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The regulations of the commodity futures trading commission ("CFTC") require that prospective clients of a cta receive a disclosure document before they enter into an agreement whereby the cta will direct or guide the client's commodity interest trading and that fees and certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the commodity trading advisor ("CTA"). It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets. In some cases, managed commodity accounts are subject to substantial charges for management and advisory fees.
![narrative causality narrative causality](https://s3.studylib.net/store/data/007496698_1-b6c2977355d747dca21ee800108d6d1c-768x994.png)
The use of leverage can lead to large losses as well as gains. The high degree of leverage that is often obtainable in commodity futures, options, and forex trading can work against you as well as for you. You should carefully consider whether such trading is suitable for you in light of your financial condition. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE ("FOREX") IS SUBSTANTIAL. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Are you price, fundamental, efficiency or narrative driven? Is the market currently price, fundamental, or narrative driven? Know your expectation mechanics. From this story, investors look for confirming evident to support their narrative.Īny investor needs to know two things: what is the philosophy that drives his decisions what is the philosophy that is driving the market as a whole. It is a “beauty pageant” of what investors think is the driving story for returns. Finding the narrative story that will push prices creates value. Prices are a weight of different expectations which may be driven by stories, fundamentals, and the herd. The narrative driven investor thinks of the market as a game of expectations. Following trends will not give you an edge. There may be value with research, but the return is just compensation to the effort required to gain an edge. The efficient market person believes that markets move on surprise that all current information is incorporated in price. Complexity in markets means that prices, which embody expectations, move first. The global macro fundamentalist will state that economic events move markets and manipulating this data will create private information that can be used to forecast prices. It drives how you filter information and derive profits.Ī trend-follower will state that price move first or at least the link between fundamentals and price is weak that there is no value with trying to determine fundamental relationships. These alternative views are fundamental to the mechanics of how markets operate and represent an investor’s philosophy to markets.
![narrative causality narrative causality](https://slideplayer.com/slide/3886540/13/images/8/What+is+Narrative+A+chain+of+events+in+cause-effect+relationship+occurring+in+time+and+space..jpg)
“And narratives move before prices.” – Ben Hunt “I always believe that prices move first and fundamentals come second.” - Paul Tudor Jones