Understanding Market Evolution: A Scientific Approach

The financial markets may appear to be mired in a raft of random changes, but they are actually undergoing the same kind of evolution that scientists have been observing in the natural world for 150 years. Just like in the natural world there are both long-term and short-term forces at work, producing interconnected effects across a wide spectrum, and placing a premium on institutional adaptability. This paper examines the forces of evolution that are acting on the markets as a whole, and on individual segments, and sets out a scientific methodology for surviving and thriving in this evolutionary environment that could be imposed upon the venues.