Abstract

This paper examines noise trade effects on foreign exchange volatility. Noise trades are mainly triggered by signals from technical analysis. These signals occur at the completion of a technical chart pattern. First, we develop and implement multiple pattern recognition algorithms to identify technical chart patterns. Second, we estimate technical signal effects on currency volatility. We show that technical signals attract noise traders with important order flow that boosts volatility.

Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call