The Foreign Exchange (FOREX) landscape encompasses -
Rather than diving right into the intricacies of FX trading - spot, FX swaps, outright forwards, fundamentals, technicals, money management etc. it might be a better idea to first build on a framework or context within which we can form trading strategies. Understanding the FX Landscape will provide you with that context. By learning how the geography of trading centers, timezones, liquidity providers influence the FX spot prices understanding technical analysis and trading patterns becomes much simpler.
In addition to the theoretical aspect of trading, by the end of this course you will also get a hands on experience on how a basic hedge is performed and how a simple arbitrage is performed.
** This course is a precursor to "The Complete FOREX Trading Course - An Investment Banking Perspective", which can be created based on the feedback from the students of this course.
Thanks for taking this course and hope you enjoy it!
Understand the objective of why we should first study the FX landscape before deep diving into FX trading
In this lesson we look at FX currency majors, their volumes
We look at volumes by instruments - spot, outright forwards, FX swaps, options and currency swaps
We look at the most active trading centers to watch for the FX markets.
The shifts in FX market participant landscape prior to 2000 and post 2000
We take a look at how important Financial Institutions and Large Banks play an important role in FX price action
Financial Institutions – hedge funds, broker-dealers, central banks invest a large amount of resources to acquire information as they have much to gain or lose on exchange rate movements. Research has shown that hedge funds and commodity trading advisors appear to be the best informed amongst the financial institutions since they have strong incentives to perform.....
Construct an FX hedge that completely hedges the exposure vis a vis a hedge that saves the corporate FX dealer "embarrassment risk"
Corporate customers usually have treasury operations to support their business activities.
Retail traders have entered the FX markets fairly recently around the year 2000 with the advent of retail aggregators – basically internet trading platforms catered to the needs of retail investors such as FXCM and OANDA.
Algorithms generate trades rather than humans. The involvement of humans is limited to the extent of creating algorithms, tweaking parameters and performance testing.
HFT is a subset of algorithmic trading in the sense HFT traders generate returns from high number of trades, low volumes, and small profit trades benefiting from low latency
Construct a basic arbitrage model similar to the one constructed in the algo trading lecture that indicates when an arbitrage is possible
This Bonus Lecture contains a coupon for another related course - Tradeonomics
I've completed a Bachelor of Computer Engineering and a MBA from Queen's University Canada. I've worked 8 years in the investment banking division and 11 years in Oracle Financial Services Software Ltd as an IT and banking consultant. During my stint at Oracle I've worked in various projects - at the IMF in Washington, built trading systems at an investment bank in London for the algorithmic trading desk, implemented a complex core banking software system at banks such as Bank of Montreal, Wells Fargo.