Talking Points:
• Sometimes high-probability fundamental scenarios or tangible risks are delayed or never come to fruition
• Oftentimes, that reality is unrealized because an irrational 'crowd' has different priorities
• We discuss the herd mentality in context of 'risk trends', Yen crosses and EURUSD
Want to develop a more in-depth knowledge on the market and strategies? Check out the DailyFX Trading Guides we have produced on a range of topics.
Have you ever been certain that a fundamental theme or market outcome was so important that it would 'have' to play out only to find the market carries on without concern? That fundamental outlook may not be wrong theoretically. The market is a consensus of many different opinions that blurs the lines of rational positioning and interpretation. A 'herd' often interprets market conditions in a very disparate way to the rational individual. However, we shouldn't simply abandon our analysis for chaos. We need to put it into context for the masses and establish 'if' and 'when' a mispricing will be appreciated by the crowd. We discuss herd mentality in the context of 'risk trends' (via the S&P 500), Yen crosses and EURUSD in today's Strategy Video.
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