The Use of Flow Analysis in Foreign Exchange: Explanatory Analysis
University of Vienna - Faculty of Business, Economics, and Statistics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Vienna Graduate School of Finance (VGSF)
Leibniz Universitaet Hannover - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
CEPR Discussion Paper No. 3221
This Paper provides questionnaire evidence on the role of flow analysis for professional traders and fund managers. This evidence suggests that besides fundamental information and technical analysis, the analysis of flows provides an independent third type of information for professionals. The proposition that flows can be used to learn about fundamentals is not consistent with the data. Instead, evidence indicates that flows more likely provide insight into semi-fundamental private information, suggesting support for the efficient market hypothesis only in a weak form.
Number of Pages in PDF File: 42
Keywords: Foreign exchange markets, flow trading, market microstructure
JEL Classification: F31working papers series
Date posted: March 14, 2002
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