Do Foreign Exchange Markets Still Trend?

16 Pages Posted: 10 Dec 2006 Last revised: 14 Jan 2009

See all articles by Kuntara Pukthuanthong

Kuntara Pukthuanthong

University of Missouri, Columbia

Richard M. Levich

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER)

Lee R. Thomas

Investcorp - London Office

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2006


Is it possible to profitably trade trends in foreign currencies? We examine the major currency futures contracts which have been trading since the 1970s as well as more recent contracts on exotic currencies that have only begun to trade in the past few years. The main conclusion is that the era of easy profits from simple trend following strategies in major foreign currencies is over. The markets have adapted to the extent that profits from these simple trading strategies have vanished. Presumably, trending may be a feature confined to currencies in the early years of a floating rate regime. When we look at some newly trading currencies, we see more attractive profit opportunities. Newly trading currency futures prices, like their counterparts thirty years ago, appear susceptible to trend following trading strategies.

Keywords: foreign exchange, technical trading

JEL Classification: F31, G14

Suggested Citation

Pukthuanthong, Kuntara and Levich, Richard M. and Thomas, Lee R., Do Foreign Exchange Markets Still Trend? (November 1, 2006). Available at SSRN: or

Kuntara Pukthuanthong (Contact Author)

University of Missouri, Columbia ( email )

Robert J. Trulaske, Sr. College of Business
403 Cornell Hall
Columbia, MO 65211
United States
6198076124 (Phone)

HOME PAGE: http://

Richard M. Levich

New York University (NYU) - Department of Finance ( email )

Stern School of Business
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New York, NY 10012-1126
United States
212-998-0422 (Phone)
212-995-4256 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lee R. Thomas

Investcorp - London Office

48 Grosvenor Street
London W1K 3HW
United Kingdom

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