The Use of Flow Analysis in Foreign Exchange: Explanatory Analysis
42 Pages Posted: 14 Mar 2002
Date Written: February 2002
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.
Keywords: Foreign exchange markets, flow trading, market microstructure
JEL Classification: F31
Suggested Citation: Suggested Citation