Praxis Core: A Multi-Layered Structural Intelligence Engine for Foreign Exchange Execution Under Entropic Regime Shifts

Chakit Vaish

MPRA Paper from University Library of Munich, Germany

Abstract: Foreign exchange markets are not merely venues for speculative profit—they are systemic transmitters of macroeconomic stability and instability. Volatile currency regimes can exacerbate trade imbalances, distort capital flows, and trigger policy interventions that carry long-term consequences for national economies. Yet, much of the existing algorithmic trading infrastructure remains tethered to predictive fragility, relying on static indicators that collapse under regime shifts and volatility clustering. Praxis Core introduces a structural intelligence framework that reframes FX execution as an adaptive, state-aware process directly aligned with macroeconomic stability objectives. By integrating a four-state Markov-Switching GARCH model—Bayesian-smoothed to stabilize rare transitions—with dual volatility and orderflow memory processes, Praxis Core detects and responds to regime mutations before they cascade into macro-level dislocations. Execution is anchored not to arbitrary price triggers, but to structural market topology—liquidity-depth contours, volatility surface curvature, and macro-sentiment alignment—ensuring trades are positioned where they absorb, rather than amplify, systemic stress. Risk is adaptively modulated using non-Gaussian tail modeling, regime-weighted sizing, and memory-aware throttling, preserving capital during high-impact macro events such as central bank interventions or geopolitical shocks. With a compliance-grade cryptographic audit layer, atomic-time synchronization, and fully transparent decision logic, Praxis Core offers a verifiable, institution-ready mechanism that bridges microstructure precision with macroeconomic responsibility. In doing so, it positions FX execution not only as a profit engine but as a stabilizing force—capable of mitigating spillover volatility that would otherwise propagate through global trade and investment channels.

Keywords: Foreign Exchange Markets; Regime-Switching Models; Market Microstructure; Systemic Risk Mitigation; Adaptive Execution Algorithms; Bayesian Smoothing; Macro-Financial Stability; Central Bank Policy; Quantitative Trading Systems; Non-Gaussian Risk Models; Liquidity Topology; High-Frequency Risk Control; Cryptographic Audit Trails; Atomic Time Synchronization; Currency Crisis Prevention; Macroprudential Risk Management; Sovereign FX Defense Systems; Economic Resilience Architecture; Structural Intelligence Framework; Independent Finance Researcher. (search for similar items in EconPapers)
JEL-codes: E44 E52 F31 F37 G15 G17 (search for similar items in EconPapers)
Date: 2025, Revised 2025
New Economics Papers: this item is included in nep-cba
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