The Money's Gone!

I had a comment asking why I thought the volumes were down. My reply was:

I think it's a combination of the money that has evaporated from the financial system, fear of the current economic situation and MFGlobal. I suspect that it's mostly the first reason.

When the markets collapsed in the 2007/2008 debacle, it wiped out nett worth. The collapse of real estate had an even more disastrous effect: it made money evaporate. It didn't move money from one person to another, but just caused the money to evaporate. Whether you owned property or a security whose assets were based on mortgages, your money evaporated. Money was created as the real estate bubble inflated and people used the increased "value" as if it was an ATM machine. The assets evaporated and the debts remain. This has had an impact on the ability to buy stocks, derivatives and other financial assets.

To this add the fear generated by the flash crash and the current world economic uncertainty and a drop in transaction volume is understandable.

This transition will continue for some time. Years I believe. But the opportunities are there. The European news today about Greece was tough to believe that any agreements will be kept. The politicians never cease to disappoint me.

There were some nice trades today in many markets including the DAX and Light Crude. Here's one of the charts.

The DAX is my favourite market both for discretionary trading and algo trading. It trades well in both the Euro and U.S. morning time zones. Lots of you guys there in the 'States get up early to trade it, I hear. Good on ya mates!