Sterling, Dubai: a liquidation love story

In case you were wondering why sterling might be suffering on the back of the Dubai story, Reuters reports on Thursday:

dubaiLONDON, Nov 26 (Reuters) – The Dubai government could be forced to hold a firesale of its international real estate if creditors to two of its flagship companies reject proposals to put near-term debt obligations on ice until May 2010.

International property advisers are bracing for a potential slew of instructions to revalue and sell trophy assets owned by Dubai World and its many property-owning units as the emirate struggles to shrink its $59 billion debt pile.

“We do expect the Dubai government to step up efforts to raise capital via real estate sales, and sales of their UK assets in particular,” James Lewis, a member of the Gulf capital markets team at property consultant Knight Frank told Reuters.       Lewis said Dubai had a better chance of denting its massive financial liabilities if it raided its group portfolio, which comprises international landmarks such as the Grand Buildings close to London’s Trafalgar Square, the Mandarin Oriental hotel in New York and the Victoria & Albert Waterfront complex in Cape Town, South Africa.

“The simple supply and demand imbalance (in Dubai) is horrific, which begs the question of why you would want to buy commercial and residential property there if you couldn’t be sure of letting it,” Lewis said. 

What’s more, they add: Continue reading »

Financial Suicide

“Most good traders would agree that risking less than 1% of equity in a trade (where 1% is the amount you lose if your stop loss was hit) is a prudent risk. Risking between 1 and 3% gets into the gunslinging range. Risking any more than 3% is usually financial suicide, and the average trader commits financial suicide all the time without knowing it”

How to Become a Disciplined Trader

  1. The psychology of price movement
    • The market prices flow back and forth like a tug of war between those who believe and expect the market to go up–and consequently buy–and those that believe the market will go lower–and consequently sell.
    • This means for one side, in their minds, that “the market” will make them winners; their beliefs will be validated.  All the traders on the other side, however, will be made losers; they will feel the market took something away from them and will naturally be disappointed.
  2. The steps to success
    • Once you trust yourself to always do what needs to be done, there will be nothing to fear because the markets won’t be able to do anything to you, as a result of your inability to respond appropriately.
    • Second, by passing up other opportunities that you are not an expert at yet, you will be releasing yourself from any compelling desire to trade.  Any compelling behavior is usually the result of some fear.
    • Staying focused on what you need to learn–> Deal with losses–> Become an expert at just one market behavior–> Learning how to execute a trading system flawlessly–> Learn to think in probabilities–> Learn to be objective–> Learn to monitor yourself