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Sunday, May 28, 2023

Trading the Pump & Dump Pattern | Cameron Benson

I'm going to show you that pattern that I use every single day on every single trade, whether I'm going long or short. The pattern that I'm referring to is the pump & dump and the dump & pump pattern. Every single market movement is either a pump & dump or a dump & pump pattern, and all trade setups are based on these two patterns.
 
 
Markets are fractal, and this pattern is going to occur on the weekly and the daily time frame, on the 4 hour, the 15-minute, the 30 second chart, etc. It doesn't matter: whatever you're looking at, this pattern is going to occur.


I use larger setups and then I start to break things down: I look at the date and day in the month, I look at the three-week cycle, at the three-day cycle, at what day are we in the week, and I look at the weekly range, what is the high and the low of the week. Are we working the low, are we working the high? 
 

Any unidirectional move – up or down - ends with a consolidation, followed by a break in market structure and a continuation to anther pivot level and/or it is followed by a reversal.
 
 
Three pushes to a high, a sideways consolidation, a break in market structure to the downside, then the dump. A lot of times the market will return down at least to the 50% retracement level or down to the level where the pump started or even below.


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Sunday, May 21, 2023

The ‘Khaldun Curve’ | Nima Sanandaji

Ideas change the world. A good example of this is how the global view of taxation quietly began shifting one afternoon in 1974. That afternoon, the American economist Arthur Laffer met with Dick Cheney and Donald Rumsfeld, who both were working for the Nixon-Ford Administration at the time. The topic at hand was taxes, a pressing matter at a time when the highest marginal tax rate in the US was fully 70 per cent.
 

During the meeting, Laffer explained that the relationship between the tax revenues and the tax rate was not as simple as one would expect. Doubling the tax rate, for example, does not double the tax revenues, because higher taxes disincentives people from working. To illustrate his point, Laffer famously sketched a curve on a napkin. It showed that both a tax rate at zero per cent and one at hundred per cent would yield no tax revenues.
 

 
A tax rate of zero per cent would logically mean zero revenues, and one at 100 per cent would disincentives people completely from working, which also means zero revenues. The implication, Laffer noted, is that somewhere between zero and hundred per cent, there is a tipping point. Above this point, raising the tax rates would actually lead to such a damaging effect on economic incentives, that the collected taxes would actually be lower after the tax rate was raised.
 
[...] The funny thing is that Arthur Laffer’s theory was far from new. He was rediscovering a concept that had been acknowledged during the Islamic Golden Age period of free market policy. Laffer has himself explained that he didn’t invent the curve, but took it from Ibn Khaldun, a 14th-century Muslim, North African philosopher. Indeed, many of the ideas we today associate with Western free-market thinkers originated in the Islamic world.

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