Don’t Fight the FED

Many stock traders and stock investors pay little or no attention to their central bank, often regarding them as unimportant or irrelevant, a classic mistake. As I have said in the title which I hope makes the point, don't try to fight the FED, because if you do there will only ever be one loser. To join them, you have to understand them, how and why they work in the way they do - you may not agree with it, and at times have a completely opposite view to theirs, but at the end of the day it is what they say and do which will prevail in the stock market.

In this module, we take a deep dive into what I call 'the plumbing',  and literally take up the drains of the FED in order to explain how it works. In particular, the money that flows back and forth often at night, and which ultimately dictates the broader sentiment in the markets, and the cost of money. Here I introduce you to the repo market, and the changes which have been imposed on the FED, forcing them to move from applying monetary policies with limited reserves to a model using monetary policy with ample reserves. The Federal Reserve is a fascinating organization to study, and while I do not suggest you develop an academic interest, I would urge you to become a solid FED watcher which I and many successful traders and investors now do.