Greece Financial Crisis Explained

With all the financial news focused on a looming Greek debt default and the pundit’s myriad forecasts of apocalyptic consequence, it might be easy to forget that Greece is celebrating it’s 6th anniversary of this current debt crisis.Parthenon

In this post, I’d like peel back the layers of hype about the Greece financial crisis, and look at the root of the gridlock problem.

 

The question on everyone’s mind is, will Greece will exit the European Union? I personally feel that a Greek exit is a highly unlikely scenario, since there are no clear advantages to either the EU or Greece to separate.  Let me explain.

For the European Union, a Greek exit would be a political nightmare that opens a floodgate of financial problems.  You might think that Greece is relatively inconsequential in terms of its financial contributions to the EU, and that a Greek exit would not have much of an influence on its overall financial welfare.  So big deal, let Greece leave, write off the debt and focus on things that matter most!

The challenge for the EU is contagion.

Allowing the Greek domino to tip starts a chain of reactions in Spain, Italy, Portugal, Ireland and other debt laden members of the EU.  The fight in Greece is a fight for the European Union itself.  While the demands for some level of austerity from Greece seem unfair, it is the only way to keep the EU in tact.  IF the EU softens debt terms for Greece, then it has to soften debt terms for other economically strained countries – putting an enormous burden on the already weak economic union.  A Greek exit is no better.  The EU could probably absorb Greek default, but defaults don’t happen in a vacuum.  The financial burden is not removed – it’s just transferred to other parties and you have no idea where the burden will manifest itself.  Clearly, the EU is stuck between a rock and a hard spot.

For Greece an exit is equally dire.  To exit the EU would mean austerity for the Greek people of the worst kind.  Some people are arguing that Greece should exit the EU, wipe their debt clean,  and start over printing it’s own currency – the New Greek Drachma.  The problem is that if Greece exits, then foreign investment money will be non-existent.  This puts the strain of finance on the Greek Central Bank to issue bonds, buy the bonds themselves, and print money to pay the bonds.  In short – inflation and taxation.  The inflation will destroy pensions and any semblance of wealth for Greek citizens.  In other words, a Greek exit will guarantee the austerity they are trying to avoid by renegotiating debt structure.  Greece’s argument that the debt demands from the EU are too burdensome for their citizens is a weak argument, because its only other option is worse austerity.  Clearly, Greece is stuck between a rock and a hard spot.

So what is most likely to happen next is exactly what has happened for the past six years.  Rescue funding may be given at the last moment to allow Greece to limp along for a few more months while political posturing continues to play out for the media.  Perhaps Greece will default on a payment – just like it did a couple years ago and just like Cyprus did in 2013.  Other political players such as Russia and the US will try to steer the outcome to their favor – possibly offering assistance in one form or another.  Meanwhile, you’ll have a group of bankers and lawyers working behind closed doors to restructure and renegotiate terms in hopes that time and inflation, or better yet, real economic growth will sweep all their problems away.

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Non-Directional Markets

With all the talk about volatility and the dollar strengthening… it appears the dollar stalled out in January, and has gone nowhere since. On January 27, the dollar was trading at 1.13 against the Euro and it’s there again today – the dollar has essentially gone nowhere in 6 months.

What we’re seeing is an extended period of non-directional movement in the dollar. This is a situation where large dollar gains and losses are typical – with the media focusing more on the strong dollar than the weak giving us the illusion that the dollar is strengthening when it is really just drifting sideways for an extended period.

The root cause of the non-directional market is uncertainty. As traders, we understand that the only guarantee in the markets is uncertainty, but this type of uncertainty is different. For example, it’s easy to frame uncertainty during a rate decision – if the rates increase the dollar goes up.  If the rates drop the dollar weakens.  However, the uncertainty of having one fed meeting after another with conflicting economic data is much more difficult to forecast future movement.

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And there is a lot of this type of uncertainty in our world.  Among them is the uncertainty surrounding the Greek debt defaults and the Grexit from the Eurozone.  An exit could bring contagion to financial markets – the extent to which no one really knows.

Geopolitical tensions (such as ISIS, South China Sea, and Ukraine) also make directional bias difficult.  At any moment tensions could flare resulting in greater uncertainty.

Adding to the uncertain cauldron, is the presidential race in the US, where we have an ever-expanding pool of candidates with no candidate showing any real sign of strength.  There is also the dysfunctional relationship between the Whitehouse and Congress, and their inability to settle on any meaningful fiscal policy.

All these factors make forecasting future trends foggy at best.

What do you do in markets like this?  The easiest solution is to use different models.  Fading the outside of the range is an effective strategy.  Reversals will tend to yield better results than breakouts.  Smaller timeframes will still have directional bias – albeit with smaller returns. And taking small incremental profits is better than hitting home runs.

Traders can survive periods of non-direction if we remember the rules are different and it requires a different book of play.  Don’t forget the rule of volatility – the market oscillate from periods of high volatility to low.  We are in a low volatility period so the next move is to an increase…  Clarity on any of the issues mentioned in this article could be a catalyst for that shift and you need to be prepared!
Happy Trading!

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All About Apiary VPS

June 2015 Apiary launched a new service called VPS.

VPS is designed to help people with Apple Mac, and increase trader mobility.

A fast computer with a fast internet connection is a necessity for a trader. It’s crucial in order to execute trades for the prices you want. However, a fast computer is costly, and not everybody is computer savvy and knows how to maintain their computer. No matter how fast a computer is, without proper maintenance it will slow down eventually. In the last few years, it’s become a trend to use VPS (Virtual Private Server) to increase trading performance.

Virtual Private Server acts like a computer, but in the cloud. A trader installs their trading platform (such as Alveo) and all of their trading activities are executed through the VPS. The trader’s computer or laptop only acts as a ‘keyboard’ to control the VPS.

The benefit of using VPS are :

  1. VPS works faster in transmitting the orders then an ordinary computer or laptop. This may reduce slippage.
  2. Trader can trade from anywhere with different machines (computer,laptop,iPad, tablets, etc). Say a trader’s laptop is broken, the trader doesn’t need to worry about his/her trading because all of the trades are in the VPS. The trader just needs to find/borrow a laptop with an internet connection then login to the VPS to secure his/her trading positions. In the past, traders have needed to reinstall all software and equipment again in order to access the trades.
  3. Save money because trader does not have to buy ‘high end’ computers to get fast trade execution.
  4. In case of power failure event,  VPS will keep the trading position (including Take Profit and Stop Loss), so all strategy and pending orders will proceed as normal until the trader has access to VPS.
  5. A trader will not need to waste time maintaining their computer, since VPS usually already has their own IT team to make sure it runs 24/7 without problem.
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Our Philosophy On Success

I was on facebook the other night, and I ran into an article, “Will Your Child be Rich or Poor? 15 Poverty Habits Parents Teach Their Children.”  I read the article, and was surprised by Habit #4. It stated,

“62% of the wealthy floss their teeth every day vs. 16% of the poor.”
 

Now that may seem like a silly statistic about an unrelated field.  I mean, how does flossing your teeth connect with the size of your bank account?  As I started to think, it hit me as to why it was #4 on the list. Successful people are creatures of habit, but not just any habits: Successful habits.

If you want clean teeth you need to both brush and floss.  I don’t think I am saying anything too ground breaking here.  I mean, we’ve all been taught the benefits of dental hygiene from a very young age.

So how will dental floss help you in your trading?

Habits.  We, by our life experience, create habits on how we act when different things happen to us.  When people see the market falling they are naturally fearful.  When people see the market raising they are naturally greedy.  It is not the emotions that define who we are, it is what we DO with those emotions.  Do you let fear take control of you?  Do you cut your winners short?  What we have found in the Apiary Fund is that the most successful traders are the ones who have a set of rules, and apply those rules consistently every day.  We all have times in trading where the market does not go our way.  The question is what do we do at those times?

Remedy: Know your rules and follow them.

That might seem like a nice trite remark, but what do I mean by know your rules?  Step one is to write your rules down on paper.  I know most of you have your system that you follow in your head, but if you can’t write it down then you can’t measure it.  If you can’t measure it you can’t improve it.  Once you know it, you have to follow it.

Seems like a simple enough recipe for success, but then again so does flossing!

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Fear of Failure

A 2014 study conducted by Babson College revealed how fear of failure stops some people from engaging in activities where failure is a possible outcome – including the activity of learning. The study concluded that the fear of failure negatively influences a person’s motivation to learn and their attitude toward learning.A mature business man giving a presentation to some colleagues.

This study has direct implications on the mission and purpose of the Apiary Fund. At its core, the Apiary Fund teaches a person how to manage an investment portfolio – an activity where risk of failure is very real. We accomplish the goal through a progression of classes, simulation, and the eventual management of a small portfolio in live market conditions.

At every step, Apiary works to mitigate the elements of risk and teach a person how to properly analyze and make decisions that include risk. We strive in every possible way to give a person the greatest chance of success in learning how to manage an investment portfolio.

The irony of this study is that when fear of failure prevents a person from engaging in an activity that will make them better, it almost assures their failure in that activity. And when that activity is learning how to manage our finances and investments, the cost of failure can be high! Imagine living your life and avoiding all investment decisions – it is likely to leave you broke for retirement. Imagine giving all those decisions to someone else – it leaves you vulnerable to fraud, mismanagement, and high costs.

We know that many of you join Apiary Fund for the opportunity of trading our money. It is a wonderful incentive – one I wish I had when I was first starting! However, what you really gain through your Apiary experience is a skill and an ability to make intelligent decisions that involve the risk. That is a skill and an ability that has far a greater reach and value in your life than any amount of money you could trade for Apiary Fund!

Happy Trading,
Shawn

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Meet Our New Support Member

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Hi! Meet our new Support Staff Member, Jacob! He’s excited to be here, and excited to get to share a little bit about himself with you…

“I am so happy to be working here at The Apiary Fund. This is a company with a mission that will improve the lives of everyone who joins. The people here are kind and considerate, and always looking to do what’s best for you… SO be sure to call the Support Hotline so we can help you out!”

My name is Jacob Johnson, and we can talk through the support line. I’ve been trading for some time now, though I began mainly in stocks. My dad is a Financial Advisor, managing millions of dollars, so growing up I always knew that investing would be a part of my life. I’ve always been good at math, and I’m quick to notice a trend and see what’s happening. Eventually, I want to be able to see what happens BEFORE it happens ;) After not feeling fulfilled with an engineering degree, I decided to follow my heart and trade. With all the guidance and direction that Apiary has to offer, anyone can be a successful trader!

The FOREX market is the best market to trade in. The whole world is involved! I’ve worked with people from Sweden to South Africa, New York to LA, and everywhere in between.

I am here to help, so feel free to call the hotline!

Best,

Jacob

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Meet The Newest Addition To The Apiary Family!

Hello everyone! It is a real pleasure to work for Apiary Fund. The environment here is awesome, and I am so blessed to work with great people with great energy, attitude, and an ability to always make you feel welcome.

Let me introduce myself, my name is Xavier Parra. I come from Ecuador: a small country in South America. Located in the middle of the world, Ecuador has nice beaches, mountains, and weather-summer all year long!

Some more about me. I have been in the US for over 10 years, and I enjoy having 4 seasons. It seems like time goes faster when you have 4 seasons (I might be the only one who feels that way, who knows). I have a Masters Degree in Economics, and was introduced to the currency market while studying Macroeconomics. I was intrigued by how currencies interact between each other, so I started learning more about this “mysterious market.”

One of the best things about FOREX (at least from my perspective) is that you are interacting with hundreds of thousands of people all over the world. You can feel the pulse of this market by checking the charts. The market keeps me current on the most important news around the world, because based on the news I can establish my positions (either to buy or sell certain currency pairs).

I am here to help people who share the same passion as me. I want to help people learn to love the things they learn from the market everyday.

Thanks!

-Xavier

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Big Thanks To And From Trader Support

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We just want to say thank you to everyone who has been sending us feedback for Alveo. It’s because of that our IT department knows exactly what to work on each day to make the Alveo platform better for everyone to use.

We also wanted to say thank you for all of your patience to those who have called into trader support the last month or so because we have been training some new support staff. As we all know, there is A LOT of information that is needed to know about trading-and Apiary Fund-to be successful. It can be a bit overwhelming at times for someone new-especially when everyone looks to you for answers when calling into trader support. We just want to give a shout out to Aeron, Vincent, and Pete for putting all of their hard work into being the great trader support team that we are!

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How To Form A Trading Strategy

“Trading System” and “Trading Strategy” are two words that are often used interchangeably, but have two entirely different meanings.

A Trading System is the plan you put in place to accomplish specific goals in the market.  Your trading system incorporates your trading goals, resources, and strategies into a plan to accomplish your purpose in the market.

Most of the time, when people talk about trading systems they are actually talking about a trading strategy.  A trading strategy defines a set of rules you will follow in order to take advantage of a specific opportunity you see in the market.  To build a trading strategy you would follow the following steps:

Step 1.  Define what filters you will use to identify your opportunity in the market.

Step 2.  Create the rules for your setup.

Step 3.  Identify your trigger.

Step 4.  Identify your target.

Step 5.  Identify your stop.

Step 6.  Determine your position size.

Step 7.  Apply any trade management techniques.

Step 8.  Track your results

Step 9.  Review each trading sessions.

Step 10.  Use stats to adjust your strategy.

Here’s what we did this week in our training on developing a successful trading strategy:

On Wednesday, April 1, we walked through the steps to developing a trading strategy.

Then, in the Trading Room on Thursday morning we traded the strategy-resulting in 4 winning and 1 losing trade.

Finally, that night in a class we reviewed the performance and identified a couple of areas we needed to adjust for better performance and better results.

It was a great experience.  Some of you have not had the opportunity of developing a trading strategy and this was a very “hands on” demonstration of the process.  If you want to review the steps yourself, go to the calendar and click on the links from April 1st and 2nd to review the recordings.

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High Probability Trade Qualities

A frequently asked question is, “What is a high probability trade?”

When you sit down for a good trading session, finding a trade setup isn’t that hard-but there are trading setups, and then there are high probability trading setups.  In fact, in any given trading session you’ll only have a few setups with that coveted high probability quality that pays so handsomely!

So what are those qualities in a setup that make it high probability?

We’ve identified qualities of a high probability trade: (In order of importance)

1.     Trend.  Does the trend support the direction of the trade?

2.     Momentum.  Is momentum building or slowing?

3.     Support and Resistance.  Is the trigger above or below support?

4.     Pattern.  Is there a pattern to support the trade?

5.     Volatility.  Is there enough volatility to create a profit?

6.     Time.  Are you at the beginning of a time cycle?

7.     Indicators.  Does your favorite indicator support the setup?

Like a good attorney, you can use the qualities listed above to build a solid case for a high probability trade.  If you don’t have everything aligned, then the probability of successful trade drops.  If your trading setup has these qualities in perfect alignment, then there’s a high probability the trade will work to your favor.

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