As we just mentioned the banks use a 3 step process day after day to profit from the forex market. We can think of this process as their forex trading. I will never understand this romanticism of putting a figurative sense in everything. Examples: Does this indicator repaint? Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or. SPORT BETTING SITES UK MAP
The analysis leading to the identification of main metaphorical fields of the foreign exchange Metaphors of the foreign exchange market market was based on the complete transcripts of 26 interviews: 11 commercial and investment banker interviews, 6 central banker interviews and 9 financial journalist interviews were included.
In the selection of interviews for this analysis, the relative weight of the subgroups in the total sample was adjusted in order to arrive at a balanced representation of different market players. Within the three subgroups, inter- views were chosen randomly. We discontinued the inclusion of further interviews when, after the analysis of 26 interview transcripts, the structure of the underlying metaphorical fields appeared to be comprehensive and stable.
Our analysis of how metaphor use relates to individual assumptions about market predictability is based on answers to the introductory question in all interviews. Metaphor operationalization For the purpose of this study, we consider metaphorical statements as all non-literally used expressions or segments of a text which map elements of one domain of experi- ence to another Schmitt, The non-literal quality of pieces of text can be accessed by a de-contextualized reading of the text.
An in-depth textual analysis of the interviews can help reveal the use of metaphors, which are applied unconsciously most of the time. We were really killing people by frightening them. B9 In a literal understanding of the quotation, trading appears to be a matter of life and death, involving physical assault.
This understanding is reinforced by the following quotations: No gambling, you go for a kill. Gambling to me is entertainment, to the point where it becomes obsessive. This is more brutal, this is more abusive than gambling. People get abusive on trading floors. B14 Somebody will come in and there will be a take-over battle2 and we can make even more money. This cognitive metaphor allows the integration of a large number of textual segments into a coherent imaginative scenario.
Metaphor analysis procedure Our understanding of conducting a metaphor analysis follows Schmitt , who suggests a step-by-step procedure based on a cognitive linguistic understanding of 2 Different degrees of conventionality in the use of a metaphor exist.
These idioms represent conventionalized conceptual mappings which, however, may indicate the co-presence of less conventionalized cases. First, the transcribed interviews are reduced to those expressions with imaginary or metaphoric contents within their immediate context. This results in a list of de-contextualized metaphorical statements. These statements are then sorted according to shared metaphoric roots, with the possibility of assigning one statement to more than only one metaphorical field.
Finally, the resulting clusters of metaphoric expressions are labelled and compared to the root metaphors emerging in other interviews. The use of a computer programme in this qualitative analysis makes it possible to easily trace back the de-contextualized statements to their original context and thus to support their interpretation.
Texts were analysed with the help of WinMAX, a software programme for qualitative research which facilitates text analysis and interpretation in such areas as selecting, coding and comparing textual segments Kuckartz, Development of a preliminary coding system Each of the three authors of this study independently analysed three interviews by highlighting all metaphorical text segments.
On the basis of these textual data, a preliminary system of metaphor codes was established. Single metaphorical expressions without reference to other concepts were excluded. Analysis of main market metaphors Twenty-six interviews including the interviews used for the preliminary coding system were analysed by the three authors of this study. All metaphorical text segments were marked and assigned to metaphor codes inter-rater agreement was.
This analysis resulted in a structure of seven main market metaphors. Predictability ratings of the interviews were determined by concordant individual ratings of the two authors; in the case of different individual ratings, interviews were discussed until a full consensus could be established. Inter-rater agreement with a third rater, an undergraduate student who was only briefly instructed about the scale and who then independently assigned ratings to all interviews, was.
Relations between implicit market meta- phors and assumptions about market predictability were explored by correspondence analysis, a technique suitable for analysing relations among categories of discrete variables. Comparison between implicit and explicit market metaphors Using the final coding structure, two of the authors together analysed two parts of all interviews. Both parts of the interview were jointly analysed by these two authors, who together read the two Metaphors of the foreign exchange market parts of each interview and determined which of the seven main metaphorical repre- sentations of the market which had resulted from the main analysis could be identified.
Again, interview parts were read and discussed until full consensus could be estab- lished. Since the comparison of implicit and explicit metaphors was conducted for all interviews, it also allowed us to validate the structure of main market metaphors. We will introduce these main market metaphors by presenting verbatim quotations from the interviews and by discussing such crucial characteristics of these metaphors as stressed or concealed market features, the suggested rationality of the market, the role of social others, and the time line suggested by the metaphor.
The market as a bazaar Although the understanding of the foreign exchange market as a bazaar may seem obvious, it nevertheless represents an important metaphorical conceptualization. The foreign exchange market here is conceptualized simply as one specific form of marketplace, a place where people are buying and selling money B5.
Currencies are compared to any other kind of goods, such as fruits, used cars, or kitchen plates: buying and selling of one commodity for another Currency is a commodity, as you can sell chairs, refrigerators If you could move refrigerators through a Reuters screen, you would probably be selling them by now B The bazaar metaphor implies a personalized setting and a specific rationality of behaviour in such a setting.
Unlike in the machine metaphor, prices in a bazaar are determined not by objective mathematical algorithms but emerge as the result of complex social interactions and subjective value attributions. Bazaars are places of human encounters where buyers and sellers meet B3. There, social and physical needs may be fulfilled by an exchange with other market participants, which may increase the satisfaction of all parties involved.
In a bazaar, buyers and sellers do not form detached prices in isolation, but are highly dependent on the surroundings of the bazaar. To do so, sellers have to take into account information from other sellers: he realizes that the other guy is selling plates for two dollars, so he drops his price to one dollar ninety and all his customers come back FJ For an overview, see Weatherall and Walton Customers, too, may first window-shop before they choose a product: customers who access the market go to a couple of shops See Table 1.
Here the market can be understood as governed by defined rules and built-in mechanisms. These movements can be calculated in probability terms. And this is a purely mathemat- ical process CB4. The mechanisms of the machine define, for example, the input the machine requires, the output it delivers, and the process that generates output from input.
See Table 2 Understanding the market as a machine implies a logical and analytic rationality. The optimal interaction with the machine is thus detached: you have to make decisions on certain probabilities on the basis of your past experiences but not on the basis of your personal emotions CB4. A machine has no emotions; therefore, dealing with a machine should be without emotions and any trading decision is a totally emotion- free thing B Although the inner mechanisms of this machine may be hidden, expertise for the market as a machine can be gained through observation, interaction with, and learning about the machine.
If you drive a car for 20 years, and the car makes a noise, you can pretty much tell what this noise is emanating from B See Table 2. This is sometimes like a casino where you are betting on rouge or black or zero FJ Unlike a machine, gambling stresses risk taking and emotional involvement. Players may become unreasonable and get carried away. Personal responsibility for, and influence over, outcomes of the gamble are externalized in the gambling meta- phor: some of the best returns from fund managers are [from] people who are incredibly lucky B As in the machine metaphor, other market participants are comparatively unimportant, since they do not influence the algorithm of the gamble.
Besides pure gambling, the metaphorical field of gambling includes strategic games, such as professional poker or a game like chess perhaps B17 , in which the combi- nation of chance and strategic thinking becomes manifest. These games highlight elements of discipline, skilfulness and expertise, and may thus be seen as a bridge between the metaphorical fields of gambling and of sports.
See Table 3 The market as sports In the market perceived as a sports competition or as a race, the ultimate goal and rationality is to win against others. The central motive is to have the competitive spirit B3 , to be the best B21 , the ambition to beat B11 others, to be a little quicker, a little more excited, maybe a little sharper CB3.
Everybody becomes Mr. Iron Man B An indisputable awareness of other participants follows from such felt inter- action and competition. A sports competition, unlike war, a market metaphor discussed later, is always conducted within a defined framework. It has an agreed-upon beginning and end; it takes place on a particular playground FJ14 , and it follows a set of constitutive rules which are not questioned during the event.
In a sports competition, opponents are also not destroyed completely, since they are needed to start the competition anew. The sports metaphor thus gives the foreign exchange market a generally more calcu- lable and less dangerous undertone than does the war metaphor. However, the market will be cruel FJ13 to, and will not remember Thomas Oberlechner et al.
A subcluster of interview expressions belonging to the sports metaphor refer to images of hunting and chasing, with a maximum evocation of dynamic movement, speed, and incitement to reach peak performance. See Table 4 The market as war War was a frequently used market metaphor in the interviews. Currencies come under attack B5 , market participants defend positions B9 , follow certain strategies CB3 or intervene B1 when they are powerful and strong enough CB3.
As in a sports contest, in war there are opposing parties or individuals and there is competition. In contrast with sports, however, in war winning is a matter of survival. There are always people who are quick enough to get out. The best. The quickest. And they make money on it.
And then you have the stampede, and they die. They got run over CB3. The market as war represents a continuous threat in which trading is a matter of life and death. In this struggle for survival, market participants do not think in terms of win—win solutions but in terms of self-defence, survival of the fittest and martial law; everyday moral rules are not valid since this is a dirty industry B In war, opponents are not only beaten in the way competitors are in sports; instead, they may be hurt or even killed B3.
Make them run, if you wanna move the market. You Metaphors of the foreign exchange market have to hurt people. If you hurt people, they run, if they run, the market moves. And you have to be very aggressive in that B9. In war, people use weapons and even unfair tactics. CB4 The existential threat represented by the market as war implies a strong personal involvement of individual traders who have to fight for their lives.
In this life-threatening environment, such personal characteristics as being strong, brave and fearless are crucial. It is a tough world. See Table 5 The market as a living being The market as a living being is a comprehensive and frequent metaphorical conceptualization of the foreign exchange market.
Characteristics usually associated with living beings are attributed to a market perceived as an animated organism following its own rhythm. As a living being, the market reacts emotionally to such stimuli as when shock news items would panic the market further CB1 or factors came along that made the market nervous FJ4. The market as a living being also anticipates and interprets events when the market then draws its conclusions or thinks this way B4.
I tend to think of markets just like this big brain but of a very stupid person, and they often respond in these ways that The behaviour of a living being is not always intelligible, and so it may be extremely difficult to find out why the foreign exchange markets do what they do FJ6. As a living being a market does not function according to fixed rules but depends on its mood B29 , thoughts, and intentions: market behaviour changes from one day to another CB4.
Markets also show different reactions depending on whom they deal with. I mean if the Treasury Secretary says so, then they listen FJ8. The market as a living being can be socially influenced by the interaction with market participants. Participants let the market know what our intentions are CB3 or may keep the market guessing CB4.
The general living being metaphor of the foreign exchange market serves as a basis for two more concrete elaborations: beast and lover. The market as beast — ssssssssss, a great big creature FJ2 — is huge and always hungry. Traders, like heroes, must also fight, cope with, and to gain ultimate victory, overcome this dangerous animal.
This comparison with a wild animal, I think the challenge is to master it. In contrast, the relationship with the market as lover is characterized by strong attraction and fascination. All dealers who are really dealers, they have an erotic relationship to the market B2.
This intense relationship may cause passionate emotional swings. It may cause feelings of excitement and being high — it can give you a lot of satisfaction, a lot of great feelings B9 — but simultaneously it represents the danger of emotional dependency. Getting emotionally attached to it B See Table 6 Metaphors of the foreign exchange market The market as an ocean The market as an ocean is another important metaphorical field.
Interviews abound with liquidity-related expressions such as flows e. These expressions are used both to describe the market as a whole and its components. Currencies fluctuate B21 or float B34 , information is a source B31 or gets absorbed FJ14 , Austria is a bottleneck for big western money trying to get into the East B To make this work, unrestricted liquidity is a must: In a market where there is no liquidity, markets jump.
A guy could just come in with 10 dollars and move the market massively. When liquidity comes in, instantly it will be realigned back B4. While variations in functioning, such as economic cycles B5 and chaotic periods, are inherent in the nature of an ocean, they would be signs of malfunctioning in a machine. The market as an ocean knows of quiet and of dramatic times. There are times when everything is calm and you have normal market conditions However, such invisible underlying flows B11 as trade flows or portfolio flows FJ7 may knock the dam over FJ1.
Then, currency markets fluctuate B28 , money sloshing around In such times of crisis, it may happen that the lira plunged and Kohl had to go onto Italian television with Dini to try to smooth the waters FJ4. Like a stormy sea, currencies can calm down B3 again.
The ocean metaphor implies neither the complete inanimateness of a machine metaphor nor the intentionality of a living being. In an ocean, people interact with the organic rhythm of the ebbing and flowing FJ5 of tides.
Observing this rhythm, people are very obsessed with levels B21 and certain levels. Because an ocean does not need human attendance to function, market partici- pants often function as bystanders. They may, however, also consider themselves adventurers, seafarers who take some cover on board B5 and put in the auto-pilot and cruise B11 , or surfers riding the crest of a wave FJ3.
Surfing the waves of the ocean allows one a certain competitiveness, which bridges the ocean metaphor to sports. You are riding a wave; at some point it comes to an end and you want to get off before it hits the shore. That is what makes the difference between the winners and the losers in any financial market: you have to know when to get in and, more importantly, when to get off FJ3.
The autopoietic, i. The ocean metaphor also makes participants forget that there inevitably have to be losers in the market. The supposed self-sustaining powers of the ocean, its endless and effortless ebbing and flowing FJ5 , give rise to the phantasm that all players can equally profit from its unlimited, ever-renewed energy.
In the vastness of an ocean, all may have their share without visibly affecting the ocean and without harming others. Permeable borders and overlaps between fields indicate that metaphorical expressions may relate to more than just one field. For example, notions of hunting and chasing merge the sports and the war domains. In other words, these metaphors Metaphors of the foreign exchange market mainly express possible scenarios of interacting with other participants; i.
In the second group of metaphors, the market participant is mainly oriented towards the entity of the market. These metaphors primarily express the possible nature of this market entity, i. Here, the interaction of a participant is directed not at other participants but mainly at the market entity, relat- ing, for example, to the living being metaphor, observing and surfing the ocean metaphor, and operating the machine metaphor.
Action-oriented metaphors thus describe what it means to act in the foreign exchange market. The action expressed by these metaphors is goal-oriented, since all action-oriented metaphors refer to the final goal of winning through interaction or competition with other market participants.
Winning can be achieved in different ways: by trading, by gambling, by sportive competing or by belligerent fighting. It may result either in winning or in losing. Meta- phorical entailments of the different action-oriented metaphors demonstrate important variations. For example, in winning by gambling, success depends at least partly on luck and does not necessarily imply the defeat of another market player. Here, instead of chance, personal skills and achievement result in winning.
Overlap between these two metaphors exists in such strategic games as professional poker, which combine chance and skill. A different example of metaphorical entailment would be that both sports com- petitors and warriors have to demonstrate such superior skills and traits as being Thomas Oberlechner et al.
However, winning in sports is less serious than in belligerent fighting, where winning becomes a matter of survival. Also, the buying and selling of such goods as vegetables in the bazaar metaphor refers to winning, namely in the sense of making money by skilful trading. In contrast to the other action-oriented metaphors, the bazaar image thus plays down the thrilling aspects of trading and obscures the high stakes involved in decisions about potentially very large gains or losses.
Instead, the bazaar metaphor emphasizes the social interactions between traders and customers. Unlike action-oriented metaphors, ontological metaphors construct the market as an entity which exists independently of human actors. Market participants may encounter the market as a machine, as an ocean or as a living being.
Each of these ontological metaphors implies a certain understanding of the market and a unique way of relating to it. Through ontological metaphors, the market is no longer seen as a man-made product but as an outside reality with which market participants are confronted. This conception of the market as a separate object has a crucial effect on the perceived controllability of market events. The market as an ocean or as a machine follows its own rules, uninfluenced by the market participant.
The market as a living being may be influ- enced by social interaction; however, in this interaction the market may decide to follow its own will. Furthermore, ontological metaphors allow the participant to obscure the agent. As a result, ontological metaphors may play down the effects of human behaviour.
Market predictability As in all financial markets, in the foreign exchange market the correct anticipation of market movements is the key to success for participants. Accordingly, one central aspect of market metaphors may be that they contain assumptions about the pre- dictability of the market.
Different metaphorical fields may imply various degrees of perceived market predictability, as already suggested by Fig. If the market is perceived as a machine, anticipation follows the logic of an input— output prognosis. Specific events will produce specific reactions which can be com- puted according to mathematical formulae.
The ocean and the living being metaphors express a fundamentally different organic logic of anticipation. The market as gambling can only be predicted by means of luck. In the market as war metaphor, the enemy is likely to behave in a way that is difficult to predict and to break rules, whereas in the market as sports the behaviour of the other players will follow clearly defined rules that present a more predictable setting.
Metaphors of the foreign exchange market Figure 1. Map of market metaphors. Our exploratory correspondence analysis explored relations between metaphor usage and notions of predictability in the first page of interview transcripts. The corre- spondence analysis figure illustrates the similarity or dissimilarity between different categories of a variable with respect to another variable; here it illustrates the similarity of different metaphors with regard to assumed market rules.
The closer metaphors are 5 The introduction of the interviews was chosen for this analysis as a convenience. Metaphors used and notions about market predictability conveyed may change in the course of the conversation; therefore, results of the correspondence analysis pertain to metaphor usages and not to subjects. Correspondence analysis allows the production of a graphical output in which, for each variable, distances between category points reflect the relationships between categories, i.
For a description of correspondence analysis, see Greenacre or Doise, Clemence and Lorenzi-Cioldi Figure 2. Correspondence analysis. Figure 2 shows that in comparison with other metaphors, the machine and the sports metaphors are more strongly associated with the assumption of fixed market rules, while the bazaar and the ocean metaphors tend to be more strongly associated with the assumption of partial or changing rules than do the other metaphors.
The living being and the war metaphors are associated with the assumption of changing rules and with the assumption of an absence of rules comparatively more often than the other metaphors, suggesting that these two metaphors allude to a conception of a market which may follow variable rules but which also includes possible unexpected reactions. Finally, the gambling metaphor is most strongly associated with the assump- tion that there are no predictable market rules.
For e. The book is filled with quite engaging interviews with fund managers, fund marketers, and other fund service providers including our very own administrator Fund Associates. If Scott Patterson's The Quants is about the gods of hedge funds, this book is for and about the mortals. Nobody wants to be associated with a manager aiming at 30 percent a month returns.
I have actually met institutional investors who don't want to look at a fund that actually achieved double-digit monthly returns. Presumably that's because they believe that a high return automatically implies high risk, and also presumably a high leverage as well. I would argue that there are 2 reasons not to completely dismiss such funds out-of-hand: 1 Leverage should not be determined arbitrarily, but should be based on the minimum of what's dictated by half-Kelly see my extensive discussions of Kelly formula on this blog and in my book and what's dictated by the maximum single-day drawdown seen historically or in VaR simulations.
And if this minimum still turns out to be higher than what most institutional investors are comfortable with, one should be bold enough to adopt it in your fund. For example, if the fund manager tells you the fund employs a constant 10x leverage as dictated by the risk analysis outlined in 1 and you are only comfortable with 5x leverage, just invest half your capital into the fund, and keep the other half as cash in your bank account!
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