Flexibility and Perception: Key Drivers for Trading & Investing

Having the ability to be flexible and adapt to almost all types of market conditions in trading global instruments can be an advantage for most tactical investors and smart main street traders alike.The level of sophistication in trading volatile markets can be learned through rigourous training and market experience, as it is the best training ground for self directed investors.

The 'Perception' of an investor in accurately analyzing the market can only be derived from proper due diligence. Where a collective understanding of the fundamental factors surrounding the market place is well aligned with price action and market's behavior particularly in the financial markets. As prices drive perceptions which drives changes in fundamentals. 

At certain times in the market place, this process do create a positive or negative 'feedback loop' that will continue until such time, it reaches a breaking point. Well known to most active market participants as the 'Cause & Effect' theory in trading the financial markets. And from George Soros exceptional market performance managing his Quantum fund before retiring have time and again used his Theory of Reflexivity' investing particularly in the stock market.

When prices move to the extreme, Mr. Soros would bet on a reversal much similar to the 'Contrarian Theory'. With the exception which he refers to the circular relationship between cause and effect. That most people who often invest based only from sound fundamentals surrounding the company, fails to consider relative price changes in the market. And media reporting has everything to do with this.

Post Major Market Sell Off: What signals to look for

The 'Concept of Equilibrium' is where the market finds itself in a process to 'freely-adjust' price levels rightfully even after unexpected major price movement or from a rapid melt down. And the adjustment process that leads to an equilibrium, where the underlying asset values are implicitly identified to be true and correct along side the actual trend direction of the market would take a relative number to stay well within these levels.

At times, because of the market's ability to diverge from equilibrium, the probability of a greater price action contrary to a prevailing market trend would simply occur. And this can be seen from the recent melt-down of stock market prices when it comes to specific market price behavior and actions made or even coming from both; momentum driven and technically motivated market conditions.

    

Great Reference:

Executive Summary on The Alchemy of Finance  by George Soros

Combining Old School with New Technology has its Advantages

With SAC ousted from the hedge fund line,  George Soros’s Quantum Endowment Fund made the strongest gains out of any other hedge fund in 2013. This is according to a tally sheet made by LCH Investments while, John Paulson’s - Paulson & Co. hedge fund came in at 4th place. And Moore Capital, Louis Moore Bacon, $2.5 billion came in at the tenth place finisher for the year.

Those who invested in equities coming out ahead — 70% of total gains in 2013 were made from stocks. This is the same transition period that has cleared our way into shifting most of our trades in mid-June and July towards equity stocks. Particularly in social media, Technology and financial in line with stock valuations  as against reported earnings; as compared to US Dollar value with a hedge position in the precious metals market.

We at Megatrade101 had taken this macro-economics outlook from Keith Anderson, who runs the $25.5-billion Quantum Endowment Fund for George Soros Fund Management, has seen enough of choppy global markets specially the Foreign Exchange market.

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Cumulative Analysis leading to Current Market Conditions

As a matter of record, Megatrade101 have decided to compile certain market trend analysis leading to the current market conditions. Knowing the effectiveness of the analysis while staying the course has led to some remarkable trades that we would like to share.

Although, there is no such guarantee that future results would be the same;  the appropriate approach to market analysis based beyond charting systems and platforms are relatively effective knowing that prices would simply walk through current market conditions.

This is also in reference to one of George Soros trading philosophy, that at certain times the market place will find its way to adjust towards market equilibrium. And volatility could be tamed while price trends are defined. 

A certain process of deduction and trading methodology do apply with a certain degree of due diligence. However, the end result justifies the means in this classic case of a reinforced trend! On the contrary, whenever positions are on the opposite side of the market, an equal risk of loss can occur. A cautious approach and serious consideration to apply this strategy should always be taken before any trade execution.

Related articles listed below have actually paved the way to how the market conditions are reflected in today's price levels.

• An effective Analysis vs. Contrarian Theory  
• Counter-trade Strategy  
• A Constructive Approach  
• A Structured Strategy 
• Next Level Analysis ll