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OlsenBlog wrote a new blog post titled Review of 2012 & Outlook for 2013
Political and economic uncertainty paralyzed the markets and was a drag on market liquidity, which contributed to erratic market moves in 2012. At OLSEN, we introduced new trading models with refined money management rules and upgraded our risk management framework. We were invited to participate in a research project funded by the EU to analyze the microstructure of markets. Our fully automated investment process is well equipped to successfully navigate the increasingly complex financial markets of 2013. (Download PDF) Performance in 2012 Our investment strategy generated a positive...
2439 days ago
OlsenBlog wrote a new blog post titled TEDxZurich: Who Controls The World
James B. Glattfelder – a researcher and trading model developer at Olsen Ltd – had the chance to speak at the TEDxZurich. Read more about James on the TEDxZurich website. Decoding Complexity: The Organizing Principles Behind our Economy It sounds paradoxical, but today it appears that we understand more about the universe than our society. We have created systems that have outgrown our capacity to genuinely understand and control them. Just think about the ongoing financial crisis. But recent advancements in the study of complex systems are able to offer new insights into the...
2481 days ago
OlsenBlog wrote a new blog post titled Trading Forex Is A Positive Sum Game
Have you ever played dice with a friend? Betting a fixed amount of money each turn, you win if the number on the top face of the die is one, two or three, your friend wins in all the three other cases. At any single point in time, the sum of all the profits and losses amount up to exactly zero. This is an example of a very simple zero sum game. Read the whole article on FXStreet.com
2509 days ago
OlsenBlog wrote a new blog post titled The Future of Computer Trading Report of Foresight
Hurricane Sandy is one of the biggest hurricanes in the history of the United States with an estimated damage of 30 billion USD, a lot of money. The flash crash on May 6th 2010 caused a drop of 9 percent in the world equity markets in a matter of 30 minutes wiping out 6 trillion USD of market market capitalization. This is 200 times more damage than the hurricane. The published report of The Future of Computer Trading in Financial Markets by the Foresight Project fails to highlight, how destructive financial markets can be. 150 experts were asked to contribute, where the CEO of Olsen Ltd,...
2511 days ago
OlsenBlog wrote a new blog post titled no title
We are please to announce that our product profile was ranked in the Barclay Hedge Ranking award for August 2012. var siteHost = (("https:" == document.location.protocol) ? "https://" : "http://"); document.write(''); This fund was ranked based on the data in BarclayHedge’s CTA database In August, the health of the European economy was the main concern of investors and market participants around the world. The ECB responded with a clear signal that it will resume with buying government bonds to stabilize the fixed income market and make financing for Spain or Italy easier. This...
2534 days ago
OlsenBlog wrote a new blog post titled Speed is Good
Richard Olsen argues (in the September issue of Investment & Pensions Europe) that, far from slowing down, transaction volumes need to increase by a factor of thousands, and that pension funds should benefit from its uncorrelated alpha. Download original article Today’s financial markets are dysfunctional – price movements are exaggerated and do not mirror underlying fundamentals. The cause is a lack of market liquidity across time scales. We need to dramatically increase liquidity in financial markets by allocating high-volume investment strategies that inject liquidity and contribute...
2559 days ago
OlsenBlog wrote a new blog post titled How a Cell Based Company Pioneers the Structure of Modern Society
A recent article (Living Cells Show How to Fix the Financial System) by Michael Buchanan in Bloomberg Views argued that modern finance and especially financial engineering could benefit from nature’s cell based architecture. It is possible to go beyond financial engineering to benefit from nature’s experience and organize companies, countries and even society as a whole along the lines of nature. The following text outlines possible implementations for current and future companies. Today, companies have a top-down organizational structure: The (upper) management imposes rules,...
2603 days ago
OlsenBlog wrote a new blog post titled Investors Hunt For Uncorrelated Profits
A recent article on Reuters (Hedge funds get exotic in hunt for profits) described the arduous efforts of money managers to find new ways to generate returns in the current market environment. Safe havens are viewed as overvalued and the stock market as too volatile. Additionally, investors would like to diversify their portfolios and therefore are on the lookout for truly uncorrelated investment opportunities. OLSEN today features products that not only generate consistent return but are also uncorrelated to other assets, and even to its peer group. The low correlation numbers of the...
2635 days ago
OlsenBlog wrote a new blog post titled Science of Global Economics
By Richard B. Olsen, Founder and CEO of Olsen Ltd Download: Science of Global Economics Here (pdf) Problem1. Stalemate in public debate on how to deal with economic crisis.2. The global economy is in negative equity.Methodology3. The Science of Global Economics is a hard science.4. The economy is a dynamic system.Recommendations6. Ethics: in all walks of life we need to embrace a Hippocratic Oath.7. Create ubiquitous internet exchange for digital certificates representing any type of assets.8. Replace the price based rule of queuing of limit orders in organised exchanges to prevent flash...
2658 days ago
OlsenBlog wrote a new blog post titled Outlook for 2012: Global Interest Rate Hurricane – What Next?
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 sheets. Governments and central banks are already fully leveraged and do not have sufficient resources to...
2804 days ago
OlsenBlog wrote a new blog post titled Olsen Invest ranked in the Barclay Hedge Ranking
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 have decided on a haircut for the Greek debt. After the US has enacted the Volcker rule for banks,...
2833 days ago
OlsenBlog wrote a new blog post titled The Internet itself will turn into one large exchange (Interview with Richard Olsen)
  “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 stressed. Olsen proposes the introduction of electronic certificates, global early warning system or stabilizing...
2833 days ago
OlsenBlog wrote a new blog post titled Interview with Richard Olsen (Handelszeitung)
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 physics before 1900: only Einstein’s theory of relativity, which took the dynamical behaviour...
2947 days ago
OlsenBlog wrote a new blog post titled THINK ABOUT PRESS: How to Trade
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 profit but if the price continues to move in the adverse direction, the model trades the coastline to...
2947 days ago
OlsenBlog wrote a new blog post titled THINK ABOUT PRESS: Global Economy Under Siege – Possible Initiatives
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 visuals to accompany the text. A picture is worth a thousand words, thank you Lisa. I hope that you...
2947 days ago
OlsenBlog wrote a new blog post titled How to hedge: currency overlay
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 hedged in the same way as assets. Assets, just as liabilities, can be of any shape or form; they can be...
2947 days ago
OlsenBlog wrote a new blog post titled How to trade: managing exposure
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 or three ideas at the same time. It is through diversification that he can improve his risk profile...
2947 days ago
OlsenBlog wrote a new blog post titled Why policy makers need to take note of high frequency finance?
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 a new discipline in economics that was officially inaugurated at a conference held in Zurich in...
2947 days ago
OlsenBlog wrote a new blog post titled U.S. will never lose Aaa rating – is Geithner the captain of the Titanic?
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 way; the US will lose its Aaa rating. It is no trifle matter, if a country has a government budget...
2947 days ago
OlsenBlog wrote a new blog post titled Trading: Meltdown of Carry Trade: Strong JPY Market Quake
USD_JPY collapsed from 90.60 to a low of 88.65 in 30 minutes taking down AUD_USD from 88.00 to 86.15. The Scale of Market Quakes for AUD_JPY recorded a strong quake of 4.4. Three trades triggered the move: margin calls on long AUD positions, liquidations of short JPY and short USD positions. The market was building up to such a move because there was a bifurcation in the market, where one group of traders believing in the long-term collapse of the USD turned a blind eye to their increasing losses due to the gradual rise of the USD, while on the other hand there were the traders with the...
2947 days ago