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The Use of Flow Analysis in Foreign Exchange: Explanatory Analysis

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  • Gehrig, Thomas
  • Menkhoff, Lukas

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.

Suggested Citation

  • Gehrig, Thomas & Menkhoff, Lukas, 2002. "The Use of Flow Analysis in Foreign Exchange: Explanatory Analysis," CEPR Discussion Papers 3221, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:3221
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    File URL: https://cepr.org/publications/DP3221
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    References listed on IDEAS

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    1. Taylor, Mark P. & Allen, Helen, 1992. "The use of technical analysis in the foreign exchange market," Journal of International Money and Finance, Elsevier, vol. 11(3), pages 304-314, June.
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    Cited by:

    1. Alexander Mende & Lukas Menkhoff, 2003. "Tobin Tax Effects Seen from the Foreign Exchange Market's Microstructure," International Finance, Wiley Blackwell, vol. 6(2), pages 227-247, July.

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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