Broker to Trading

USD/JPY on FOMC gave me this slight feeling of past times: it has been an interest of this blog whether keeping interest rates low for a prolonged period of time helps a company led recovery. It has been an interest as well whether QE1 and QE2 and QE3 helps this.

Now, the question might be asked when growth processes begin, is it better to stimulate as early as possible. If one examines how these processes work in markets, it seems that the best time is before the total collapse of values, in this case assets values of companies. This did not exactly happen, but maybe it would not have made a difference here.

The problem is that these assets were valued in relation to some basis of what may have been problematic related valuations. Does that matter - well, yes because it means there is less basis on which to rebound, for starters. This is presumably a useful condition of a market turn, that values find incorrect valuations. But the problem is that the crisis made assets find possibly correct valuations (with bounce inducing depth issues as well).

Post crisis we have perhaps seen an encouraging of the market to rebound, in a way extended over time, but repricing assets with the vast availability of money, pure money flow. The way the market rebounded looks a bit like a too low re-pricing rebound in a trading day.

But is the growth actually occurring going to help this process, because that growth is perhaps unconnected with this asset re-pricing, except in as much as money flows into these companies as well. Perhaps, because in each new market rise, the winners are not known at the beginning.

That is a difference between equities and forex views, one is seeing money flow, however much it may be structured by optimization or growth. But in equities one is seeing equity growth. Except now in equities one is seeing in general money flow in equities.

Money flow may bid assets up and down without regard for intrinsic value, it is like the way big money could force a currency up or down. Yet that tends to result in a-directional reactions by the market, and it seems huge reversals sometimes, the more it is applied.

The implicit possibility, from the standpoint of the market is that money flow interacts with a directionality in the market, what I might term a growth process (in certain circumstances this can be linear), or an optimization given linear directionality (this may be a random event).

That said I do not believe that linearity is that important, traders implicitly structure market processes to give them a temporary linearity within the market. However this temporary linearization may distort directionality within the market.

The same in equities, over longer terms, that is yes, parallel company revolutions are important, as they provide a basis for investors to linearize this market, in terms of the market itself, that is a view of the market that is functionally relevant to them and may or may not have an effect on the market.

The problem with stimulus is the effects flow over time, after the initial boost. However that initial boost may be what is important, not the later movements. In theory this could be cumulative, catching something partly by repeated efforts, thus in effect the flow over time becomes important.

Put it this way, it is a different way of doing things, but what is happening may be similar in some extent to what went before. But this time, the money is there to attract to assets by unrelated means, if this can happen. Thus we could argue that what has been created is something more like an enabling free market, it may tend towards this rather than is.

Forex seems to me to be like a very extreme example of this, as patterns and differentials provide the basis for this attraction with perhaps extreme temporal limitations to it, before repulsion occurs. To trade on it otherwise is to look for either those longer term processes themselves or shadows or flickers of them.

One wonders to what extent those longer term processes are impaired or changed functionally by this market reality. Flickers of past flickers, because there are no new flickers, if one might put it like that. A de-referenced market. However as always I feel that the vitality, which existed after the crisis and is happening now in tech and it seems even new media, is something that provides present and most importantly future valuation stability.

What I meant by past times at the beginning of this post was that the structure of the reaction of USD/JPY reminded me of its behavior around 2008, yet something also seemed to have changed. To me that was possibly either an instability or an enhancement of something unstable.

Blog Posted by Broker to Trading at 5:18 PM

One could say that trust is something that is a basis for a trade. That is, one trusts that one has made a purchase such that over the ensuing time, it will return in your favor. Whether there was any basis for this trust, or simply random events construed this outcome is not necessarily important, except for the fact one may want to make another trade and another. What I could say is that the basis for such trust, if it exists, is contextual.

One can look at fear and greed in terms of trust, that is one deviates away from trust with fear and with greed. But of course can one in any sense trust a trading market. If trust is highly limited, then the effects of fear and greed may become amplified.

Which comes back to systematic approaches of some kind, because one has no alternative to act in the market. One can find trust here, by saying that a given systematic approach may have some validity in market function, or past performance (in both cases that validity, if it exists, can change).

But what is a non-systematic market stance without fear and greed like. Market driven, perhaps.

If one could use a trading market a bit more like an investing market, that is loosen the time factor which decides exits of trades (that is, the extent of the move against your position overwhelms the opportunity within the position) one may have a different perspective, if one can find an apparently counterintuitive basis for such trust.

It is interesting to ask if equities have a different time factor than other instruments, ignoring issues of leverage and is this related to that growth. That exists in forex for example, market participants may seem to effectively grow a forex pair, but without that stability from company structure, except perhaps in the way markets may interact.

But, again, is there something else in that space between trust and simply doing. If one considers responsiveness, one can say that the human brain, as long as it deals with fear and greed can respond (this is what it does, it was designed to do so, within the limits of such design). Assuming there is something to respond to.

There is nothing one can do about or with the news event, it happened somewhere else just as one cannot really do anything about what is happening about the market, especially markets like forex. The consequence of responding in forex is not not necessarily really growing, just a collection of responses. That points to the question in markets, do valuations really grow in some sense, or is it just trader response which may make for changes.

Is there something real in the way information changes over time, what structures it or even appears to structure it. It possibly comes down to a sense of predictions of accuracy being made, that is the way these are collectively done. This points perhaps to the importance of making such predictions to the generation of information.

In the case of forex, there may be something that at least guides those predictive statements. In the case of equities this may be more the case, in some circumstances.

Blog Posted by Broker to Trading at 8:09 PM

What can we characterize as trust in new media, does it matter in the way it matters in old media. Now, media itself is something one may tend to trust and have that basis of time and again, to trust. One has criteria to know to what extent that basis remains constant and filters events, which may themselves be highly filtered anyway.

But new media has this sense, it is so immediate, that those filters are disengaged. It is so granular that one might expect any disinformation, to be re-patterned away, or it is filtered from top down to remove what may be seen as noise. In a sense one does not need to trust new media, as its best. What I mean ideally one can make up one's own mind, or at least surf on all that information. One can simply reference the raw data coming at you, with established media, indeed.

Thus old media has a crucial role as long as at least part of it, is part of new media as well (that is there is a something to reference). Now this raises the question, can new media take over that role, without impinging on the experience of rawness and the possibility of people to come to their own conclusions, which is surely the very foundation of a free press. That is can we get something really new, or even can we maintain new + old media.

New media is to a reasonable extent the people, for now, it is people getting the news as it happens, as it grows from point zero, taking on new interpretations and vistas as it does. One needs to grow with it, but that means one needs to get that growth unimpeded, or at least very lightly filtered. I think that growth itself is important, as that is potentially where the most information can be for a while (i.e. the 'noise' is needed).

I might say that there is something inherent to that which old media does, that is part of this growth. But partly what is new, what makes it new media, is that people are there from point zero. A thrilling experience, running the gamut of emotion, like watching something on TV, except it references real world events ? But to me there is something more, that extraordinary process as ripples make waves around you, in the world of the Internet.

It is important that many voices can add to this process, but it is the process itself that is of interest to me. What is it about growth, does it mean anything. I think it means something for people to be in on it. That is what I mean by growth, which does that process result in. It is a great question, what did that sharing of information and opportunity at the beginning of the US do to it. Putting people in, because of words written on a document.

Growth here is opportunity, because being so close to the development of the news, does not have risks, one assumes. But whether that opportunity becomes anything, is the same question it always is. That come back back to trust. Leaps into the connected unknown, because the connectivity does not necessarily enhance the accuracy of the information, and assuming accuracy is required for effective opportunity (one could say that it may be, over time and for sustainability, but not necessarily).

This opportunity may happen if the connectivity enhanced the accuracy of the other media, or created a more complex way to express the development of information, either short terms events, or longer term issues.

But is there something in that space between trust and simply doing. If one considers fast moving conditions in new media (which is where this comparison is coming from), one can consider that perhaps there is no information really at all, except for the experience of it, or one can possibly consider that again the individual's brain responds.

There is nothing one can do about or with the news event, it happened somewhere else. The consequence of responding in new media is getting a sense of being more immediate with news events, what I would take from it, is that sense of a story growing and being with it. But not necessarily really growing, just a collection of responses, expanding and inputs into it.

Can we see anything that guides responses, something for them to fit into. The only thing one might say is that the process of growth of a story may reveal something in its granularity such that there may be something otherwise not to be seen. That is the core of a free press though, that greater precision potentially on what actually happened, widely disseminated.

But here those myriad responses matter, and that to me is an argument for finely grained new media news: the flow of expression through news, that is news shapes expression, but to how much of an extent (but not so much the other way around). Is that something new for media.

New Media brings the first amendment to life in this way: one trusts that one can express oneself, therefore one brings the flow (i.e. another part of that amendment is crucial here, but as noted each relevant part can work together, now).

The question is more and more, how valid is that trust and what are the consequences for new media if it is not the case, these are not really privacy issues, as the idea here is dissemination, they are issues of freedom.

Freedom of expression, in the sense of what it may do, is nothing except possibility. But enduring possibility seems to produce the most astonishing creations, there is a point to it. And new media may create a realization of possibility, or at least seem to.

Whether that 'seem to' is or is not or a drive in your (future) direction, is another matter. One could ask what happened to all that freedom of expression, and importantly feeling free to express oneself in the early days, but hopefully not about new media, yet. It is like another chance.

I might say more optimistically, that all that granular freedom, on the technology of printing presses and possibility did not disappear (it couldn't), it just became more formalized, yet that rawness tends to be where it is at, without necessarily implying that the content itself is raw.

That we can see as an advance, technology genuinely has given further possibilities for expression and its generation over pieces of paper and print, this time around. So freedom and and its expression liberty evolves in some sense, on this optimistic note.

Blog Posted by Broker to Trading at 7:15 PM