This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.

Do you understand the impact the Federal Reserve has on markets and your money?

Most people don’t. And they’re left playing a game against a force they don’t even realize is there.

Central banks are key institutions to understand in order to be a profitable trader or investor.

Their motives and the tools they use to achieve those motives have a huge effect on individual investors.

In the video above we’ll discuss the Fed’s mandates which include:

  1. Maximum employment

  2. Stable prices

  3. Moderate long-term interest rates

We’ll also cover the three policy tools they use to implement those mandates:

  1. Reserve requirements

  2. Discount rates

  3. Open market operations

Understanding the basics about the Federal Reserve will prepare you to learn how they manipulate financial spreads in the market. We’ll cover financial spreads in the next video.

 Make sure to subscribe to the Fallible channel here for more videos!

 

By Steve Burns

After a lifelong fascination with financial markets, Steve began investing in 1993 and trading his accounts in 1995. It was love at first trade. After more than 30 successful years in the markets, Steve now dedicates his time to helping traders improve their psychology and profitability. New Trader U offers an extensive blog resource with more than 4,000 original articles, online courses, and best-selling books covering various topics.