The Nature of Market Flows

Market behavior is largely driven by mechanical flows rather than fundamental information. Approximately 90% of daily market transactions stem from activities such as hedging, market-making, and clearing trades, which are often influenced by algorithmic strategies. This emphasis on flow dynamics suggests that actual market drivers are misunderstood, with many attributing price movements to news events or earnings reports instead. Understanding the underlying structural features of market transactions is crucial for grasping why prices behave in certain ways, often at odds with publicly available information.