The International Monetary Fund is one of the most important market movers out there. Its actions have caused turmoil on the markets in recent years, and since its inception. Few traders understand the importance of the institution, however, and fewer still are able to predict its effects on the world markets.
This guide takes a look at the IMF from the basics of what it is and how it works to more complicated descriptions of how it pushes world markets and why traders should be keeping an eye on it.

What is the IMF?
The IMF was set up by the Bretton Woods agreement as part of the system of weights and governance that kept semi-fixed exchange rates in place across the world. It’s goal was then, and is still, international monetary cooperation.

The institution has several principles that are pillars in its vision of a globalized free trade system. It wants to minimize trade imbalances and create currencies that float freely with maximum stability, an approach designed to maximize trade between all countries. It is one of the three most important multinational economic institutions, alongside the World Bank and the World Trade Organization.

How does it work?
The IMF is an organization of 188 countries, each giving its share of funds to the organization. Operating like a company, the funds also determine the amount of votes each country has. That means that the United States, which has the most votes, has close to three times the voting power of the second biggest contributor Japan.

Policy is decided by the Board of Governors, a body made up of two representatives from each country, a governor and an alternate. These are usually the highest profile financial controllers from the respective countries. For example, the United Kingdom’s representative is the Chancellor George Osborne. His alternate is the Governor of the Bank of England Mark Carney.

The Board of Governors delegates day to day operations to the Executive Board of 24 members. 8 of these members: the USA, Japan, Germany, France, the UK, China, Russia and Saudi Arabia get their own representative. The other 16 spots represent constituencies of between 4 and 22 countries each.

The IMF board elects a Managing director, currently Christine Lagarde.

Why does it affect my investment?
There’s three basic ways that the IMF works on the financial markets, the first is through information and analysis releases, the second through its existence as a lender of last resort, and the third in its actual dealings with countries. We’ll deal with each of these issues separately here, though they’re often intertwined.

Information and analysis

The International Monetary Fund is constantly releasing information about the basic state of the world economy, from simple data collection to forward looking analyses of global and regional trends. This is some of the most highly regarded economic data and analysis on the planet, and it has been known to move markets.

Example of important, market-moving reports include the organization’s World Economic Outlook, anything it releases on a country in an IMF program, and its case studies on economic performance and reforms.

Lender of last resort

The IMF acts as a lender of last resort for the lenders of last resort. This is a passive effect of the organization. Its impact is priced into the market, and it’s generally clear that countries have options other than outright default when they run into financial trouble.

This may not effect the market directly, but it has a logically compressing impact on bond yields around the world. Recent action in Europe has strengthened this part of the IMF’s reputation. This effect is implicit, meaning it will only move markets if it is questioned, or confidence in its ability to achieve this end falls.

IMF loans

When a country hits rock bottom and it can no longer afford the interest rates the markets levy, it heads to the IMF for a dig-out. Conditions are usually attached to these loans, and are sometimes controversial. As can be seen from several events in recent years, markets stand up and react when the IMF steps in.

This has been most apparent in Europe in recent years. IMF intervention in countries like Greece and Ireland forced changes in government policy, and completely revolutionized the way European bonds were treated by the world market.

This is the most dramatic way in which the IMF has an effect on markets, but it is not as uncommon as might be believed. Loans from the IMF have increased in recent decades, and dozens of countries are currently in some kind of IMF program.

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Nassim Nicholas Taleb is a trader and a philosopher. His books about the way people think about probability have been obscenely influential, and trading strategies based off of his ideas are becoming an indelible part of the market.

His strategies center around the idea of the “black swan,” an event that’s incredibly unlikely to happen according to the models but has significant power on the market when it does. He made a great deal of money from betting on these events over the last few decades, leveraging what he saw as the mis-pricing of options in order to generate massive returns.

Finding a Black Swan
Taleb defines a black swan event with three attributes: (1) It’s wholly unpredictable given current models, (2) its effect is powerful, and (3) it is incorporated into models after it happens. You can have a better chance of calculating the likelihood of these events than other traders, but Taleb is emphatic on one point, you cannot predict the black swan and you shouldn’t be trying to.

Betting on a black swan isn’t about trying to predict what’s going to happen next year, it’s about finding bets that are mis-priced because nobody has calculated the odds of them properly. Taleb made his money on options that covered all sorts of low probability thresholds that were eventually crossed, most notably during the 1987 stock market crash.

These events may only happen on average once every hundred years, but if you have a hundred of them, you start to average one a year. The payoff is, at the same time, incredibly high because of the extremely low probability. Balancing a portfolio around this idea can be incredibly lucrative, but it’s not for the lighthearted.

You need a strong background in valuing options in order to make this strategy work but, most importantly, you need to know how to build a portfolio. If you’re investing your own money on long term chances, you may run out of cash before anything has a chance of paying off.

Building a black swan portfolio
There’s no case in which an investor should rely entirely on long-odds high-payoff investments to make his money for him, especially when the odds are so long that they’re impossible to calculate. You need to build a portfolio that can offer a steadier stream of income while you wait for the big bets to pay off, assuming they will, or at least one that ensures you don’t lose all your money.

In order to accomplish this, Taleb advises a portfolio in which 80-90% of the money is put in something extremely safe, with Treasuries being the generic instrument, while the rest of the money is invested in out-of-the-money options that carry ridiculous levels of risk.

This portfolio, which he titled the barbell, means that there is a guaranteed floor. You can’t lose your safe money. At the same time there’s huge upside from that once-in-a-hundred year event. If you aren’t familiar with options, however, or you’re not disciplined in your creation of a portfolio, trying to follow this strategy may be enough to wipe you out completely.

Don’t rely on the black swan
It’s been close to thirty years since Taleb discovered the power of so called out-of-the-money options, and many traders have invested in strategies that mirror his in the intervening years. That has risen the price of options covering the kinds of trades he made his name off of.

He was gifted with the 1987 stock market crash as a demonstration of the power of this idea, but he does not believe that strategy would automatically an ordinary investor, simply because there isn’t enough information to price the risks, and therefore, the mean time to happen, properly.

The bottom line is that this strategy takes a lot of work and involves a lot of risk if mismanaged. The original idea was to hold a tiny portion of your money in options for the long term while keeping the rest in something with a lot of safety.

Many investors go for broke investing in what they believe is a Taleb inspired portfolio, forgetting that he was working for an investment bank, and playing with their money, when he invented the strategy.

There’s still money to be made in this area, and there’s still plenty of mispricing of options going on every single day. You have to know when to buy them, however, how to price them, and know how to build a portfolio around them. If not, your returns are going to look downright bad, and you may spend forever waiting for the black swan.

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The Bloomberg Terminal is considered to be one of the most powerful machines on the globe. This is proved through the buzz which surrounds the use of the Bloomberg Terminal by various Bloomberg reporters to gain access to an insurmountable amount of data regarding government officials, bankers, etc.

What is the Bloomberg Terminal?

The Bloomberg Terminal is an advanced machine with central processing unit that was manufactured by the Bloomberg L.P, which allows professionals in different financial settings and different industries to receive Bloomberg Professional services which they can use to track and evaluate real-time financial data and trading trends moving on various trading platforms.

Bloomberg Terminals are leased and contracted based on a 2-year span. The lease is initially based on the number of display connections the terminals have. A majority of Bloomberg Terminals have two to six connection displays. The terminal provides a client server layout the server operating on a Unix platform which is a multiprocessor platform. The ‘client’ is a Windows application that normally links up with the servers of the users through a router. This router is given by Bloomberg and is installed right then and there.

Many traders and investors use Bloomberg Terminal to gain access to information they can use to predict accurate trading trends and prices. Mentioned below are some reasons why you should consider using a Bloomberg Terminal to enhance your trading experience:

Benefits of Bloomberg Terminals

Access to News from Around the World

Although most traders think about the data these terminals provide them pertaining to the financial markets, for example options values, and securities, the Bloomberg terminals also provide investors real-time market news and notifications from around the world mainly through a number of websites, wires and tickers. By simply accessing the ‘News’ option in the search bar, you will be able to gain access to the latest financial and non-financial news as well as important headlines worldwide. Alternatively, traders can also use different media platforms to gain information, for example the New York Times, through the terminal.

Access to Equities

Traders can also enhance their search for publicly traded equities and shares through Bloomberg terminals, as it allows users to categorize their search by name, country, exchange, etc. Moreover, other options in this menu also allow users to review and analyze historical pricing on each of the equity stocks in question. You can choose to view an entire description of a business, look at the outstanding corporate debt the business may have, and also evaluate different reports and estimations for its stocks and options along with several other factors, which is truly amazing.

Using the Bloomberg terminal, you can also compare different equities which might give you an edge of having an analysis report of two different equities. The comparison options consist of overall analysis, historical ratios and technical charts.

Investing in Fixed Income Securities

Similar to equities, the Bloomberg terminals also allow clients to look for real-time information pertaining to fixed income securities. This search can include a multitude of options, including corporate debt, municipal bonds and government bonds. With a matching and comparison system quite similar to that of the equities’ options, you can easily search for appropriate fixed income securities on a day to day basis, analyzing any changes in the security value or any yield-to-maturities.

Derivatives

Perhaps the best feature of the Bloomberg Terminal is its derivatives’ ability. And with this facility, traders can now look for real-time information and values on securities, namely exchange trade options, and future contracts (contract for WTI). However, Bloomberg also provides traders put price on hard derivatives. For example, when you talk about OTC options, Bloomberg will allow you to alter their options valuations strategies so the traders can come up with a said value.  So, using this option, traders can now think place values on an OTC option on let’s say the S&P 500.

All in all, this goes to show the power of Bloomberg terminals, and it is easy to say why they are the most widely used for trading and other purposes. So, if you want to avail all the aforementioned benefits of the Bloomberg terminal, it is time you consider using one yourself right away.

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All Forex traders aspire to become super traders. Let’s consider the trader personality Andy Krieger. Most have a hunger for that one big deal which has the potential to immortalize their name in the currency trading market and the industry. However, contemplating about becoming a legendary trader is easier than accomplishing the goals which can get you there. It is still great to get a bit of inspiration from some of the world’s most diligent and hardcore traders. Andy Krieger is one of those legends.

Black Monday, 1987

People who belong to the trading markets and those aspiring to become successful traders all know about the fateful incident that took place on October 19^th, 1987, when the stock market crashed. Dow Jones ended up falling 22%. The days that followed gestured towards a massive collapse of the world’s stock markets and most markets fell by 20% by the end of October. To the surprise of many, this collapse was not triggered by any single event. Experts believe that the collapse was a result of a mass panic that ended up devouring the entire market.

However, amidst everything, there was one currency trader working with Bankers’ Trust who wasn’t too concerned about what was going around him.

Introducing Andy Krieger

Andy Krieger, after graduating from Wharton School, joined Salomon Brothers and in 1986 joined Bankers’ Trust. It wasn’t long before he made his mark in the company, being labelled as one of the world’s most assertive and hard-hitting dealers. It was his reputation in the market that led the Bankers’ Trust to gain the full confidence and support of the board members. And it was because of this that he had a trading limit of $700 million, compared to the normal limit of $50 million.

The Attack on the ‘Kiwi’

In the wake of the stock market crash on that day, which has been noted in history books as Black Monday, Krieger became overly convinced and confident that the Kiwi (the New Zealand dollar) was susceptible to attack. Krieger, in light of his research, his diligence and aggressiveness chose to hit the Kiwi and take advantage of the situation. By utilizing his trading options, Krieger had the ability to leverage massive amounts and could own and control up to $30 to $40 million in actual currency.

And he did not hesitate to use his advantage to land a big speculative strike on the Kiwi in 1987. Because of the fact that he had a fairly large trading limit, he decided to leverage it by trading currency option spiking up to 400:1, which allowed him to topple the a massive amount of money to crush the Kiwi dollar. As a matter of fact, Krieger’s short position ended up being so large that he said it went past the entire country’s money supply. In simpler terms, he controlled more Kiwi dollars then there were in circulation in New Zealand.

The Outcome

Krieger’s move to destroy the currency had a catastrophic effect on the Kiwi dollar. The New Zealand dollar dropped by 5% against the US dollar in a span of just a couple of hours, allowing Krieger to make a staggering $300 million profit for the Bankers’ Trust just sitting there. Of course, the reaction of the Bank of New Zealand wasn’t pleasant. They were outraged and rightly so, but Krieger responded to their outrage by saying something only a man of calibre can say. He made it clear that Bankers’ Trust did not make a position that was significantly big for them. Instead he said that New Zealand did not have what it takes to handle the operations carried out by the company.

The damage he inflicted on the Kiwi dollar caused a lot of controversy for the New Zealand Central Bank. So much so that the New Zealand Central Bank and government official kept on asking the bosses at Bankers’ Trust to get him out of their currency. Shortly after the Kiwi incident, Krieger resigned from Bankers’ Trust and found started working for another trading legend and guru, George Soros.

So we can see that Andy Krieger  is a trader personality. Part of why he resigned from Bankers’ Trust was also because of his disgust and anger at his former company which only gave a $3 million commission on a $300 million profit he made for them. After he left on good terms, Bankers’ Trust ended up reaffirming their foreign exchange and trade profits and that is because of the fact that they had no idea how Krieger operated and failed to understand his complex methods of trading.

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Jesse Livermore, who is thought to be the grandfather of stock trading, was born in 1877 and died in 1940. Although Jesse traded more than 100 years ago, the principles he used for trading at the time are still practiced firmly by many of the legend’s followers today. He was an ordinary American citizen who rose to riches through trading and also saw his share of multi-million dollar losses.

‘Boy Plunger’ was the nickname given to him early in his life when he started his journey towards a successful future as a trader through various bucket shops, which is another name for gambling houses. He used to trade there and started at the tender age of fifteen. When Livermore turned 40, he already had a $100 million fortune which in today’s terms can amount up to $6 billion dollars, a staggering amount. And he rose to fame when he shorted the market in 1929 when the entire US stock exchange was crippled.

The Trading Style of Jesse Livermore

Jesse was an active and successful trader in the US even before the great spike and plunge of the US economy. The Civil War, having been long over, people still remembered it. However, it was also era of great industrial development in the US at the time which presented a great deal of opportunities for smart traders and businessmen. It was at this time that America rose to becoming a safe haven for all who needed shelter and food.

This induced a massive influx of settlers who chose to escape the endless hardships of the Old World to embark on new beginnings through hard and honest labour. And this is what Jesse Livermore loved and the sort of environment he chose to invest in. He got involved with people like Henry Osborne Havemeyer, the owner of American Sugar Refining Co, along with the owner of the National City Bank, which has become Citigroup today, E.H. Harriman, the master of the railroads, J.P. Morgan legendary banker and the founder of Standard Oil, William Rockefellar.

He was rolling with all the big people responsible for developing these booming industries. Livermore was familiar with each and every industry, from coal to coffee, to sugar and the world of banking, which meant he had a tremendous amount of knowledge and information available to him at any given time.

Yet with all that knowledge, Livermore was convinced not to anticipate anything in the market and chose to be patient and let things swing in the way his knowledge enabled to predict and believe that it should and it did, so he did what he did best: invested in a bullish market and shorted in a bear market.

However, Livermore’s personal life was not as successful as one might imagine. Having endured three unsuccessful marriages he was also stricken with clinical depression which had been with him for a long time. And this is what led him to taking his own life in 1940.

The Grandmaster’s Principles in Momentum Trading

Although Jesse Livermore was active along time ago, trading in commodities and stocks, making millions. Believe it or not, the methods and principles he used are not so different from today’s financial world and just as legitimate. Jesse Livermore used to say a successful trader never acts on his own instincts until the market has deemed his instincts correct. If you try to understand the meaning behind what Livermore was talking about, it would do you good to remember you are in the market to make investments and not to form prophesies.

And many of the successful traders today follow in Jesse’s footsteps, which is not to anticipate but to follow the markets to a more fruitful return. The maestro also used to stress on the fact a trader can never buck the stock market, because there is never anything new. However, there are always variations of the same patterns, insightful for a man who traded 10 decades ago.

Livermore also emphasized on the fact one should never trade when he is unsure of the opportunities in the market, learn to hold money. This means all good trades need time and a lot of patience and greed is the worst enemy of a trader. All in all, Jesse Livermore’s wisdom still carries out, even today where everything is modernized in the world of stock, hedge funds and ETFs.

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Born on the 28^th of September, 1954, in Memphis, Tennessee, Paul Tudor Jones II is the founder and owner of the Tudor Investment Corporation. The management of his other private investment partnerships is done through his own corporation, which you can refer to as hedge funds. Tudor Jones had an estimated net value of $3.2 billion in 2010 and as of now, it stands at $4.3 billion.

He studied and attained an undergraduate degree in economics from the University of Virginia in 1976 and was also a welterweight boxing champ. He began working on the trading floors in 1976 as a clerk and gradually became a broker for the famous firm E.F. Hutton four years after. In 1980, he was adamant on earning on his own and made a lot of profitable deals for almost two and half years before he started to get particularly ‘bored’ with his work.

After realizing that he has to do something else, he then successfully applied to the Harvard Business School, and to the surprise of many did not join because he realized the skill set he really wanted to capitalize on wasn’t going to be taught to him by anyone and decided to take another approach. He went to William Dunavant Jr. for career advice. Dunavant, who is the founder of one of the globe’s foremost and biggest cotton merchant company, sent him to meet another commodities broker by the name of Eli Tullis, who was in New Orleans.

It was Tullis who took him in and began to mentor him, showing him the ropes of cotton trades and painted the future of the cotton industry on the New York Stock Exchange.

The Early Success of Paul Tudor Jones

In 1980, Jones proceeded towards establishing his own company, the Tudor Investment Corporation, which is regarded as today’s foremost organization in asset management companies and has its headquarters in Greenwich, Connecticut. The corporation consists of affiliations tied to leading active trading, investing and research in global equity, venture capitalism, currency, debt, and the commodities markets.

Jones became really popular following the events of Black Monday in 1987, when he accurately predicted the markets, earning massive profits due to large short trade positions. He, along with his colleague and friend, Hunt Taylor went on to successfully create FINEX, the financial futures’ section of the New Board of Trade and were also instrumental in the making of US dollar index futures contracts.

Paul Tudor Jones also went on to becoming the Chairman of the New York Cotton Exchange from 1992 to 1995.

The Futures Trading Strategies of Paul Tudor Jones

Paul Tudor Jones is a contrarian investor. He keeps going for single trades until an idea essentially changes his mind. Most of the times he works on keeping his position in the markets cut down. Then he attempts to trade in small amounts when he has trouble hauling in good trades. Jones also considers himself as the best when it comes to identifying and taking advantage of market opportunities. When he thinks up of a brilliant idea, he initiates the pursuit of its implementation from a low risk perspective until he is deemed and proved wrong or at least till another idea befalls him.

He is also a swing trader and believes that considerable money can be made at different market turns. Although he has missed quite a bit of meat all around the middle, he always managed to catch a good share of tops and bottoms. He is by the far the calmest investor and trader of all and is always relaxed, thinks coolly and always exits the market swiftly whenever his losing position in the market starts to get to him.

Jones has the habit to decrease his trading mass when he sees he might lose and increases it as his trades get successful. Plus, he also tracks his whole portfolio equity in real-time and believes that prices always move first, the fundamentals should always be a secondary concern. He always looks at the bigger picture and does not even think about the losses he incurred moments ago. Jones also emphasizes deeply on not involving your ego in the game. He says that a good trader always questions his ability and form at every turn, always yearning to improve. If you think you are better than the rest, you will fail.

Contributions

Paul Tudor Jones has also made sizeable donations to the University of Virginia, his Alma mater, and has contributed $35 million for the development of a brand new basketball arena which he named after his father, John Paul Jones.

Married to a former Australian model Sonia since 1988, Jones and his wife have four children together.

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Which trader doesn’t dream of making millions and conveniently retire at the age of 30? Surely, it is every investor’s sole purpose and their dream. But for market guru and legend Jim Rogers, a commodities trader, it was just the dawn of an illustrious career on Wall Street that has lasted for over 60 years and has helped him make millions of dollars.

Jim Rogers amassed his wealth and grew his business empire using his phenomenal ability to monitor and pinpoint long-term trends long before anyone else could which blissfully ended up building him a reputation as a sharp contrarian. Rogers retired at the age of 38 to pursue his love of motorbike riding around the globe, and since his retirement he has also been a treasured guest professor of finance at Columbia Business School.

Rogers is known for the huge gains in commodity he made back in the early 2000’s, but he really became a living legend after correctly forecasting the collapse of the housing market, ending up making millions.

A Look into the Early Life of the Rogers

Rogers always had a fondness or affinity rather, for business, beginning from an early age. In fact, Rogers first started stepping on the trading floor in the financial world at the age of 5 and used to sell peanuts and gather empty bottles that were left behind by baseball fans in Alabama. Rogers graduated from Yale University back in 1964 and has a Bachelor’s degree in history. After his studies, he went on working as an investment banker on Wall Street which eventually led him to meeting another billionaire stock market legend, George Soros.

It was him and Soros that founded the exceptional Quantum Fund in 1973 which made a stupendous amount of money in its first 10 years, enjoying up to 4200% in returns. His early success allowed him to retire earlier than most traders. But that wasn’t the end of his career. Rogers still trades as a private trader and an astute investor, securing massive gains on the way. Moreover, he is also the author of the book “Investment Biker”, published in 1990, and is about his trip around the world on his motorbike.

Rogers’ Investment Methodologies and Massive Gains

Rogers has a timely approach to investing and employs a top-down model when analyzing the economy, which according to him is instrumental in guiding his investment methods and style. Rogers also said he has never been able to time the markets. So, instead he has adopted a long-term approach to investing.

Jim is a popular contrarian investor and his eagerness and assertiveness has led him to always go against the tide of the buck and grain and has allowed him to form some diligent ideas. He is also well-known for his ability to spot particularly long-term trends faster than any other trader or investor. After being instrumental in the success of Quantum Fund in the early 70’s and 80’s, he was able to call the commodities boom a decade later  allowing him to establish the Rogers International Commodity Index in 1998 before the boom of the commodities market in the 2000’s.

The key feature in the way Rogers invests and trades is nothing but patience. Irrespective of whether he was predicting the early boom of the commodities market in the 2000’s or shorting the market in the 2008 stock market collapse, he has always focused on being patient and has emphasized its importance to follow through a successful investment. To sum it all up, this is what Jim Rogers said about being patient in the market, “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.”

Jim Roger’s Investment Portfolio: What Does He Hold Now?

Rogers has his target set on what he believes to be the greatest of all opportunities that happened to have landed on his lap: the food and agriculture industry. He is also big on bullish commodities and analyzes that the ceasing process of the central bank will sustain hard assets. He also invests in precious metals like gold and silver and is particularly fond of these metals. Back in 2011, he mentioned that in 1987, gold and silver stock fluctuated from 40% to 80%, but compared to what’s going to happen now, that era seems like a blip.

In 2007, Rogers moved to Singapore with his family to further take advantage of the growth of the nation’s economy. Rogers even started his the Rogers Global Resources Equity Index, an index primarily designed to capitalize on the most liquid companies pertaining to agriculture, mining and metals and alternative energy industries in 2011.

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MKTPlace is a leading digital and social media platform for traders and investors. MKTPlace offers premiere resources for trading and investing education, digital resources for personal finance, news about IoT, AI, Blockchain, Business, market analysis and education resources and guides.