Defeating the Discombobulating Dialectic: Or, Just Trade the Damn Thing! Part I.

Catching a glimpse of the market's most interesting behaviours.

At the AXIA trading desks.
Tuesday 19th November 2024,
Limassol, Cyprus.

“But yeah, it was weird!”

“It felt like the markets wanted to go that way beforehand,” so continued this trader. “But these headlines were little triggers. Then everyone decided that these headlines must be moving it, and they all just jumped in! From experience, you usually look past these comments and think nothing of them. But you have to adapt…”

This highlights one of the market’s most intriguing features: its ability to observe and adapt to itself, altering the very question we’re trying to answer simply by attempting to answer it.

Here’s the chicken-and-egg problem: Would the market movements on Tuesday morning—the Bund’s rally, for instance—have occurred if the headline ‘Putin Approved Updated Nuclear Doctrine’ had emerged under different market structure and participant positioning?

Suppose the market’s positioning favoured the downside in Bund futures. In that case, how would the risk-off bid on a nuclear doc…