Please allow background. My Inside the Currency Market book is an important document but it was a personal turning point in understanding since I delved so deeply into the minds and operations of central banks. I earned unprecedented access to central bank traders at the BOE, RBNZ, and those that create markets such as the London Brokers Wholesale Markets Association. The section on interest rates is most vital because it shows the relationship between interest rates and currency prices. It was here I began a multi year venture to understand a currency price.
I first captured the interest rate, currency price by melding carefully chosen Moving averages, carefully chosen time frames then applying carefully chosen math formulas that work. I literally went back to ancient times to study the bible, Arabs, Persians, Sumerians, Hittes, Greeks, Jews, Christians, Indians from India to determine how they viewed and calculated numbers. The world began based on multiples of 5 for all nationalities and here was derived the Standard Deviation by the Sumerians, yet unknown to them but credited to Gauss in the 1800’s. If 5 is the foundation of the world, markets are designed based on 5 multiples. Math formulas is an important statement because it took time since a vast vast majority of math formulas are utter and pathetic failures.
Statistics is by far the way but Statistics has the ability to constantly calculate separations. One can get lost in calculations so a cutoff point must be found. So I hit the professions to see how certain Statistics was applied. Physics for example is a failure in all math formulas such as Heisenberg, De Broglie, Schrodinger while Audiology and Meteorology are correct and fascinating. Think Amplitudes and wind speeds. The only other calculations viable is Pi and Pi deviations because PI views are seen in full circle circumferences and it is here where is derived the wave, not cycles but waves because in Unit Circles is determined where are exact Pi locations, negative or positive. Negative Pi must travel to positive and vice versa and its basically the same for Statistics. But the same PI deviations can be seen in Sine and Cosine waves. What the great Martin Armstrong sees in Pi to determine market turning points is Pi locations. If he finds negative Pi then he knows Pi must go positive. What I wanted was perfection, what I found after much time and testing was perfection. But then I built on those math formulas to go directly to the heart of the central bank, the interest rate. I then devised interest rate models, interest rate curves. Same story as previous, how the heck does it work. Well after time, I found the answer.
The central banks by itself or collusion run, determine, dictate currency prices. They inform currency price direction, levels of exchange rates. They don’t just inform, they yell it from the rooftops. But control is their way to not let the currency price go far out of whack, far out of place. Central banks despise volatility and movements because they can’t control a fast moving price. Better to stop volatility before it begins. But they counteract volatility if seen by stopping it dead in its tracks. How.
What is the difference between AUD, CHF, JPY, EUR, GBP. The answer is nothing, they are all the same even if it is the Botswana Dollar. They are just names that separate a nation by three letters. The joke on the trading public is to include the 3 letters together and call it an exchange rate. An exchange rate is valuable only if one wishes to exchange. To trade, all is needed is to know one of the 3 letters. What is the difference between nations exchange rates, nothing except its separated by an interest rate number. That’s the value in trading and profits. Interest rate have different names per nation but like the 3 letters of a nation’s currency, its just a name. Euribor and Fed funds are just names and only have value in the respective numbers.