Wikipedia explains "Reflexivity is discordant with equilibrium theory, which stipulates that markets move towards equilibrium and that non-equilibrium fluctuations are merely random noise that will soon be corrected. In equilibrium theory, prices in the long run at equilibrium reflect the underlying fundamentals, which are unaffected by prices. Reflexivity asserts that prices do in fact influence the fundamentals and that these newly-influenced set of fundamentals then proceed to change expectations, thus influencing prices; the process continues in a self-reinforcing pattern. Because the pattern is self-reinforcing, markets tend towards disequilibrium. Sooner or later they reach a point where the sentiment is reversed and negative expectations become self-reinforcing in the downward direction, thereby explaining the familiar pattern of boom and bust cycles"
Well, for those who understand it, which "belief" you choose? My point of views;
Equilibrium defines supply (SS) and demand (DD) will meet in one point. Can this happen in FOREX Market? FX market is just like other market which driven by DD and SS, whether in short or long run, you will see the price come back to the original point.
"Reflexivity" will shift the demand and supply curves sharply where "noise" overcome "emotion". Behind every "loud noise" is back up by the strong force who eventually move the curve. If you are in FX market and follow the gullible "noise" at the point which pattern changes, it will burn your ass!!!
