Pricing in the FX Marketplace

Price displacement in the fx market is an artifact of market mechanics that have nothing to do with determining fundamental value. The inefficiency of over-shooting is disruptive, increases risk, and drives uncertainty.

Olsen’s investment methodology counters this uncertainty by anticipating imbalances between buyers and sellers and providing liquidity that can restore prices to more reasonable levels.

Finding a foothold in the shifting sand

The potential profitability of currency trading is a given. The trader who takes advantage of just a 0.2% price change once a day can make an annual profit of 40 %; succeed at trading a change as small as .05% 10 times a day and your annual profit is 100%. Betting on price moves is one thing, but where, exactly, is value?

Price is always specific: it enables or disables a transaction; it sets a new bench-mark for the pricing of all other positions in the market; and sudden, inexplicable price changes accelerate cascading trends that destroy or dilute value.

So, what really drives currency pricing? And how do we reduce the uncertainty of that process and retrieve value?

The valuation of currencies is a mysterious business. But for the traders who come to the market with distinctly different expectations and time horizons, valuation is beside the point.

In the fastest-moving, most active market in the world, the name of the game is price. Something different, somehow.

With only a tentative connection to fundamental value, currency prices move quickly and for the most opaque reasons. Yet, we rely on the market to exercise some degree of “efficiency”—to perpetuate trading, of course, but ultimately to provide a rational basis for the global investment and allocation of capital. This in the face of the fx market’s well-earned notoriety as the least predictable, most change-direction-at-the-drop-of-a-hat market on the face of the earth.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.