FX algos and the weight of industry expectations

Matt Clarke
25 Aug 2020

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Oaktree Capital’s Howard Marks wrote a wonderful memo on how investors should adjust their forecasts by considering what’s already priced in. He calls this “second-level thinking”. If you believe a company’s prospects are good but the market thinks they’re great then you should expect its stock price to fall, he advises. This is not an intuitive reaction for most of us.

Foreign exchange algos are currently a bit like that. There’s no question the outlook is extremely promising for this

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