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Dunning–Kruger effect

The Dunning–Kruger effect is a cognitive bias in which an unskilled person makes poor decisions and reaches erroneous conclusions, but their incompetence denies them the metacognitive ability to realize their mistakes.^[1] The unskilled therefore suffer from illusory superiority, rating their own ability as above average, much higher than it actually is, while the highly skilled underrate their abilities, suffering from illusory inferiority. This leads to the situation in which less competent people rate their own ability higher than more competent people. It also explains why actual competence may weaken self-confidence: because competent individuals falsely assume that others have an equivalent understanding. "Thus, the miscalibration of the incompetent stems from an error about the self, whereas the miscalibration of the highly competent stems from an error about others."^[2]

The Dunning–Kruger effect was put forward by Justin Kruger and David Dunning. Similar notions have been expressed–albeit less scientifically–for some time. Dunning and Kruger themselves quote Charles Darwin ("Ignorance more frequently begets confidence than does knowledge")^[3] and Bertrand Russell ("One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision."^[4][5]). The Dunning–Kruger effect is not, however, concerned narrowly with high-order cognitive skills (much less their application in the political realm during a particular era, which is what Russell was talking about.^[6]) Nor is it specifically limited to the observation that ignorance of a topic is conducive to overconfident assertions about it, which is what Darwin was saying.^[7] Indeed, Dunning et al. cite a study saying that 94% of college professors rank their work as "above average" (relative to their peers), to underscore that the highly intelligent and informed are hardly exempt.^[4] Rather, the effect is about paradoxical defects in perception of skill, in oneself and others, regardless of the particular skill and its intellectual demands, whether it is chess, playing golf^[8] or driving a car.^[4]

http://en.wikipedia.org/wiki/Dunning–Kruger_effect

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FX Trade Lab Incubator Program

http://fxtradelab.com/portal/trading/trader-incubator
Do you have a consistent, profitable trading system?  Are you a professional money manager looking to raise capital for your program?

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More than 400 US Banks Will Fail: Roubini

http://www.cnbc.com/id/38986777
Even if the US and European economies manage to avoid a double dip, it will still feel like a recession, while more than half of the 800-plus US banks on the "critical list" are likely to go bust, according to renowned economist Nouriel Roubini of Roubini Global Economics.

Kabul Bank on the verge of collapse - Afghanistan

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/02/AR2010090202266_pf.html
Karzai's brother calls for U.S. to shore up Kabul Bank as withdrawals accelerate

DUBAI, UNITED ARAB EMIRATES - As depositors thronged branches of Afghanistan's biggest bank, Mahmoud Karzai, the brother of the Afghan president and a major shareholder in the beleaguered Kabul Bank, called Thursday for intervention by the United States to head off a financial meltdown.

"America should do something," he said in a telephone interview, suggesting that the Treasury Department guarantee the funds of Kabul Bank's clients, who number about 1 million and have more than $1 billion on deposit with the bank.

Kabul Bank handles salary payments for soldiers, police and teachers. It has scores of branches across Afghanistan and holds the accounts of key Afghan government agencies. The collapse of the bank would probably spread panic throughout the country's fledgling financial sector and wipe out nine years of effort by the United States to establish a sound Afghan banking system, seen as essential to the establishment of a functioning economy.

Action by the United States, said Mahmoud Karzai, would prevent a run on Kabul Bank and protect other banks too. He said Kabul Bank is "stable and has money" but cannot withstand a stampede by panicked depositors.

"If the Treasury Department will guarantee that everyone will get their money, maybe that will work," said Karzai, who holds 7 percent of the bank's shares, making him the third-biggest shareholder. Karzai, who spends most of his time in Dubai - where he lives in a waterfront villa paid for by Kabul Bank - rushed to the Afghan capital Wednesday to join efforts to salvage the bank.

Treasury officials have said they have confidence in Afghanistan's Central Bank, which ousted Kabul Bank's top officials this week and has sought to stabilize the bank's finances.

But those moves may have spurred a panic: Depositors yanked at least $90 million from Kabul Bank on Wednesday, according to people familiar with the situation, and the hemorrhaging of funds accelerated Thursday.

"Yesterday was not too bad, but today is worse," said a Kabul Bank insider. "It is a very bad situation."

Currency trading jumps 20% in 3 years

http://www.bbc.co.uk/news/business-11148626
A three-year report into currency dealing shows rapid growth in trading, with the majority of business happening in London.

Trade has jumped by 20% in the three years since the last survey was conducted by the Bank for International Settlements (BIS), which is sometimes called the "central bankers' bank".

But London outpaced the average, with turnover up by 25% over the period.

Some $4 trillion (£2.6tn) changes hands around the world every day.

Rumors have circulated in China that People’s Bank of China (PBC) Gov. Zhou Xiaochuan may have left the country.

Rumors have circulated in China that People's Bank of China (PBC) Gov. Zhou Xiaochuan may have left the country. The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within PBC, including Zhou.

Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou's defection have spread around China intensively, and Zhou's name has been blocked from Internet search engines in China.

STRATFOR has received no confirmation of the rumor, and reports by state-run Chinese media appeared to send strong indications that Zhou is in no trouble at the moment. However, the release of this rumor and its dispersion throughout the public is significant, particularly as the Communist Party of China (CPC) is preparing for a leadership transition in 2012.

Chinese state-run media and official government websites have run several high-profile reports about Zhou, which should be seen as a move to refute the rumors. The PBC website published two articles on its homepage reporting on Zhou's meeting with visiting

Japanese Financial Services Minister Shozaburo Jimi during the third China-Japan high-level economic dialogue as well as a meeting with an Italian delegation. Xinhua news agency reported that Zhou told the PBC Party Committee Enlargement Meeting on Aug. 30 it should "continue to implement justice, and strengthen legislative work in financial system." Prior to this news, Zhou appeared at the 2nd annual conference of the heads of the Chinese, Japanese and Korean central banks held on Aug. 3, and his most recent public appearance was Aug. 10 for China's Financial System Anti-corruption Construction Exhibition.

Zhou is known to have lofty political ambitions and is believed to be a close ally to former Chinese President Jiang Zemin, as well as a core figure for Jiang's "Shanghai Gang." There has been no shortage of rumors about Zhou's possible dismissal in the past five years, as he is believed to be associated with several high-level financial scandals. For example, Zhou was rumored to be under "shuanggui," a form of house arrest administered by the CPC, during the massive crackdown of Shanghai Party Secretary Chen Liangyu in 2006, which was perceived in the country as a crackdown of the Shanghai Gang and part of Hu's effort to consolidate power ahead of the 2007 power transition.

There was also a rumor that he might have been detained following the investigation and arrest of Wang Yi, the vice governor of the China Development Bank, along with several other officials in the financial circle. Currently, several financial scandals are still under investigation, and it is likely that Zhou, as PBC governor and one of the most powerful economic players in the country, could be associated with some cases. Therefore, whether or not the rumor is true at this time, the leaking of this news is very likely to be associated with a power struggle within the Communist Party's economic hierarchy.

By George Friedman

EES releases FXDF Forex Strategy Documentation Framework

http://eesfx.com/wiki/docs:framework
A framework for writing strategy manuals & documentation is needed. Having a standard for documentation of FX strategies will help document writers, by providing an easy to use template, which will increase organization. It will help users understand documents as they will become familiar with the standard and will understand how to use the document and where they can find specific information. FIX provides a standard for trading APIs, and most liquidity providers and FX trading banks have relatively few differences between FIX versions. However, the difference between strategies and their documentation is huge. A developer's work in many cases is only as good as his documentation. If something happens to him (such as "FX Burn Out") and others are forced to re-create his work, this can be difficult without clear, structured documentation.

The billionaire brothers who are waging a war against Obama.

http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer
On May 17th, a black-tie audience at the Metropolitan Opera House applauded as a tall, jovial-looking billionaire took the stage. It was the seventieth annual spring gala of American Ballet Theatre, and David H. Koch was being celebrated for his generosity as a member of the board of trustees; he had recently donated $2.5 million toward the company's upcoming season, and had given many millions before that. Koch received an award while flanked by two of the gala's co-chairs, Blaine Trump, in a peach-colored gown, and Caroline Kennedy Schlossberg, in emerald green. Kennedy's mother, Jacqueline Kennedy Onassis, had been a patron of the ballet and, coincidentally, the previous owner of a Fifth Avenue apartment that Koch had bought, in 1995, and then sold, eleven years later, for thirty-two million dollars, having found it too small.

Read more http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer#ixzz0y2qhGwd4

EES FX Forum Question: Adaptive Trading Systems

http://eesfx.com/portal/14-fx-systems/164-adaptive-trading-systems.html#164 What is the best methodology to develop adaptive trading systems?

Banks back switch to renminbi for trade

http://www.ft.com/cms/s/0/182a2b70-b130-11df-b899-00144feabdc0.html

Banks back switch to renminbi for trade

By Robert Cookson in Hong Kong

Published: August 26 2010 17:55 | Last updated: August 26 2010 17:55

A number of the world's biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.

HSBC, which recently moved its chief executive from London to Hong Kong, andStandard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency.

EES Strategies Update – 8.24.2010

EES Strategies Update

EES has completed a modification of the DRS system, and has coded a new system, Tick Monster, soon to be officially released.

All referenced strategies are now available for customers who have access to Elite Meta Sync. Please sync up to get the latest strategies.

For questions about these updates, please use the EES FX forums at:

http://eesfx.com/portal/list-forums/

DRS – TM updates Changelog

Drs R 3.5

1. Modified lot multiplier for double orders to accept 0.1. Please take note that if set too low calculated lot size will be less than minimum allowed by broker in which case the minimum lot size allowed will be used.

2. added option to use autogrid value for takeprofit, autogrid must be on for setting to take effect

3. added "check spread" function which will check if spread is within limits before sending orders

4. added options to trade again after global profit or stop

5. added use_PercentAccountStart feature for calculating starting lot

!EES-DRS_T_v2.1

1. Added pivot indicator filter - If ON EA will buy only above specified resistance line and will sell below support line

2. Added SMA indicator filter - If ON EA will only buy above SMA and only sell below. MA default type is simple moving average, 200 period but this can be changed at user input

3. Added "MovingAveragePlus" input parameter where user can define additional pips above/below MA to allow buy/sell orders. Set value to 0 to turn this feature off

Tick Monster V1.4

1. Fixed bug in pivots indicator filter

ShoreBank of Chicago Said to Be Closed Today by FDIC

http://www.bloomberg.com/news/2010-08-20/shorebank-of-chicago-said-to-be-closed-today-by-fdic.html
ShoreBank Corp., the Chicago lender operating under a Federal Deposit Insurance Corp. cease-and- desist order for 13 months, will be shut and most of its assets will be bought by Urban Partnership Bank, two people with direct knowledge of the matter said.

Urban Partnership, created to make the acquisition, will keep branches in Chicago, Cleveland and Detroit and continue to focus on low-income communities, the people said, speaking anonymously because the matter is private. Urban Partnership will have Tier 1 capital of at least 8 percent and its chief executive officer will be William Farrow, a former executive at the Chicago Board of Trade and Bank One Corp., they said.

"The good news is that the bank, under this new management, will still be there and serving the South Side community," said Dory Rand, president of the Chicago-based Woodstock Institute, a non-profit that studies community lending. "They have made the South Side a decent place to live and work and do business."