ultimately force less economical operators out of business… whereupon we’ll start to see prices rise again. This process will take some time however, as the marginal players will try to continue to tread water until they drain their capital reserves. Smart money people are saying this process will take 12-18 months before we’ll see a substantive rise in oil prices again. In the meantime this will cause instability in markets in which oil is a crucial export.

How the Carry Trade Is Impacted by Cheap Oil

One of the more important carry trades of the last decade or so has been the use of cheap USD or forex credit to speculate in oil markets. Rumors of a major player / trader going bust are just one example how of the end game shakes out when demand growth fails to materialize. Long-time readers know all to well how markets are layered / levered up and stacked like dominos: a failure in one market (if big enough) begins a chain-reaction in other markets. That is what we are seeing in the carry-trade. Asset prices have fallen in one key speculative trade, forcing multiple parties to unwind. Suddenly can’t miss investments in oil-exporting nations become too risky – causing more traders to cut their risk level. Similarly the threat of capital controls in exporting countries prompts further speculative risk reduction. Risk reduction (for those of you who don’t know) is just a fancy way of saying, “SELL! SELL! SELL!” without trying to draw attention to the fact you are selling.

G7 Carry Trade Chart 12/16/2014

Major Drop Off Since Mid-November Coincides with Oil Speculative Capitulation (click for current chart)

If you hadn’t noticed lately… lots of folks engaged in the most speculative trading positions… are doing LOTS of selling. Here’s how it looks in the G7CTI… note the mid-November peak, just prior to the capitulation of WTI and Brent Crude prices. It’s been just about all downhill since.

Is Political Instability or Economic Instability the Endgame?

Recent geo-political events – most notably between Russia, the West, and Ukraine have me wondering if this is an example of fortunate timing for the West. Sanctions against Russia did not dissuade Vladimir Putin from annexing Crimea or supporting Ukrainian separatists, so is it conceivable that the drop in oil demand has become a convenient tool for the West / Petrodollar nations’ to attempt to destabilize Russian ambitions? It remains to be seen. Russia’s threatening of gas supplies to Europe probably was not a wise one. Economic destabilization threats of that magnitude are likely to be met with greater real actions against nations (read: Russia) making those kinds of threats.

It is also worth noting that Chinese and Russian forex ties and attempts to trade oil in Rubles and Yuan (hence ending / curbing Petrodollar domination / influence) may also be playing a role in the motivations of the top exporting nations.

From my perspective – this is not about using soft demand to shutter a handful of marginal shale operators in the US. This is about geo-political policy and maintaining global influence and power, with all of us peons hoping the heck world leaders know what they’re doing.

Where I Look to Find Day Trading Ideas

I follow the stock market every day, as I have for the last 20 years. Over that time frame I have come to rely on a few key indicators to help me assess where the market is headed. Unfortunately over the last few years, the market has become very skewed as a result of essentially daily central bank interventions via asset purchases (quantitative easing in the US and Japan, sovereign debt exchanges and bailouts in Europe) – making endeavors to discover the true price of assets a useless venture.

It has been something of a relief to people like me – day traders – that the Fed has finally begun its effort to taper purchases of treasury bond and mortgage assets. After all – if price discovery can’t happen on the foundational assets of the market (a.k.a. bonds), then how the heck are we supposed to price anything else?

Where to Find Opportunities in a Normal Stock Market

The time is coming soon when investors like you and I might actually see a normal market for stocks. A normal market hasn’t truly existed since TARP was enacted in late 2008, just around the time of the Obama election in the US. Opportunities should start to appear as the more traditional (inverse) relationship between the VIX and the S&P 500 reestablishes itself. As you might surmise, the VIX is one of the important indicators I use to find day trading ideas – either entry or exit points. Given the relationship has been battered by all the government and central bank interference these last several years – I have not been able to use the VIX to gauge my entry and exit points. I look forward to using it again soon though.

How Forex Market Normalization Will Provide Trading Ideas

The other big asset class (other than bonds) which has been subject to manipulation by governments rather than allow market forces to perform their function of price discovery is the forex markets. Since we launched our Carry Trade Index (measures the high volume forex pairs) in May of 2013, the Carry Trade Index has zoomed in one direction (with the exception of the taper tantrum conveniently shortly after launch): UP. We have seen with the tapering of Fed purchases below a critical level a return to more reasonable-looking price action in the index. One of the problems of launching a new index during a historically out-of-the-norm investing period is that initial data points simply can’t be extrapolated out to infinity (which maybe isn’t the worst investing lesson to learn). We look forward to a time when we can see how the index reacts to a more purely “market-driven” era of price discovery in currency markets. Our premise has always been that as currency markets embrace risk, equities markets follow suit… and when fx cross pairs reach favorable exit points – distribution events occur and both fx and equities markets fall. We look forward to a return to more normal price-discovery as an opportunity to prove out our philosophy (and index).

G7 Carry Trade Index circa October 2014

The Carry Trade Index Peaked September 8th and Has Fallen Sharply Since (click image for live chart)

What I See for Year End 2014 and Early 2015

More info and demos
So long as the Fed continues to stay the course and ultimately discontinue mortgage and treasury bond purchases, true price discovery will begin. As the taper continues, however, momentum and leverage investors will have seen the writing on the wall and exited positions – potentially en masse as we have seen in the last 10 days in a series of steps – or frightfully possibly all at once should a major counterparty fail to deliver a la Lehman was allowed to fail in 2008. It remains to be seen as to whether our markets, its principal participants, and government have learned anything in the last 6 years. My premise is we have not learned nearly enough.

How Risky Is the Stock Market Today?

If you are an engaged investor and trader as I am, the thought has to have crossed your mind lately just how much longer these market highs can go on. What risks to continued appreciation of stock prices exist in the market and what events might trigger a significant event? We’ll look at some sources of concern and what impact they might have.

Prolonged Complacency Inherent in the VIX

One of the first risk-profile components I invariably look at is the VIX index. I know based on whatever level the VIX is holding what level of concern sophisticated investors have about current versus future prospects. We have this understanding because at some level this indicator reflects the amount of hedge against market corrections major participants have accumulated. A low level of this index suggests reduced demand for stock price insurance, and hence suggests that a near-term pull-back is not likely priced in to current market levels. We have been at just such a (relatively) low level state for a considerable amount of time now, and that has me concerned, particularly as the Federal Reserve’s Quantitative Easing program ends (again). The last time the FED shut off QE, the market did not do very well – resulting in a resumption (and expansion) of the program multiple times since 2008. Here’s an annotated look at the VIX since the dot-com bubble burst in 2000-2001 (source data Yahoo! Finance).

VIX history annotated

Selected Annotated History of VIX Index 2000-2014 (source data Yahoo! Finance)

Developed Nations Interest Rates Remain at Historic Lows Globally

The second concern I have with regard to global markets is the interest rate flatline, also effectively ongoing since the adjustments related to the Lehman collapse. Can you believe we’re still talking about that 6 years later (this September)? And yet here we are. That is simply how badly mis-managed the financial markets were in terms of counter-party risk exposure resulting in nominal dollar amount contract exposure when all the derivatives markets blew up on the sub-prime loan defaults. Here’s a look at the current funds rates in the leading developed financial centers (Japan, US, EUR, GB) and elsewhere. Some countries have experimented with negative rates yet still negligible growth. BRICS nations are slowly developing alternatives to trading with the US as an intermediary for both geopolitical and economic reasons.

Source: (via AVATrade)

Source: (via AVATrade)

Margin Levels Peaking Again

A third area of concern typical during market booms is the level of margin exposure (particularly in relation to net equity positions). We don’t have a global breadth of data on the topic, but we do see periodic statements of NYSE margin participants – and those results and signals have been reasonably telling (predictive) in the past. I won’t bother to reinvent the wheel here as others have already nicely posted this chart and analysis but the message should be obvious: here again is another red flag.

( - click for original article)

(Source: – click for original article)

Major Powers Geopolitical Conflicts Threaten Global GDP Growth

Ukraine. Libya. Syria. Iraq. Gaza. Those are just the hot-spots right now, let alone the threat posed by a potential nuclear Iran or unrest in North Korea or China. Heck, we even had a several week long uprising in Missouri not to mention an employee revolt against the ownership of Market Basket in northern New England. There is a bubbling tension from disenfranchisement both globally and even now domestically. Participation in equities markets (at least as measured by trading volume) stands at decade-old lows. Labor workforce participation rates continue to fall in the US and Europe. Wealth and income gaps continue to grow. Political leaders remain aloof and uninterested in solving any of the basic economic problems of the day.

What Is There to Be Optimistic about in 2014

I honestly do not have a good answer for this. Usually financial crisis tend to start outward in the emerging markets and work their way in. Argentina’s default is one event. Spain has shown signs of stress over the summer. The ECB just did a rate cut… and then just when you think things will have settled down in Europe, Greece or Italy will blow through their funding resources again.

And just in case you thought the US 4.1% GDP growth was a good buffer against global growth issues… wait until all those sub-prime auto loans come due (and end up delinquent). If the VIX chart above is any indication as to how the next series of negative market events will unfold, we can expect the fall from current market highs to be swift and brutal. We’ll have to see how the market handles the loss of the Greenspan Bernanke Yellen put.

Where Is Binary Options Trading Legal?

People used to ask me all the time whether they were allowed to trade fixed return / digital options. Binary options have been available in unregulated markets since 2008, and regulatory authorities have (relatively quickly for them) begun to put their mark on this new type of retail security.

More info and demos

The short answer to the question is that it is legal to trade binary options just about anywhere in the world (including the US), so long as you follow the rules and regulations of the securities authorities in the country in which you reside. The longer answer is that as long as you live / reside outside the US it’s pretty easy to find assets and contracts to trade on virtually any of the leading stocks, indexes, commodities, and forex pairs. If you live inside the US, there are far fewer contracts to trade, it’s a lot more complicated to trade them, and you’re lucky if you can find a broker to take you on at all.

Legal Places to Trade Binary Options Outside the US

Europe, Japan, Singapore, Australia, Chile actually have taken the steps to develop regulations on fixed return contracts and treat them as financial securities. CySEC is the leading regulatory body in Europe given the number of firms operating out of that small country. Generally however at least a few firms will accept clientele globally (except US residents). In the past platforms such as Anyoption ltd. boasted of clients residing in around 140 countries. Most brokers are considerably more selective in the number of countries where they do business – however if they do offer contracts in your home country, they generally offer them without any asset-class restrictions. That is NOT true in the case of the US however.

Legal Issues in Trading Binary Options in the US

Full review

When it comes to using digital contracts in the US, the CFTC and SEC have each stepped in and asserted their authority over US securities markets. The CFTC has made it plain that futures and options contracts on forex and commodities have to be done over a regulated exchange. Given only a couple of brokers (NADEX comes to mind) operate within this space and offer few contracts at all, virtually no traffic / volume exists on US binary trading markets – last I looked anyway.

Exceptions Apply However for Sophisticate Investors and High-Net-Worth Individuals

One thing about US securities regulations is their routine double-standard – for while the law prohibits low-means individuals from entering into binary contracts – people of high-net-worth and financial institutions (a.k.a. “sophisticated investors” in the eyes of the SEC and CFTC) apparently can trade without restriction due to their ability to understand the risks (and presumably absorb the potential losses) from trading these high-risk / high reward hedging contracts. For those high-roller investors it them becomes a case of finding a broker offering the contracts on the assets they desire to trade.

How to Do Intraday Trading with Free Tips and Strategies

For many years now I have been a huge advocate of short-term or single-day trades in the market – ie getting in and out of stock or options market positions fast. Even though many years have gone by that system of getting back to cash quickly has continued to be my method of choice.

More info and demos

What Is the Best Indicator to Use?

That’s a question I get a lot – which market indicator or signal do I use to ultimately decide whether or not to pull the trigger and try to make money with an options trade. Those of you who have been readers for a long time will note that I have put up a couple of my own free trading algorithms online for visitors to look at (although I can not advocate using them for live trading given the data latency and other issues). Pro binary options traders however have been using a program introduced last year called Algobit with great success.

How to Open and Close Trades Profitably

There are a fair number of fairly simple options strategies we’ve discussed on in the past – but a couple of important ones come to mind. The easiest to take advantage of is the early close feature offered by binary brokers like Optionbit. Take your signal and make your trade and when it goes in the money (prior to lockout) – execute an early close feature on it to lock in gains prior to expiration. You won’t make as much money closing early as you might with a fully expired in the money position, but no one ever got hurt taking a profit, right? As for other potential solutions and strategies, normally I would point to some of the earlier binary trading systems we’ve discussed on here – but in reality most brokers have already adopted our systems and created products specifically for those strategies – namely products like range and barrier options – touch / no touch contracts and the like.

Free Tips for Intraday Traders Today

As I mentioned above, the algorithms I designed for free use can’t be used for live trading but there is no reason not to use them for research or idea generation. For example I have tended to find that the Risk On / Risk Off signal (see gauge on sidebar) tends to be a contra-indicator – in other words if the market is showing “risk on” on the gauge, typically the market begins to move downward. That might seem counter-intuitive but when you consider how large orders get executed these days (build momentum in the upward direction prior to selling off a large stake), it suddenly makes sense why the signals gauge would read highly positive as the market begins a sell-off. Again – I can’t advocate live trading with the algorithms I designed, but there’s no reason not to keep an eye on them and try to understand how the markets are moving.

HFT Trading Pushes Trading of Binary Options

It seems to me HFT trading pushes more traders to consider binary options as an alternative. The recent CNBC spat between IEX founder Brad Katsuyama and BATS CEO William O’Brien had viewers riveted to the financial cable network in a way not seen in years. We have watched markets over the last several years devolve into what has become an algo-run-wild / “Christians to the Lions” spectacle in order matching. Although the average citizen did not know anything was different, it is clear based on today’s events that the largest investors in the world did know something was very wrong – and they-weren’t-happy.

Day Traders Abandoning Traditional Stocks and Options for Binary Options

See details

Average traders had already begun leaving the retail stock markets in droves for newer and more transparent binary options contracts beginning with the opening of firms like Optionbit, AnyOption, and TradeSmarter (now 24Bulls). Day-traders of the first decade of the millenium saw their profitability challenged on multiple occasions but nothing could prepare them for the final slaughter that came as a result of institutional use of HFT. Retail day-trading of the stock market has effectively been dead for several years now, and HFT arguably was the final death blow.

Dark Pools and Institutional HFT Collusion with Wall Street

Flash Boys author Michael A. Lewis says it succinctly when he declares that HFTs are unnecessary intermediaries between buyers and sellers of shares that have created an entire ecosystem from which Wall Street has become dependent. This new-millenium Wall Street ecosystem is a festering leach field comprised of (on the inside) investment banks (and their dark-pools of tradeable securities portfolios), Stock Exchanges (and their supply and demand information), HFT trading companies (and their colocated servers and software programs), and (on the outside) investors – big and small – getting whip-sawed every time they try to place an order.

Is It Too Late to Stem the Movement to Binary Trading Platforms

One important outcome of any potential reforms that result from the firestorm Katsuyama and Lewis have created will be the fate of retail traders. US binary options trading has been pretty well restricted, particularly after the Dodd-Frank legislation was passed along with the CFTC weighing in on jurisdictional lines. It is for this reason US traders have been largely shut-out of this un-regulated market since 2011, while other traders around the globe have largely embraced the platforms as a preferable alternative to directly accessing US stock markets.

Binary Software Algos Offer New Trading Strategies for Day Traders

As the new global stock-playing medium has continued to expand and evolve, so too have the strategies and software programs that make that market. Two current market participants have platforms that offer binary trading software solutions retail investors can use to design their own strategies or use those already created by the platforms’ expert traders.

Trading the December 2013 Fed Taper Meeting

So here we sit awaiting yet another Fed meeting and wondering whether Bernanke, Yellen, and company will finally taper asset purchases and stop the quantitative easing madness. To date, the Fed has added another $1trillion in assets to its balance sheet in 2013. How I will be trading the taper question is the same way I trade all assets: both sides of the fence.

Plenty of Upside If the Madness Continues

More info

It has been shown again and again by our friends at ZeroHedge the relationship between the size of the Fed’s balance sheet and the NYSE Market Cap (and by extention the S&P 500 index). Should the Fed continue on its merry “buy ‘em all” ways in the mortgage and long-dated treasury market, one need only continue to apply the 5 times Fed balance sheet formula for the NYSE market cap and extrapolate the resulting index levels from there. This sort of simplistic analysis lends itself more towards binary options trading strategies because let’s face it: if we’ve figured this out then you know the IBs of the world have and it’s already priced in the options contracts before you can buy them.

Downside Risk in Taper and Budget Deficit Reduction Agreement

On the other side of the fence from the “maintain course” scenario we described above is the potential issues with the fed tapering asset purchases. This scenario has been further spiced up by the recent bi-partisan budget agreement made by Congress which further reduces the deficit spending over and above the existing sequester. While on the surface this may seem like an easy “it’s all down from here” trade it is important to note that eliminating the sequester (across the board cuts in all departments), the new budget agreement creates winners and losers. You can bet defense spending will be up (no more sequester mandated cuts – a Republican priority), however the thinking here is that retail will suffer (reduced unemployment benefits for long-term unemployed).

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Two Sides of the Fence Strategy Ahead of the Fed Taper Meeting

More info

We already have a blue-print for how a taper commitment announcement plays out: a sharp spike downward in the major indexes and a sharp rise in long-dated treasury yields: in a nutshell, a rapid margin / carry unwind trade. There are a lot of ways to make a short term volatility trade play when the outcome is not yet known. Several cheap trading strategies include picking up some long-dated out of the money put options on major indexes. Worked nicely for me buying in May when all heck broke loose in June. Another low capital strategy would involve taking a end of hour position or end of day position with a binary put contract: limited (cash position) downside risk and potential 70% yield for a single day trade. Other alternatives in anticipation of the Fed decision could include going long VIX options (either in binary, standard, or futures contracts).

So that’s what we see: either a continued daily ramp (a.k.a. BTFD) if the Fed sees no choice but to continue Quantitative Easing, or any of a number of “getting in ahead of the wave” strategies in anticipation of a taper commitment announcement (combined with deficit reduction) to make money on downside trades. Either way there is plenty of excitement ahead of the Christmas holiday. I haven’t made up my mind which assets I will use but at least you can see my thinking.

Fiat Money Debt Serfdom and Bitcoin

So I was on a thought experiment the other day while reading, and I came to a somewhat startling conclusion: that dollar creation results in debt-serfdom. I don’t tend to be one of those whacko-conspiracy nuts, but I do read a lot of material considered controversial for the kernals of truth it might contain. Face it, behind every conspiracy theory is at least some fact that bears exploring – regardless of where the source of the fact might have come from and regardless of whether there is any conspiracy at all.

Fiat Money and the Death of the Gold Standard 1971


One of the more pivotal moments in modern history was the decision by the US (under the leadership of then President Richard Nixon) to discontinue the use of the gold standard relative to US currency. Instead of being able to redeem dollar bills for gold at the US mint, people could now only redeem goods and services (and pay taxes) in exchange for dollars. It would still be possible to buy and own gold, but doing so would require purchase on the open market rather than a fixed exchange with the Treasury.

What were the implications of this? It meant that the money supply of the country would no longer be constrained by an arbitrary amount of metal in a vault owned by the US Government. Instead, the money supply would be controlled by the willingness of either the government or the private sector to borrow money – ie go into debt. How is it that money and debt are tied together? It has everything to do with making a system of payments work. Each time you or I make a transaction in the economy, money changes hands and (eventually) moves from one bank to another, or to cash in your wallet. But where does the money come from in the first place? Neither you nor I own a printing press capable of creating a dollar bill (at least I hope you don’t for your sake!), but yet dollars exist everywhere. Where did they come from?

The answer should be obvious – ultimately all dollars in existance come from the Federal Reserve acting at the behest of the US Treasury (and further at the behest of Congress). Treasury (in effect) writes checks (or sends electronic deposits) to vendors and or citizens every day and ultimately the Fed changes the account levels of the associated banks where the checks (or electronic transfers) were deposited / directed. Dollars created in this manner are paid for via IOUs (debt) of the US Government – bonds, bills, and notes issued by the US Treasury and sold to the public by means of auction. Each dollar of debt carries an interest burden however – ie promises to make future payments of (more) dollars in the future. Hopefully you can see the circular logic starting to form here… more dollars owed in the future means… more debt creation. Technicians would note that it is the deposits which create the money supply, not the debt – however without generation of some debt somewhere there is no currency in circulation.

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So Do the Treasury and Federal Reserve Control all Dollars / Money Creation?

This is a very important point: the answer is a resounding NO. In a more “normal” economic state (ie, not today) deposits based on newly created debt (public or private) expand the number of dollars in existence. Unfortunately credit / debt creation has essentially stopped on the private side, and been absorbed via Quantitative Easing on the public side (see this from Zerohedge for a great piece on the divergence from a normally functioning banking system post Lehman). This is what is making the world so unbalanced today. Especially attractive financing rates are available in vast amounts to a select few while everyone else fears taking on more debt – unless they intend not to repay it!

Meanwhile for the rest of us not cashing in on the zero-interest bounty of available financing our days consist of (if we’re lucky) going to work, collecting a paycheck that hopefully keeps us afloat, and wondering when (if ever) our balance sheets will be above water. Many Americans have run the numbers and decided the answer to when they’ll ever be above water is never! Essentially anyone who financed a house with more than 75% loan to value in the last decade has a low probability of breaking the surface financially. So whether we like it or not, we’re committed to servitude of a wholly different master than our ancestors, and one that is far less personal: debt.

Fiat Money and the Wealth and Income Gap

This is the legacy of fiat money. It is only created by debt or (at present) the whim of the Federal Reserve and the depository institutions who (can) demand infinite supply of currency and pay next to nothing for it. Meanwhile asset prices continue to climb, non-substitutable consumption item prices rise (until demand dives short term), and those who have access to the money spigot see their vast incomes and wealth expand over the rest of us with ever wider gaps. Each dollar created is encumbered by interest – which is multiple factors higher for folks like you and me (figure 40x higher than the Fed Funds rate so we’ve essentially stopped borrowing) than Wall Street (which borrows presently at around 0.09% if the Fed tables are to be believed). With rate differentials like that is it any wonder the wealth and income gaps continue to expand parabolically?

Bitcoin and the Race to Leave the Government Sponsored Fiat System

We recently (like many) have become intrigued by the cryptocurrency craze lead (at present) by bitcoin. We explored earlier the notion and value of earning bitcoins in an earlier piece. There is something of a mania surrounding the notion of a stateless monetary system. Wealthy individuals have seen the writing on the wall in countries such as Cyprus and the rest of the Eurozone where the bail-in (confiscation of unsecured deposits) has become a reality. How better then to protect precious wealth deposits than by owning a convertible (yet stateless) electronic currency which is deposited (and held) on an electronic hard drive you own and control (and presumably no one else has access to). Dollars, Euros, and Chinese yuan disappear from unsecured regulated bank accounts remain physically (albeit electronically) as cash in hand. Of course the bitcoin exchange where these state-backed currencies have moved now have the Yuan, Euros, etc. (and hence have the challenge of avoiding deposit theft by governments).

Sponsored Ad: Bitcoin Miners

Suffice to say that the bitcoin story is still to be written, and it is a fascinating one at that. How does that relate to Debt Serfdom of fiat state-backed currency? Consider that electronic currency is not created the same way as dollars or Yen. There are a fixed number of bitcoins (or other similar cryptocurrencies) and they are mined / created into existence as transactions are processed (solved / encrypted / stored). The point is there is no debt service on bitcoins, only a miniscule transaction fee (orders of magnitude smaller than international wire fees) for cross border payments. This is a vast improvement on the existing highway robbery that goes on when sending cross-border payments today. The end result is that by transacting in bitcoin, the average joe or small business owner like you and I save a high percentage of money in transaction fees – and if you know your investing math at all – you know it’s the percentage based money game that kills the little guy and further enriches those already who are wealthy.

The point being is that the more people that wake up to the realization that each dollar currently in existence represents an even greater future liability, the more people will try to find ways to opt out of the system (dollars, Euros, Yuan, Yen, you name it) and transact and invest in payments systems that don’t create future encumberance.

Is It Worth It to Earn Bitcoins?

We have been reading alot about bitcoins lately, and whether there is value in owning or trading them, or perhaps earning some by mining them. It’s honestly becoming an explosive mania right now, as the broader population has discovered this new chic form of exchange. Right now there is a lot of volatility in the price of them, and it is hard to know whether you are getting a good “price” in buying them. It is for this reason a number of people have gone the alternative route of trying to earn them instead.

How to Earn Bitcoins with Your Computer

Sponsored Ad: Bitcoin Miners

The premise is fairly simple – you hook your computer to existing networks or exchanges of computers, and by doing so lease your computer’s processing power to compute solutions – earning bitcoin as a result. The higher your processing power and the more time you lease your machine, (in theory) the more you make. In the early days gamers with high-quality graphics cards were able to use their superior processors to do quite well in competing to “win” computational competitions (don’t make me say that 5 times fast).

Increased Competition Creates Hardware Tech-War

As time has gone on and wider adoption of electronic money as a medium of exchange has grown so too has the competition in trying to make money mining bitcoin. It began with inexpensive flash drive-like USB devices which grew into more sophisticated plug-in cards and finally tech-developers are working on even more expensive machines (which look like universal battery backups) to pack as much processing power in as small a space as possible. Many new powerful (and very expensive) machines are in development right now. Many people are pre-ordering the devices with promised delivery dates months into the future.

I would point out in the paragraph above the key words “in development” and “months in advance.” I think there is a great likelihood that the market for mining equipment is getting way ahead of itself and its ability to deliver. Customers on the waiting list for processing power may end up getting their gear only in time to find that it was an epic waste of money.

So Can Individuals Today Make Money Mining Bitcoin?

As we mentioned in the paragraph above – the key word is today versus the future. Can you get your hands on equipment today and start earning while the sun is shining on this mania? There are relatively inexpensive devices available for immediate purchase in the marketplace for processing power enough to be competitive – if you can install them today and so long as the price of bitcoin continues its epic climb. It is my belief that demand (near-term) for the means of exchange will continue to grow parabolically – making the value of getting hardware to mine bitcoin very likely worth it. The question is whether or not it is possible to get you hands on equipment soon enough to cash in before the new high-cost machines arrive. I think it’s possible to still get in on the phenomena and learn (and earn) the ropes today. Once you have your gear and are earning it will be a bit of a waiting game for the coming crash in prices of the high-end equipment (as supply imbalance leads to liquidations of gear).

When I look at this mania today I see a lot of volatility. With volatility there always comes opportunity. The key is to be able to earn as the wave peaks and pick up assets on the cheap after the crash(es). Bitcoin is acting every bit like manias of the past. There is no reason a quick-moving agile individual can’t make a few bucks at it before it normalizes.

Other resources:

Binary Options Signals Now on Integrated Platforms

Value to the consumer continues to get better for binary options signals users – as brokers continue to innovate to bring the best trading experience to online day traders. As competition for business continues to heat up more platforms are advancing their technology to provide the best value to retail customers like you and me.

A Brief History of Binary Options Platforms

With the opening of retail trading on binary options in 2008 there began an immediate “arms race” to develop the best platforms and use aggressive incentives strategy to attract as many customers as possible. Bonus cash was very common and (at least initially) had few restrictions – which led to some complaints later when restrictions started showing up. As time has moved on users have been offered a greater variety of assets to trade and customers in more than 140 countries have access to this fast-paced market. Yields and incentives varied wildly and traders couldn’t get enough of this market. Then Lehman happened. Then Dodd-Frank (basically cutting off US traders from the more popular European binary options brokers).

2013 Advancements in Binary Option Trading

Profitable binary options trading has primarily been done via the use of professional signals services. A retail investor opens an account with a broker, buys professional signals (indicating under what conditions to buy calls or puts and on which securities), and then makes trades based on those recommendations. Services with accuracy rates generally higher than 60% generate profits for the traders. Accuracy rates less than that… well not so much.

The major issues with services like these however were two-fold: price, and timeliness. A signal might be received and be accurate – but if not received in time to act on it proved frustrating for some. Enter 2013 and the invention of the integrated binary trading signals platform. Other brokers have offered similar guidance services or perhaps VIP access to professional traders or market reports, but to my knowledge this is the first example of an integrated platform at a binary broker – and it represents a great advance for traders.

US Binary Options Trading Restricted

Trading of binary options for US residents continues to be restricted. Recent crackdowns against brokers such as Banc de Binary and others have forced closure of US client accounts. Even most-reputable brokers such as (EU-regulated broker) AnyOption have discontinued relations with non-EU clients as a part of their registration agreement with CySEC.

This of course leaves US clients three alternatives: trade the US regulated brokers (such as NADEX) – which offer products generally not-comparable to European brokers, stop trading binary options entirely, or trade illegally and hope their broker doesn’t close up shop under pressure from the SEC or CFTC. Enforcement has come as a result of a number of unfortunate incidents involving customer complaints about unscrupulous brokers – many of whom are “white label” operators licensing the technology of a true broker / platform. It is best to stick to the actual platform brokers and avoid the white label ones if at all possible. Many traders continue to look to make money in overseas markets despite the risk of eventual account closure given the lack of desirable products in the US. Personally my hope is that one or more of the top brokers will work their way through the red-tape to open legitimate operations in the US. Until then US traders will have to hope regulators look the other way at their particular overseas broker – a fair likelihood so long as their broker has few or no complaints against them.

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