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Reassurance always runs out. Reassurance implies that the only reason to go forward is because it’s certain to work. Reassurance is futile.

The words of Seth Godin. He's a marketing guy (probably THE marketing guy). As with everything written on these here pages, his sentiment applies wonderfully to markets.

People are constantly seeking reassurance. We're really not built for uncertainty. It's just human nature. ... 👇

Which is why trading and investing are so hard. So stressful. So... taxing. All of those things. But does reassurance really serve us?

Which is more helpful? Someone telling you everything's going to be OK.... Or a dose of dark humour about the absurdity of doing battle with Mr Market? 👇

Maybe both are reassuring in their own ways, but one version is infinitely more honest, and arguably has longer-lasting effects...

If you go with the easy, comforting option, how long until you need another hit of that sweet reassurance juice? Back to Seth 👇

...the future has an annoying habit of showing up, regularly. And it shows up in ways that we don’t expect.

Non-markets person with the perfect description of why markets exist. If the future didn't have that annoying habit, markets would serve no purpose.

If we get hooked on reassurance, we’ll make two significant mistakes:
We’ll spend time and energy looking for reassurance instead of focusing on our work and those that we seek to serve. The trap is deciding that if it’s giving us solace and a warm feeling, then bring it on, even if it means losing sight of what we were trying to do in the first place.
If we believe that the future can be controlled (which those that reassure us seek to do) then we’ll start focusing our work on the outcome, not on the best version of what we’re capable of. Worse, we’ll end up trying to make the reassurers happy instead of making something for our true audience.

All of the bolded lines are where so many go wrong, especially early on. Why do you follow other traders?

Because they're kindred spirits? To steal their ideas? Or for reassurance that what you're doing maps on to their (perceived) path to success?

Maybe you just want to run your trade idea past them...

If reassurance is futile, what's the alternative?

The alternative is to embrace that feeling of uncertainty and refuse to get hooked on reassurance. The future is on its way, our work will ship, and then we’ll see what happens. In the meantime, we’ll keep doing the best work we know how to do.

That need for reassurance comes from a place of insecurity. In the early days of any endeavour, you're a novice. You need guidance, some degree of hand-holding to keep you on the path.

If you're not at least a little bit insecure at that point, you're delusional. Or doing well with Beginner's Luck.

Beginner's luck is thought to end once a player gets involved with a game, and the "innocent" psychological mindset is replaced by one that is concerned with the nuances of the game.

However, as time goes on, reassurance-seeking becomes a liability. All traced back to a fear of being wrong (which is hilariously insane, because we're all wrong a lot).

What if that reassurance came in a different form? Nobody telling you it'll be OK. No dark humour, just understanding...

Yeah, I know. Come on, anon. Just understand more stuff and you'll feel less insecure. Genius levels being reached here, but the logic's undeniable...

Take this example 👇

If you don't understand the role of swaps, why wouldn't you be scared by that sequence of headlines?

It's got all the elements. Massive numbers, an authority figure (BIS) putting the information out there, and it's all hiding in a blind spot... (Which isn't a blind spot any more because everyone knows about it but forget about that for now).  

Special award to the Daily Express for 'potential losses exceeding the total number of US dollars in circulation'...

So, should we be worried? Yes, a bit, but nowhere near Daily Express levels of worried.

Oku Markets have a great explainer of what an FX swap is 👇

a Spot trade involves selling one currency to buy another for immediate settlement, a Forward trade is the same, but the settlement is some future date, a Swap involves two "legs", usually a Spot and a Forward, looking something like this:
  • Near Leg: Sell CCY A to buy CCY B (Spot Date)
  • Far Leg: Sell CCY B to buy CCY A (Forward Date)
An FX Swap is therefore the simultaneous purchase and sale of one currency for another across two different settlement dates.

The entire economic system is based on these kinds of arrangements. People buying and selling stuff from each other to meet needs over different time horizons. Including currencies.

The size and rapid growth of the $ swaps market, combined with the fact that these deals are tucked away in less transparent areas of the system is always a concern.

But just like dry tinder lying around in a forest, it doesn't matter unless/until there's a spark. Something that starts the burning.

Even then, central banks, led by the Fed will eventually step in with their liquidity hoses and put out the fire. Some of the forest will be burned beyond repair, but a fertile environment is left behind in its wake.

New growth will sprout from the ashes of the old equilibrium.

Once you understand those things... That all of this has happened before and will likely happen again, it's reassuring, right?

Maybe not entirely, but infinitely better than a patronising platitude...

False reassurance. Understanding. Or ignorant bliss.

It sucks monkey nuts, but those are the choices.