News, Noise, and Trading

November 17, 2008

Not all currency market web sites cater to the final stage of decision-making. Some dispense specific trading advice, and The Lonely Trader is a very good example of one of those. For sites like Currency Thoughts, the intent is to inform currency market traders and position takers about economic trends, policy and political developments, the interrelationship between foreign exchange and other financial markets, and the implications of currency movements for main street as well as high street. No market responds to more different kinds of stimuli than foreign exchange, and the task of trading currencies and distinguishing meaningful news from market noise is formidable. When the dollar floated in the early 1970’s, corporate Treasury departments begged the big money center banks for better intelligence regarding the management of their currency exposures. Most of the money center banks are gone, and almost everything else about foreign exchange and banking has changed, too. After numerous waves of this creative destruction, one constant remains, and that is the need by currency market participants to farm out parts of currency market decision-making to various specialists.


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