Noticias del mercado & perspectivas

The US official trade deficit number with China is $375.2bn in 2017. But According to China Customs General Administration, this number should be $275.8bn. Notice there is a vast gap between the versions from two sides.

So, which version is closer to the facts? Firstly, let’s start this debate by looking at the US perspective. Previously in the 1990s and early 2000s, most of the imports from China were low-value, labor-intensive products such as toys, clothes, footwear, etc.

And even now, China are still producing these kinds of products. However, over the past decade, an increasing proportion of US imports from China are more technologically advanced products (US calls it ATP). From the table below, we can see that, among the top 5 categories of import products, three of them are ATP by the US’s definition.

According to the U.S. Census Bureau, U.S. imports of ATP from China in 2017 totaled $171.1 billion. Information and communications products (i.e., Phones and Pads) were by far the most significant U.S.

ATP import from China, accounting for 91% of U.S. ATP imports from China and 60% of U.S. global imports of this category (see table below). This would generally go against common sense, right?

Let me explain. As we all know, Apple is the largest company in the world to produce mobile phones and IPads, and the second largest is Samsung, which is a Korean company. Although Huawei is the third largest mobile phones producer, the US government entirely banned Huawei from entering the US market due to “national security” reasons.

So how did phones and pads become the largest category that the US imported from the Chinese? An explanation from China's point of view helps reveal this mystery. Firstly, there are two terms that we learned in Economics 101, Finished Product and Intermediate goods.

An intermediate good is a product used to produce a finished product. For example, in the case of producing an iPhone, Chinese factories contribute only 6% of the components (which is Assembly). All the other significant parts such as Hardware, Touchscreen& Glass, Battery, etc. these typically come from other countries such as South Korea and Japan.

If we take all those parts which come from Korea & Japan out of the US/China Trade Balance, the trade deficit will decrease one-third straight away. Below is a breakdown of the costs for various components of an average iPhone. Moreover, when an iPhone finished assembly and shipped and sold to US customers, it was Apple, a US company, who earned most of the profits, not Chinese assembly factories.

However, just because the assembly is the last step of the manufacturing process, and the phones did “shipped from China to the US,” the US government defined this as “imports from China.” Based on this knowledge, it appears the US might be deliberately twisting the terminology to fool the general public, helping to fuel the current dispute against China. There are hundreds more similar examples like this. These include iPhone, Dell who assembles their laptops in Shanghai, Boeing who assembles their planes in Tianjin, and most recently, Elon Musk who announced that he wants to open an assembly factory in Shanghai.

In conclusion, the US government seems to be exaggerating the trade deficit figures to help justify starting a trade war with China. This idea may sound like a conspiracy, but when you consider the many influential world powers throughout history who have leveraged their strength and resources to suppress their competitors, it makes more sense. Particularly those deemed to be in second place.

Think about the cold war between the US and Soviet Union; it just passed not too long ago. Lanson Chen GO Markets Analyst This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions.

Trading Forex and Derivatives carries a high level of risk. Sources: USCITC DataWeb, US Census Bureau, Teardown.com

Central Bank Interest Rates By Klavs Valters A central bank's interest rate is a rate at which it typically lends money to local banks. This interest rate is charged by nations’ central or federal banks on loan advances to control the money supply in the economy and the banking sector. Each central bank has its own annual schedule when announcing its rates.

In the trading world, it's prudent to keep a tab on these announcements as it impacts market volatility if there is a sudden interest rate rise or fall. These rates also have an impact on everyday life, as they often determine what you pay for borrowing money, as well as what the bank will pay you for saving money. Recent Rate Hikes The most recent rate hike came from the US Federal Reserve back in March 2018, when it increased its rates from 1.5% to 1.75%.

Additionally, the Federal Reserve also signalled its intention to further raise this rate in the future. This has been the sixth time the US Federal Reserve has raised its interest rates since the 2008 financial crisis. Bank of Canada increased its key interest rates back in January by 0.25% to 1.25% while quoting a number of upbeat news stories, including an economy that is running flat-out, healthy job gains, and the lowest unemployment rate in over 40 years.

This has been Bank of Canada's third rate hike since the summer of 2017, and the first time the overnight rate has been above 1% since 2009. Current Bank Interest Rates Central Bank Interest Rate Announcement Timetable for 2018 To keep up to date with other news announcements, visit our ‘Economic Calendar’ section on our website - https://www.gomarkets.com/au/economic-calendar/

As Brexit concerns continue to weigh heavy on Pound Sterling crosses, there's not much to discuss from a technical perspective. Evidence of an overall bearishness sentiment dominates the charts with a few corrective moves thrown in for good measure. However, sifting through the layers of Sterling sameness, I uncovered something interesting relating to the GBPJPY, which might provide some trading opportunities longer-term.

First, taking a look at a daily chart above, notice we are hovering around the same price region as we were in August last year. Could this mean the pair is due for a change in direction? Perhaps.

What I find more intriguing is that for the past five years, August has been predominantly bearish for the GBPJPY pair when compared to other months. This seasonality chart from Bloomberg shows this more clearly. So how does this relate to longer-term trading opportunities?

If we are to believe that August is typically a bearish month, then we would be naturally inclined to seek short trades, and according to the point and figure chart below, I think I may have found one. Keep in mind that the seasonality data also suggests recoveries into December so we would need to trade with care. The bearish resistance line suggests we are currently in a downtrend with an increase in supply triggering a bearish trade signal as the price broke through the triple bottom support at 144.50.

At present, I am watching two downside targets should the fall in price exacerbate. These levels are located at 140.00 and 136.00 respectively. Alternatively, any upside move will need to re-test the 144.50 area which should act as resistance and also a rally above 146.00 to consider revising the overall trend.

Finally, if we study the short-term price action above on the hourly chart, it would seem the 100 Day Moving Average line in blue is helping to cap any bullish activity. The only time it has successfully managed to punch above the 100 MA this month has been to test the weekly pivot lines in black. If you are interested in other GBP analysis, I recently posted an article on GBPAUD here which I believe is another potential long-term opportunity.

For both these ideas, much will depend on Brexit certainty and how global trade talks progress in the coming weeks. By Adam Taylor CFTe This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions.

Trading Forex and Derivatives carries a high level of risk. Sources: Tradingview, Bloomberg

Apple is the first company on this planet to reach a $1 Trillion Market value, each year continuing to release brand new innovative products including the latest iPhone to hit shelves. There is no doubt that Apple is the technology king of this generation given its following, constant growth, and company profits. However, can it maintain its innovation and high market value over the next ten years? ---------------------------------------------------------------------------------------------------------------------- We all know that every technology product has a life cycle.

Think about this: 30 years ago your family might get very excited when purchasing a new television, but are you still as enthusiastic if you buy a new TV today? No, because on the one hand, the technology is a lot cheaper and commonplace, and on the other, the notion of refining this product has arguably reached its ceiling. After Television, PCs and digital cameras also can’t escape from the same fate.

Once sold at high prices with premium product positioning, I still remember my first PC which cost around USD 2000, and even this was considered low in the 1990‘s. How about now? PC sales in 2017 have dropped to 263m, which is even less than the sales of iPhone 1 in 2007. ---------------------------------------------------------------------------------------------------------------------- You may not have noticed, but coinciding with Apple reaching a $1 Trillion, value, the two major suppliers for iPhone components——Sunny Optical Ltd (Listed in Hong Kong) & LARGAN Precision Ltd (listed in Taiwan) are both experiencing price shocks in the stock market.

Let me first briefly introduce this two companies. LARGAN Precision is a camera producer and provides five lenses for each iPhone. Its stock price has increased 1692% in the last decade.

Sunny Optical became camera lens model supplier for iPhone since 2007. After ten years, its stock price increased insanely 13068%! These miraculous returns are all based on the developing phase of smartphones.

However, the Smart Phone concept appears to be transitioning to its Mature Phase, and eventually, declining Phase. In the 4th Quarter of 2017, the total sales of the Smart Phone market have dropped for the first time. You'll notice from the chart that every smartphone company value fell, not just Apple and Samsung.

Regarding technology, Apple had already left the “Iron Throne” years ago. In the smartphone chips producing area, only two companies (LARGAN & Samsung) has achieved current Human Limit ——7nm (the thinner the chip, the harder for human technology to achieve) Only one company (Samsung) is willing to put money into R&D and pursue the impossible——3nm. Why has everyone else already given up? (which also means that the iPhone in the next few years will likely see little to no significant improvement, except the size, colour, and Price) The smartphone product is not far away from its tech limit.

It's perhaps not worthwhile to invest loads of money into R&D anymore. Alternatively, it might be better off to move their R&D forces to the next generational products, for example, GPU, VR, Drone, Artificial intelligence, or something even beyond our imagination at the moment. It is still too early to say whether Apple can keep its leading position in next 10 years, let’s wait and see.

By Lanson Chen – Analyst Lanson Chen @LansonChen This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.

Sources: Statista, Apple, Google

Mark Austin ( LinkedIn ) is the Co-Founder of Magnetic Trading, a trading coaching and services business. With experience across prime institutions such as The Royal Bank of Canada and EFG, Mark’s unique insights have helped many discover what it takes to trade with a principled approach. In this episode we covered: Life in Thailand How he got into trading Magnetic Trading Technical vs. fundamental Publishing results with transparency; and Trading principles & mindset - Transcript: Disclaimer: Go Markets is a derivatives broker and Jordan Michaelides is the managing director of Neuralle Media.

All opinions expressed by Jordan and podcast guests are solely their own and do not reflect the opinions of Go Markets, an AFSL license holder. This podcast is for informational purposes only and should not be relied upon as a basis for financial decisions nor as an indication of future performance. Clients of go markets may hold positions in the derivatives mentioned.

A financial services guide and product disclosure statement for our products are available at the www.gomarkets.com website. Jordan Michaelides: In this episode we spoke with Mark Austin. Mark is the cofounder of Magnetic Trading, a trading, coaching and services business.

With experience across prime institution such as the Royal bank of Canada and EFG Capital, Mark's unique insights have helped many discover what it takes to trade with a principled approach. In this episode we covered life in Thailand, how he got into trading, Magnetic Trading and what it actually does, technical versus fundamental analysis, publishing results and transparency, and a course, trading principles and mindset. If you liked the episode, do leave a rating on your podcast app or share with your friends, post on your Instagram story tagging @gomarkets.

Show notes and all previous guests are available at www.gomarkets.com/podcast. With that being said, let's get into the episode. Mark, how are you?

Mark Austin: Great. At the moment I'm in Ko Samui and it’s a lovely day, looking forward to having a good conversation with you. Jordan Michaelides: Now, why move to Thailand, how did that come about?

Mark Austin: So from my earliest career I've always been in finance, and I got out of finance during the credit crisis back in 2008, 2009. I decided to leave the banking industry, I just viewed that I didn't want to be part of that industry anymore. I viewed, you know, pay was going to be reduced, bonuses were going to be reduced, and there was so much red tape coming into the banking institutions that I decided to leave.

At the time I was making as much money with my personal trading as I was actually working the bank, so the decision wasn't actually that difficult to make. I just took my laptop and my skillset and I headed off a to do a bit of traveling. The idea was actually to come down to Australia and maybe do some work down there.

I came to Ko Samui initially with a view of just spending a few months here. I was trading and I met a guy down there and he asked me what I was doing, and I said trading, that's how I'm making an income at the moment. He had a financial list and he wanted me to send my trades to him initially, and then his client list.

So I kind of ended up just slipping into this helping other clients make money on trading and with a lot of people following my trades purely by accident. I just fell into it really. I didn't really have any desire to go and do that.

I was just going to trade my own money. So that's how I ended up staying in Thailand. I set up that business and, you know, I travel a lot but Thailand is still my home, and has been for the last 10 years.

Jordan Michaelides: What do you think of the expat community there? There’s an area in particularly for Australians, I think, is it Chiang Mai? There are so many coworking spaces and tech companies there now, but, Ko Samui is also another one where you just hear of a lot of ex-pats linking up there.

How have you found it? Mark Austin: It has changed very rapidly over the last few years, actually. When I first came here there were a lot of Westerners, but actually the expat community has started to diminish.

I think that's because of the strong baht. Cost of living and the strong baht is not helping a lot of expats who are earning in their own currencies, be it the Pound, US dollar, or the AUD with the baht going up. So, we are seeing quite a few expats leave unfortunately at the moment.

Even if you look at the visitors coming into Thailand now from tourism it’s predominantly Chinese and Korean. A lot of Chinese tourists now visit Thailand. Jordan Michaelides: We have that here in Australia where, I think recently they just crossed over to the Chinese ex-pat in terms of, not in terms of visas yet, but, definitely tourism where they've overtaken the British.

The British were like the biggest bunch of tourists that we had. It's the old cliché, I work with so many people in finance and they come over and the first thing they do is they go work on these farms so they can stay in Australia a little bit longer. A couple of years later they wind up working in the finance industry because the weather is typically better than London, normally, if you're in somewhere like Sydney, the lifestyle is often better, now it's increasingly becoming more and more Chinese.

I think that will happen over time as their middle class grows as well. It's interesting that it's affecting, affecting there. I was in Vietnam a few years ago and noticed it seemed to be crossing over from mainly US and French tourists to large groups of Chinese tourists.

I guess it's just an overwhelming trend in the region. Mark Austin: Yeah, it's close as well, it's not too far away and as you said, the middle class is growing rapidly now so that they will have a lot more money. It's interesting, I find the Chinese stay more on the resorts, so, Thailand kind of feels quieter, but actually tourism is increasing here year by year, but it feels quieter because they tend to stay in the resorts or in their villas that they're renting instead of going out as much as the Westerners.

Jordan Michaelides: The analogy I've been thinking about recently is how in the of sixties and seventies you would have large groups of American tourists, tourists, that middle class was developing and they’d always go out in groups, now tour companies are the biggest beneficiary of tourism in Australia at the moment, particularly from that Chinese market because they come in groups of 20 or 40 and they come out as that group. I wonder over time though if their behaviors will become more like the Western tourists when it comes to the 90s where you get people just traveling on their own, and that'll be the key thing I think for tourism in Australia in particular. They're saying that tourism in the next 10 years could easily overtake mining.

I've got to ask, what do you miss the most from home? Mark Austin: Obviously I miss family and friends, they are the key drivers really. It's a struggle out here as well, I mean, I do speak some Thai but I'm by no means fluent.

Sometimes it's a struggle just to get by trying to deal in a foreign language, so it's nice to go back home, even if you're doing businesses, it's very easy getting something done back home. Things take five minutes whereas in Thailand it can take days. I don't miss the weather.

Summer’s in the UK are actually getting better, I went home in August for a month this year and that they had a great summer in the high 20s, probably as good as Australia really. Winters are a struggle, certainly they don't have the nicest winters, a lot of rain. I remember when I was working in the banks, you get up at six o'clock in the morning, you go to work in the dark and then you'd come home in the dark.

You don't see any daylight. Jordan Michaelides: Where did you grow up? Mark Austin: I was fortunate enough to grow up in Jersey.

Not New Jersey, whenever I say where I'm from people thing America, no, Jersey is in the Channel Islands, which are actually very near France. They are crown dependency, they use the pound there, very near France. Jordan Michaelides: Was your family local there or had your parents moved there for work?

I remember in my accounting job there were quite a few accounts that had worked in Jersey, accounting, banking, financial services in general. There's quite a large economy for that. Mark Austin: My father was actually in offshore finance, hence where we were.

I've literally grown up in offshore jurisdictions, so I'm used islands actually. Hence why I always spend some time in cities, but I'm always drawn back to the ocean. I do like to be close to the ocean.

Jordan Michaelides: Do you have any particular fond memories as a kid growing up? Mark Austin: My, my earliest memory as a child was in a place called Nauru. Given you’re Australian you would know Naura.

It's a very small Pacific Island, my father was based out there. I must live in around four, maybe four years old and I just remember the backyard and being on my bike there. I went to school there, or kindergarten, and I was the only white child there.

I can't remember the experiences there, but I remember my mother saying it was a little bit difficult for me there. Jordan Michaelides: Nauru is an interesting one. There's a funny relationship that Australia has with Narau.

Originally it was used for processing asylum seekers, but Nauru as an economy actually became very smart at acquiring land in Australia. Some of the largest REITs in Australia are predominantly owned by a sovereign wealth fund out of Nauru. There's all sorts, like Nauru house in Sydney is quite a massive building, quite an old buliding as well, The government's done pretty well.

Not many people know about it unless perhaps you're from Australia. Going back to your early career, you we're talking about waking up at 6:00am returning home at night, in the dark. Before we get to the GFC, I was fascinated by your career, you worked in the client services space for the Royal Bank Of Canada.

You worked at UBS, obviously you left it around 2008. What area did you typically work? Mark Austin: I started off with offshore tax planning, so trusts, and I moved into wealth management looking after very high net worth individuals.

I had a portfolio of clients in the middle East, predominantly Dubai at that time. Things were booming at that time and there was a lot of money and I think maybe you remember that property was, it was really hot at that time, but just before the crash and you know, people were making, you know 5% in a week on their properties even before it had been built. It was a huge bubble out there at the time which ultimately blew up.

That was another factor for me deciding to leave because not only was there was a financial crash, also the market that I was focusing on, in the Middle East, in Dubai, the property market just fell out, so a lot of people lost a lot of wealth who had invested in property there. Jordan Michaelides: And where you based out of London at the time when you're working with those clients in the middle East? Mark Austin: Yes, London and also Jersey, and I used to do a lot of business trips to Dubai.

Jordan Michaelides: And where did the trading come into it? For myself, before I even got into the industry, I was trading oil futures at university. Funnily enough I lost absolutely everything because, you know, you do when you think you know everything at the age of 19, and it was a very, very valuable lesson, but it's got me thinking about where your first entry into the world of trading.

Mark Austin: I got into it very early as well, also while at university at 20, 21 years old. My mother used to trade stocks, well known stock. She used to buy BHP Billiton and some of the big mining companies and she used to make really good money on it.

One day she said do you want to come in on this and learn it? I said why not? So as soon as I started to research this and I placed my first trade I was hooked, I wanted to just do that, really.

That's how I sort of fell into it and I was just obsessed with trading. I went into banking, but I was still always trading my own personal account. Jordan Michaelides: What did you learn from her mom in particular about trading?

Mark Austin: A lot of technical analysis at that time, that was the main factor I was using for my decisions to buy and sell stocks at the time. We'll talk about this later, but, technical analysis these days, it's one small component, I don't rely on that by any means now but back in those days it was just that, so it was kind of hit and miss. I think you'll agree it's actually better to get into trading before you've made any money.

I’ve known a lot of people that made a lot of money and then they come into the trading and they think it's really, really easy. They don't have any discipline and they end up losing a lot of money. I was like you, I lost small in the very early days while I was learning, which was good.

Jordan Michaelides: I definitely lost a small in comparison to what I would play with these days, I think I lost about four grand at the time, which for me was like all the money I'd saved and about a year or so, it was a very valuable lesson. The book I read after that was ‘What I learned Losing $1 million dollars, and you’re absolutely right about that point because this book is basically a profile of a guy who became a key member of the CME, or key trader at the CME, and how he had continued success and believed that the movement of the market and his ability to pick trades was really him and not just the market and got to a point where this guy was a multimillionaire and then in this space overnight, he'd lost absolutely everything. His marriage, house, it's one of the most fascinating books I've ever, ever read because this guy showcases that you have to have a system and a to be a trader.

You can't just go off status or previous successes. Mark Austin: That's the thing that we trading, it's not only a skillset of making money, but you really find out about yourself. All those weaknesses of your personality, you’re going to know straight away what they are; if you're not disciplined, or you don't like to lose, or if you're very competitive, it’s all going to be highlighted in a very painful way if you're losing a trade or losing money.

Jordan Michaelides: What horror stories have you got from the GFC? You moved into full time trading after that, we spoke to a previous guest, Tom, who works at go markets and he was talking about how he worked down the road from Lehman, and on the day that they went bankrupt, the chaos down at Canary Wharf was absolutely nuts. I guess I'm curious as to what that period was like from your perspective.

Mark Austin: Before we have the chaos, and we'll come back to that, I was right in the booming time. I was working actually in my very early twenties for a firm called Abacus, in Jersey. They managed the pension funds for the big traders, the big traders would get these bonuses and a lot of these traders were living in London, trading in London, but they were from different countries.

They would be able to put a very large proportion of this bonus money into these tax rapids and invest in them, and we were there to advise on which investments they should put it in. I was getting taken around and meeting some of the top traders in Canary Wharf at the time, and, in Lehman's predict particularly, so you have these guys who’ve just been paid 10 or 2 million dollars in bonuses, if you can imagine, and I remember at the time the guy who was the director I was going around with saying to me, you are never going to get access to this again in your life, never meet these top traders and the amount of money, you'd never been able to get near them. And he was right.

And, of course, five years later it all came out and it all crumbled. I remember the day Lehman's went down, the stock market, everyone, was just in panic. Nobody had ever seen anything like it.

But at the time it was also very exciting. Jordan Michaelides: Yes, if you're individual that can understand the markets and isn't overly exposed in certain asset classes or maybe you've got a nice pile of cash it was definitely an interesting time to be alive. I remember I'd just left high school and was super intrigued.

I remember I’d just got the sack from a hospitality job because the restaurant owner was paranoid that we were going to have a recession here and he wanted to pre-emptively make some measures, then lo and behold, nothing happened in Australia. We were so lucky, absolutely nothing happened. I mean, obviously the markets fell, but there was no recession.

We’ve not had a recession in 30 years, so I guess so locally that's what everyone's paranoid about at the moment. So, you left banking and financial services, you started trading on your own accord. We heard about moving to Thailand, how far from moving to Thailand did you meet Cameron?

Mark Austin: Cameron came to one of my seminars, actually. I was doing a seminar in London, I met Cameron and we just sort of hit it off and I really liked his ideas. He was from a business background, he used to run a multi-million pound distribution company supplying all the big supermarkets.

He got out of that for various reasons, a lot of stress, a lot of time, and he really focused on trading at that point in time. He came into my seminar to see if he could extract any more information to give him more of an edge in trading. At the time he was trading the American markets and I didn't really have any good contacts at that time of any traders that could successfully trade that markets, so we basically started a service for Cameron.

It was called Excelsior and that was trading the Dow Jones giving signals and on the Dow Jones. Jordan Michaelides: What have you learned working together with him? I'd say that any business is almost like a marriage these days.

Speaking from personal experience with the cofounder, what have you learned from working together? Mark Austin: It is like a marriage, yeah… a honeymoon period *laughs*. We were lucky enough that we get on well, we're pretty laid back and we're kind of aligned as to where we want to go.

Fortunately we just don't really disagree on too much or have any, you know, big arguments which a lot of business partners can do. Then they fall out which makes life very difficult. I think, from both sides, we were quite lucky to combine and I believe why we were quite successful with the Magnetic Trading.

We’ve both got the same focus of what we want to achieve. Jordan Michaelides: And I think as well, because you seem to both have unique skill sets, like yours is clearly coming from financial services where his is clearly from that business background. So you can see that if you guys get into an argument about XYZ topic, the person who's more passionate about it will obviously lead on that topic and you can just sort of move over it.

I think that's a key thing that a lot of co-founders is having someone that has an opposite skillset or complimentary skillset to you is crucial I think. Mark Austin: We do have very different skill sets, that's why it works so well, for sure. Jordan Michaelides: Now, magnetic trading, you guys run three programs now.

I know over the years it would have taken much time to develop these distinct programs in your mind. What were the early days like? Mark Austin: So the early days I used to just send an email out saying Buy, Sell, Target, that was it really, maybe with a little bit of analysis.

That was fine, but the problem with that is the reaction time, you'd have that time lag, so, someone would get an email, maybe they wouldn't have time to match the same entry as I was getting. That's why I moved into the live room where people can actually log in, see our trading screen and hear us, and they can react exactly the same time and we can give them a lot of information as to why we're taking the trade. I don't believe that someone should follow a trader blindly, I think they need to understand why they're taking a trade in the first place.

That's why the training room works so well. Jordan Michaelides: Did you start off with the trading room itself? I'm guessing you were still doing events on the side as well as that, right?

Mark Austin: The early days were just the emails and seminars in the background, maybe twice or three times a year. I think we've been doing the live room now for six years now. Six years ago we decided to transition from email alerts into a live training webinar, and it's far more successful and people can, can duplicate our results as well.

Jordan Michaelides: You now have three areas. You've got the live trading room, the whale trading program and the pro trader program. How do they differ, and what's the key thesis through structuring these three different areas?

Mark Austin In the live trading room we specialize predominantly for the first 30 minutes of the opening of the indicies. For those markets we trade the DAX and the FTSE which actually is pretty handy in Australia because it's in the early evening you guys. In the UK it can be tricky for some people because eight o'clock in the morning isn't the most convenient time in the UK, you might be going into work or you're taking the kids to school.

That's where people will just follow our trades, and those trades will be a mix of technical analysis, a bit of fundamental, and price action. We’ll trade for about 20 minutes really, when volatility is quite high. That's the live trading room.

Our whale trade, they are our nine highest probability trades over various index markets. For that program you don't need to log into a live room, an alert is pinged to your email and it says this particular trade is setting up. People know the rules, so they just log into the trading platform and then execute the trade.

Some of those trades have a 90% probability which is extremely high in trading. People really love that program and it's good if you're busy, we designed it as a lifestyle program, really. We believe that you shouldn't just be sat in front of the screens all day hunting for signals.

I think we'd all agree, there's more productive things to do in life than just stare at price action all day. That’s the basis of the whale program, for people that don't really have time for the live room and just want to be pinged two to three high probability trades a week get a really good return on them. Regarding the pro trader, that was set up because we noticed there was a void in the market for those clients that really wanted to take trading to full time, to become a professional trader.

I am against people that try and sell a program, a weekend course or a two day event and say, right, you can come here and then you'll have the skillsets become a trader. It doesn't work like that at all. So pro trader is really where clients work with us over the course of a full year.

Day in, day out, at least an hour to an hour and a half we will be touching base with our clients every day, teaching them or conversing in what we're going to do, or why we're taking a trade, and over the course of the year they basically learn everything that we know, they extract all the information we have taken out of the markets over the last combined 20 years, and we give it to them. That’s the way to learn, really. It's the old analogy that if you study for an hour a day over the course of the year, you'll become a master at that field.

And pro trader is exactly the same. That's why we set it up. Jordan Michaelides: It sort of seems like it's one on one coaching in a way, you're helping this person, keeping them accountable, that's the biggest thing.

It's almost like having a personal trainer, isn't it? Mark Austin: Yeah. It's someone looking over your shoulder.

We’ve had a lot of traders, bank traders, who have joined our program because they didn't have the discipline. Just knowing that someone is examining their accounts is quite important. Jordan Michaelides: From my own experience working on the market making side and managing liquidity, at the end of the day you've always got a boss and a boss will hold you accountable and it's very useful, even though everyone likes to whinge about their boss.

I find that whether you're a business owner, just having someone else there to hold you accountable and get you away from that sort of introspection illusion where you think that everything you see is correct and infallible. I think that that is really, really useful. Even if you're one of the top traders or bankers in London.

I love those sorts of programs because they really help with that. What sort of the overall asset classes that you're focusing on? It seems like it's primarily indicies?

Mark Austin: It is indicies, yes. It's the NASDAQ, your local ASX market, it’s the DAX, the FTSE, and we do a little bit of Dow as well. Not so much now, that market ist rickier to make consistent money out of because there's so many algorithms and institutional money manipulating that particular market, but yes, just the indices that we focus on.

I have traded Forex and commodities and shares in the past, but I found that I made consistent money more out of the indices than I did on other asset classes. I find it's a lot easier, more predictable. Jordan Michaelides: That's a key thing that we wanted to talk about, is technical versus fundamental.

With the indicies, at the end of the day you’re trading the underlying value of the businesses, so, there is an underlying value there. Whereas when I used to trade things like oil and gold, it's just an object that someone may use for something, but typically most of what it's used for in the real world is it's hedging out an exposure of some client, whereas in indicies there's actually something there. In some indicies as well, let's say you hold like a Vanguard of the world, they're actually paying out dividends.

I think it makes a lot more sense for whole bunch of reasons. I'm curious as to where you sit on technical versus fundamental analysis. Mark Austin Just coming back to the indices though, you're right, there are many reasons to trade the indices and A is because of the risk.

You know, if you're just trading one stock, you have the risk exposure to something going wrong with that stock. Whereas at least with the indices, you're trading a basket and really spreading that risk. But in terms of technical and fundamental analysis we actually have a third prong.

A lot of people, the mainstream media focuses on just those two areas. At magnetic, we focus on something called market function. Market function is actually the reasons why particular trades or particular movements in the market happen behind the scenes, what is going on behind the scenes with the banks and investors to make a market move outside of technical analysis and fundamental analysis.

If you take the example of the dividend you just talked about, the FTSE for example, will declare that a substantial dividend quite a few times a year. If you bought the index, you will be rewarded with that, you'll get paid that dividend. When there's a dividend of over 10, generally we'll get our clients long in the market.

There was a particular time in the day that we know the market is going to go up because investors are going to come into the market and get that dividend. We're literally taking advantage of that, and that's got nothing to do with technical analysis, nothing to do with fundamentals is just market function. I think a lot of people these days are focusing too much on fundamental and technical and really a retail trader does need that additional edge, which I believe is market function.

Jordan Michaelides: It sounds almost like market function is talking around structural issues in that specific market and things that may feed into that, whether it's interest rates or dividends or something like that, would that be right? Mark Austin: Yeah, and just the way funds operate. For example, we have another trade, it happens at the end of the quarter, so at the end of the quarter a lot of farmers will get rid of bad performing stocks or they'll take profits on their portfolio of stocks, so, you'll notice that there will be some profit taking and sometimes there'll be a squeeze as well at the end of the end of the session.

And again, we're just taking advantage of that because we know that the funds are going to get involved during the last half an hour of that session at the end of the quarter. Again, that’s nothing to do with technical analysis and nothing to do with fundamental. Jordan Michaelides: I completely agree, and it's a really interesting area because having moved into the cryptocurrency space now, the advent of futures for hedging your book and whatnot, and you can start to see it now in the movements of the market, when actual contracts are rolling over it can impact the market for that day and for that rollover period.

It's been very interesting. I’d just never thought about market function as a part of a key way of analyzing the market. You assume that's just the market and that's how Mr Market likes to move.

Mark Austin: That's what the whale program is all about, it's all about market function. It's got no fundamental or no technical analysis embedded in those trades. Actually, we do have an expiry trade as well, you just talked about futures rolling over.

When they roll over the markets will do something which we take advantage of. Every month at a set time for five minutes. And again, that's a trade which has a 90% hit rate.

Jordan Michaelides: Yeah, that high probability hit rate. You publish your results as well, which I found fascinating, it's great to see that. It's so rare to see someone who runs a program do that.

I don't think I've ever seen that before, what made you come to that decision? Jordan Michaelides: In the early days there weren’t too many scams around, but, unfortunately these days the internet is littered with people trying to sell programs or educational courses and the sad reality is a lot of these programs are run by failed traders or people that don't even trade; they're just marketers, so we really wanted to move into the space of complete transparency and real. We are real traders, so it's just how to get people to believe our results because that's a problem.

We have really good results but people who don't know us come and see these results and think, oh, that mustto be a scam. That's why we publish our results, and actually, going forward we’re going do a video log YouTube channel where every single trade we take on our own personal account, we're going to record, put it on YouTube, the good, the bad and the ugly. So people have complete transparency and you know we are real.

Jordan Michaelides: That would be fascinating. I was checking out your YouTube channel the other day and I quite enjoyed watching through it. To watch a vlog would be fascinating, even if it was on a weekly basis, it wouldn't have to be daily has a lot of logs are, but to see that on a weekly basis and the before and afters would be quite interesting I think.

That's what's great about the results, there are some days that are negative, some days that are positive. My favourite traders that I follow on Twitter nowadays do the same thing. They publish their results, they keep themselves socially accountable, which I think is the best way to do it.

When you think about trading plans, managing risk, I think that's sort of a key element of any strategy. How do you think about those overall principles in the way you approach trading? Mark Austin: Certainly the main principles we find with our successful pro traders are A: don't run losses.

The problem with the markets is they can move in a very tight range and a lot of time you can get away with not using a stop, but it's just that one time, that one time, I'm sure you've been there, I've been there certainly in the early days, that you don't have a stop. The market just takes off and you end up blowing your accounts. So number one principle, we all know it is never run losses, accept you're wrong.

The second principle is patience, be really patient for those easy trades because they're always there. Let the market come to you. A lot of people chase the market, they're trying to get instant results and they want instant money, we live in this world of instant gratification these days and everything happens so quickly.

But in trading, it's quite the opposite. If you're really patient, the money will come to you. I think the other thing for risk as well is, record all your trades because if you record all your trades, you can look back at your trading journal and say, right, this is working, this isn't working, and you also have some stats.

You'll be able to say this trade has an 80% chance of winning, I've been trading it and it works 80% of the time, that will give you a lot of confidence in your trading and that confidence is extremely important when placing trades. Jordan Michaelides: You touched on something there, instant gratification. I think practicing delayed gratification is becoming more and more important.

How do you manage your mindset, I guess you’re probably the generation just above me, gen X, so you wouldn't have grown up as much with these stupid phones and their addictive behaviour, but nonetheless, I'm sure you would find it just as addictive as I can at times. How do you think about that and how do you manage scanning over social media, looking at screens all day long and the like. Mark Austin: As you said it is, phones are addictive because.

It’s like your emails, you know, there'll be the odd chance that you'll get something that comes in, which is great, but then you'll have a load of issues that come in but you get addicted to those emails which are giving you positive rewards, and again it's linked to feelings. I just try and manage myself, but I do slip sometimes, it is too easy too to just keep looking at your phone. I saw some stats recently, I can’t remember exactly what they were but it was about how many times people look at their phone, it could be something like 400 times a day, something crazy!

Jordan Michaelides: I've been trying this a attention diet of late, where I’m only allowed to check my emails at certain times of the day unless it's relevant to a meeting or podcasts that we have coming up. Also social media, I've switched to documenting as opposed to believing that I'm there for consuming, I can only go on it four times a day. You'd be surprised how hard that is to instil.

It's that system one system two thinking, automatically we've become attuned with system one where we just jump on your phone, you'd know where the app for Instagram is and you jump into that. If you actually move it around into random folders that you can't remember, you actually then start to notice how much you're just going on your phone and wanting to click into stuff. I can see in a couple of years from now that you guys could have a program just specific to mindset, because I think more and more that stuff is becoming important.

For sure. Mark Austin: We already have it actually. We have a trading coach within our Pro Trading program, he specifically focuses on mindset and psychology because you right, it's 80, 20.

Everything in life is 80% psychology and mindset. And then the other 20% is your tools, your strategies. It is vitally important to your mindset.

I've always found the 1% rule fascinating, I’m almost obsessed with it. Why do 1% people excel over everything? I'm sure we've already heard about, you know, it's the top 1% of traders that make all the money, but then actually the 1% rule applies to everything.

You go into in the banks, it's the top 1% in the best jobs, getting them the best money. If you go into the world of sports, it's the top 1% excelling and at the top, whereas 99% of sports people are struggling. And again, for me, that is all because of this psychology and mindset.

Jordan Michaelides: I think the Pareto principle is always working. I remember reading recently someone had proven in biology how it exists or why it exists. I'm going to have to go back and find that.

I completely agree, it's always the top individuals that behave in a certain way and this is why I love profiling people around this sort of stuff. What does the future look for you guys, what does Magnetic Trading have planned for the next few years? Mark Austin: I'm really excited that we're starting this video blog where we are going to record every single trade that we do for our own trading account.

I think that will give people a lot of confidence that it can be done, there's always a lot of haters now on the internet saying that you can't make money in trading and that's not case. I'm quite excited just to show everyone that it can be done, and a lot of our clients have a lot of success now, we're changing lives. I went to a Tony Robins event recently actually, I've always, always been a great fan of him, he was saying that once you've made in money and you you've got your goals, what is actually going to give you fulfillment?

I know it sounds a bit cliche, but it's giving back, it really is giving back. We just really want to build our success stories, change lives and give back to the community. Jordan Michaelides: I think he's definitely right about that.

When you achieve around that $70,000 to $100,000 a year mark, not much else is going to give you fulfillment and all that's going to happen is you're going to build lifestyle inflation into your life. I think helping people is really where you get the greatest fulfillment. No doubt about that.

Mark Austin: 100%, I'm totally in agreement with that. Jordan Michaelides: Now, we're going to get into some rapid fire questions to finish off. First, what does your morning routine look like?

Mark Austin: Morning routine… Well, if I am in Ko Samui I will wake up, I will generally have a green drink, detoxify the body, go for a swim, do a bit of a workout. That wakes me up. I’m into health as well, I believe that you’ve got to start from the inside and that helps the mindset as well.

Certainly that morning swing really helps. If I'm in the city, my morning routine isn't as good generally as I'm rushing around, but I'll try and squeeze in a quick workout in the morning. Jordan Michaelides: And in the evening, how do you sort of decompress at night?

Mark Austin: The usual really. Chilling out with friends, go for dinner, movies, have a few glasses of wine. Jordan Michaelides: If you had to give the book to the audience for Christmas coming up, what would the book be and why?

Mark Austin: For trading it would definitely be trading in the zone by Mark Douglas, talking about the mindset. I would also highly recommend the Tony Robbins' books. He’s got Money: Master The Game… Jordan Michaelides: Awaken The Giant… Mark Austin: Unshakeable.

Money: Master The Game is a really good one. It gives you the strategies for growing your wealth and highlights why the majority are struggling to grow their wealth out there, the things to put in place, and highlights a lot of myths as well from the investing world. So that's a really good one.

Jordan Michaelides: I think if people are stuck on where they are going in life, Awaken The Giant Within in a brilliant book as well. Last question for you, what's been the best purchase for you under $200? Mark Austin: Again, it’s going to have to be a Tony Robbins course.

I find that it's given me to so much inspiration and helped me through throughout the last 10 years. Jordan Michaelides: Did you originally buy one of his tapes when they first came out? Mark Austin: It would have been an audio but it was downloadable.

It wasn't all early as cassettes. It was books and then audio. Jordan Michaelides: Everyone always talks about the cassette tapes, the CDs, the audio programs in general.

It’s a very common thing amongst people who've achieved something in their life is they all reference at an early age finding Tony Robbins or the ‘Rich Dad Poor Dad’ guy, that they obviously grew out of it as time went on but that opened their mind a bit. I guess that's what those guys do so well, is that they put it in lay terms and they make it quite simple. Right.

Thank you so much, Mark, for joining. Mark Austin: It’s been a pleasure. Jordan Michaelides: It's been very interesting.

For those listening, where can they find you? Mark Austin: They can search for the Magnetic Trading website, they can sign up to our newsletters and they can follow us on social media. Certainly check out the YouTube videos we’re going to start with our funds and trading accounts, displaying all our trades.

Jordan Michaelides: Mark, thanks so much for joining

Chris Tate is an Author, Trading Mentor, Co-Founder of (Trading Game), and Founder of Talking Trading. With a penchant for applying the scientific method to most elements of life, Chris (along with his co-founder Louise) is one of the longest standing mentors in the trading business – weathering all the fads that have passed through the industry. And don’t forget to pick up your free trading plan template from Chris’s website – tradinggame.com.au.

It will help you trade like a professional, and give you the focus you need to excel in the markets. In this episode we covered: Averages, statistics & people Technical analysis, simplicity & complexity Delaying gratification & FOMO How he got into trading Working with Louise Bedford; and Managing downsides