Each positioning and market expectations dig into an even bigger idea of reflexivity inside monetary markets, as pioneered by George Soros. In brief, market reflexivity means that investor perceptions and habits affect market situations, which, in flip, affect and form investor beliefs and actions. This round, self-referential suggestions loop results in non-linear market dynamics as cognitive biases and expectations construct on one another to affect market costs and investor positioning. This may clarify the emergence of worth tendencies that may change into self-fulfilling over the brief run and self-correcting over the long run as merchants chase costs till expectations and positioning for continued worth strikes can solely lead to a reversal and correction, a lot to the frustration of merchants who lately began following the development.
