Greenspan: "currency trading is like predicting coin tossing"

Discussion in 'Forex Trading' started by Daal, May 7, 2007.

  1. Daal

    Daal

    "The exceptions to this conclusion are those few cases of successful speculation in which governments have tried and failed to support a particular exchange rate.
    Nonetheless, despite extensive efforts on the part of analysts, to my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin. I am aware that, of the thousands who try, some are quite successful. So are winners of coin-tossing contests.
    The seeming ability of a number of banking organizations to make consistent profits from foreign exchange trading likely derives not from their insight into exchange rate determination but from the revenues they derive from making markets" - Alan Greenspan 2004
     
  2. the currency dealers front run.
     
  3. interesting quote. Says a lot about the dollar and the current dollar PKO operation.
     
  4. Cesko

    Cesko

    Nonetheless, despite extensive efforts on the part of analysts, to my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin.

    It's kind of scary to know that such powerful people are not smarter than regular Joes of the world.

    All you cretins in government jobs, please, leave the markets alone.
     
  5. A similar conclusion was reached by Bank of England researchers in 2004, which examined the predictive success rates since '97 of the 50 major City institutions who participate in Reuter's monthly poll:

    "In a mean squared error sense, the mean Reuters
    forecast is a weaker predictor of future exchange rates
    than a simple random walk. And, excepting sterling/euro
    at the twelve-month horizon, survey forecasts are not
    significantly better than tossing a coin in determining
    the direction of exchange rate moves"
     
  6. strange because when i traded usdyen in the early mid 90's if chemical bank london gave me $10 bucks direct even when i quoted lower the currency was plummeting through the floor.

    that was 1000-1 on that it was going down.

    forget you coin tossing on that one.
     
  7. Allaces

    Allaces

    The only difference is the government wouldn't know good money management if it bit them on the ass
     
  8. Agreed, when some institutions/players give or pay you, you know you need to reverse as soon as possible or you will be wearing the trade 10-20 points higher in seconds. Very difficult to do!
     
  9. should read 'higher/lower in seconds' obviously.
     
  10. Can someone please point me to the coin/tossing signups? I'd like to join the next contest if I can get the same return as forex.
     
    #10     May 8, 2007