In 2011, interest rate markets for Greek government bonds bolted and interest rates skyrocketed raising the specter of a sovereign debt crisis for the whole of Europe. Overall, interest rates around the world have remained at record lows thanks to the maneuvering of central banks; 10-year US treasuries for example pay less than 2 percent. Investors are increasingly impatient and there is a rapidly growing demand for equity capital that has to be pumped into the economy to salvage balance...

We are please to announce that our product profile was ranked in the Barclay Hedge Ranking award for October 2011. var siteHost = (("https:" == document.location.protocol) ? "https://" : "http://"); document.write(''); This fund was ranked based on the data in BarclayHedge’s CTA database In October, the unfolding of the European crisis was in the focus of market participants. At the European summit a new rescue package for Greece was structured. Governments and private institutions...

 
“The global economic system is dysfunctional because of the mismatch between the modern technology used in the real economy and the operational procedures of the financial system.” Richard Olsen is an economic researcher in high frequency finance. He has a long experience and strong knowledge of the forex market structure, technology and buy/sell side. “The financial system needs to be reformed, which is not as difficult as people might think”, he...

For the last 25 years you have been trying to make currency investments more efficient. Given the distortions in the market today, isn’t this an impossible mission? Richard Olsen: I don’t think so. However, the current distortions in the market show that the economic mechanisms behind the foreign exchange markets are not understood well enough. In particular, the fact that the economy is not static, but in a constant state of change, is ignored. The situation is comparable to classical...

We are publishing a small booklet on how to trade. The content is based on previous posts on the subject. I have expanded the material and hope that you will find the text helpful. The booklet is also a non-technical description of how the trading models powering the Olsen investment programs operate. We program our trading models to be good traders; our algorithm spots imbalances of supply and demand and takes positions when price overshoots occur. If the price rebounds, then the model takes...

We have published a small booklet ‘Global Economy under Siege – Possible Initiatives’. The booklet is based on a post that I published 14th December 2009. The booklet includes visuals created by Lisa Wilkens. Pictures can mean so much more than words. I hope that you enprepared a small booklet that you can download as a pdf or have us send you a copy. It includes the text of a post that I published on the 14th December 2009 and has since been edited. Lisa Wilkens has created...

Price moves in the currency markets can be disruptive and lead to large losses with investors and corporations. In general, institutions do not protect themselves against this risk, because the cost of hedging is high. In this post, I try to explain how dynamic hedging improves the cost structure and makes hedging appear indispensable. Currency risk is incurred, whenever assets or liabilities are denominated in a foreign currency.  Liabilities are the opposite of assets and can basically be...

The biggest danger for any trader is excessive exposure. An unexpected price spike can then trigger a margin call that wipes out all the profits generated over months of hard effort. This is the most frequent reason why traders lose money. How can we prevent this from happening? What do we have to know? Diversification As there is no such thing as perfect foresight and an unexpected price spike can occur at any time, a trader should always diversify his risk and trade not just one, but two...

Policy makers are typically concerned with long-term economic issues; so why should they be interested in the field of high frequency finance that seems to deal with short-term market phenomena? High frequency finance has the potential of biotechnology and can revolutionize economics and finance by turning accepted assumptions upside down and offering novel solutions to today’s issues. Why high frequency finance turns economics and finance into a hard science High frequency finance is...

The sovereign debt crisis that started with Iceland last year has now spread to Greece, Spain and Portugal. Other countries with large deficits are on the firing line as well, the US is one of them with a deficit of 12 percent of GDP, the same as Greece. Treasury Secretary Timothy F. Geithner tried to shore up confidence in an ABC News interview by claiming that the US would never lose its Aaa rating. A number of commentators have picked up on this news and have ridiculed Geithner saying no...