Definition of Deflation, Inflation and Hyperinflation

Deflation: A decrease in the prices of goods and services, usually tied to a contraction of money in circulation. Formal deflation is measured in terms of year-to-year change.

Inflation: An increase in the prices of goods and services, usually tied to an increase of money in circulation.

Hyperinflation: Extreme inflation, minimally in excess of four-digit annual percent change, where the involved currency becomes worthless. A fairly crude definition of hyperinflation is a circumstance, where, due to extremely rapid price increases, the largest pre-hyperinflation bank note ($100 bill in the United States) becomes worth more as functional toilet paper/tissue than as currency.

Gross Debt in G7 Ecomomies

Practice Deep Learning to Master Trading Skills

Deep Practice gives an overview of what kind of practice seems to build myelin and gives examples from sources as diverse as skateboarders, the Bronte sisters, and Renaissance artists. Coyle’s term Deep Practice is in most ways similar to Ericsson’s Deliberate Practice and my own notion of Intentional Practice. He culls three rules of Deep Practice:

1. Chunk it up: Basically this consists of breaking things into pieces that are more easily done or thought about. It also includes listening to and/or absorbing the whole before breaking the skill down and includes changing the material to make it easier, for example, slowing down a difficult musical passage.

2. Repeat it. This is pretty self-explanatory, but also not as simple as it sounds.

3. Learn to Feel it. This includes sensing (and remembering!) how something feels when it is done right, but also developing awareness of how it feels to struggle.

Secular US Market Cycle

Four Formulas A Trader Must Master

1) Risk of Ruin

Risk of ruin = [ {1-(W-L)}/{1+(W-L)}] Power of U
W = Probability of winning, L= Probability of losing and U= # of units of money on the account.
E.g W is 56%, L is 44%, U is 5 .
Risk of ruin = [ {1-(0.56-0.44)}/{1+(0.56-0.44)}] power of 5 = 30%

You must avoiding risk of ruin, achieve ZERO% risk of ruin. E.g Using 20 U and min 63% W, and min 1.5 win to loss trade.

2) Expectancy

Expected return $$ = [ P of winning x Ave win/Ave loss ]-[P of loasing x Ave win/Ave loss ]
High Expectancy can be achieve with low accuracy e.g 30% but high Ave Win vs Ave Loss
Trend Trading min Positive expectancy with P of winning 34% with 3 to 1 Win/Loss ratio.

3) Holy Grail = Positive Expectancy x Opportunities

4) Kelly Formula Kelly Formula F= (R+1)*P-1)/R

P= % accuracy of the system winning

R= Ratio of winning trade to losing trade

E.g Accuracy P 65% and win R 1.3 size of loss F= (1.3+1)*0.65-1)/1.3= 85%