Nearly 30 years ago, that summer day, the thought. Today that thought is reality. When we live our lives in focus, on a mission, with drive, determination and purpose. All things are possible!
I say this because as a young adult when I ventured into this career, I never in my wildest dreams would have imagined that today would be settling in. It wasn't twenty five years ago, it wasn't a decade ago. With a focus on real time market volume, I knew I was close but I still needed to venture deeper into the traders mind. I needed to dissect the mindset and reassemble perspective of the masses, this is the fight for market transparency.
This was done with meditation and deep introspection of who I was as an analyst, a trader, investor and economist. Yet it necessitated a pragmatic approach to understanding the purpose(s) of each level of market participants. Governance and ultimately greed for market opacity at the forefront provided me insight into the technical methodologies of institutions. Market cycles drove deep into the mindset of traders with emotion. Market volume gave me the dominant forces and what was to come was the finale. Almost a complete inverse view into how human response would deliver the balance of cross border capital flows and the responsive nature of market sentiment and the reflexive nature of capital flows.
George Soros on Reflexivity
Reflexivity theory states that investors don't base their decisions on reality, but rather on their perceptions of reality instead. The actions that result from these perceptions have an impact on reality, or fundamentals, which then affects investors' perceptions and thus prices. The process is self-reinforcing and tends toward disequilibrium, causing prices to become increasingly detached from reality.
Soros’s theory of reflexivity runs counter to the concepts of economic equilibrium, rational expectations, and the efficient market hypothesis. In mainstream economic theory, equilibrium prices are implied by the real economic fundamentals that determine supply and demand.
The Advancement My Way
I don't prescribe to Soros's lack of character but shrewd avoidance of the topic at all costs is a purpose of mine. Exposure. His ability to leverage a position against the Bank of England is rooted within market reflexivity. But he fails to state, for obvious reasons the mechanism that allowed his advantage.
Price Movements in a Vacuum
Contrary to popular belief and aligning with the primary mechanisms of reflexivity, institutional capital flows are the inverse of trader expectations. It's always opportunity that delivers exchange rate fluctuations but this opportunity is more commonly the opposite of trader expectations. Why? It's the leveraged give and take relationship between governance, central banks and deep pockets for control. Slight of hand, aggressive response and absolute opacity are the underlying purposes.
There's a massive difference between retail traders, institutional participants and the corporate customers seeking to engage foreign exchange. Yet all three of these demographics are outside the club of Central Banks, who seek to siphon capital from the underserved. Yet when we invert the approach of the deep pockets, who endlessly fight easy opportunity, we're delivered the approach of the insiders who counter their attacks. While volume has it's purpose, value has it's intent. It's intent's response to opportunity that guides the bankers into aggression. Yet, inversion of the institutional approach delivers the core movement as it happens. We see it all.