George Soros

The Reflexive Trader

You believe prices change fundamentals and fundamentals change prices, so no equilibrium can be trusted. You form a hypothesis, bet big, and let the market tell you within days whether you were wrong.

Position on the six dimensions

Where this method has an edge

• You can profit from regimes that break
• Cutting fast keeps you alive
• You think in scenarios, not valuations

Where it can hurt you

• Big bets mean big single-event risk
• Without valuation anchors, position size is your only risk control
• Reflexivity is easy to see in hindsight, hard in real time

One rule from this method

Write the specific observation that would prove your hypothesis wrong, and the date you will check it.

The other nine