The Use of Flow Analysis in Foreign Exchange: Explanatory Analysis

Thomas Gehrig and Lukas Menkhoff

No 3221, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
Date: 2002-02
New Economics Papers: this item is included in nep-ifn and nep-rmg
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Citations: View citations in EconPapers (1)

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