Short‐Term Horizons in Foreign Exchange? Survey Evidence from dealers and Fund Managers

Lukas Menkhoff

Kyklos, 2001, vol. 54, issue 1, 27-48

Abstract: The paper examines the extent and determinants of short‐term horizons in taking open positions using a questionnaire mailed to professional foreign exchange market participants in Germany. The findings reveal that the absolute anticipation horizon is short, but not necessarily short‐termist. Another related but empirically different measure is proposed, based on the relative length of different horizons; its use clearly shows widespread restrictions in relation to optimal behavior. No determinants in personal characteristics were established for either empirical measure; rather the instituional environment was found to be an influence. Thus, professionals may adept rationally to their incentive structure, which works towards short‐term horizons in position taking.

Date: 2001
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