How Much Is Financial Advice Worth? The Transparency-Revenue Tension in Social Trading

Management Science ◽

10.1287/mnsc.2021.4147 ◽

2021 ◽

Author(s):

Mingwen Yang ◽

Zhiqiang (Eric) Zheng ◽

Vijay Mookerjee

Keyword(s):

Foreign Exchange Market ◽

Economic Effects ◽

Exchange Market ◽

Constant Delay ◽

Protection Effect ◽

Optimal Delay ◽

Critical Tension ◽

Trading Mechanism ◽

Using Data ◽

The One

In social trading, less experienced investors (followers) are allowed to copy the trades of experts (traders) in real time after paying a fee. Such a copy-trading mechanism often runs into a transparency-revenue tension. On the one hand, social trading platforms need to release traders’ trades as transparently as possible to allow followers to evaluate traders accurately. On the other hand, complete transparency may undercut the platform’s revenue because followers can free ride. That is, followers can manually copy the trades of a trader to avoid paying the following fees. This study addresses this critical tension by optimizing the level of transparency through delaying the release of trading information pertaining to the trades executed by traders. We capture the economic impact of the delay using the notions of profit-gap and delayed-profit. We propose a mechanism that elucidates the economic effects of the profit-gap and delayed-profit on followers and, consequently, the amount of money following a trader: protection effect and evaluation effect. Empirical investigations find support for these two effects. We then develop a stochastic control formulation that optimizes platform revenue, where the control is the optimal delay customized at the trader level and calculated as a function of the current amount of money following a trader and the number of views on the trader’s profile page. The optimized revenue can be incorporated into an algorithm to provide a systematic way to infuse the platform’s goals into the ranking of the traders. A counterfactual study is conducted to demonstrate the performance of the optimal delay policy (versus a constant-delay policy) using data from a leading social trading platform operating in the foreign exchange market. This paper was accepted by Chris Forman, information systems.

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The equilibrium model of demand and supply at the Ukrainian Interbank Foreign Exchange Market: disclosure of problematic aspects

Banks and Bank Systems ◽

10.21511/bbs.12(4).2017.03 ◽

2017 ◽

Vol 12 (4) ◽

pp. 31-43 ◽

Cited By ~ 1

Author(s):

Anzhela Kuznyetsova ◽

Nataliia Misiats ◽

Olha Klishchuk

Keyword(s):

Foreign Exchange ◽

Equilibrium Model ◽

Foreign Exchange Market ◽

Inflation Targeting ◽

Foreign Currency ◽

Gap Analysis ◽

Exchange Market ◽

Demand And Supply ◽

Trade Offs ◽

The One

This article is devoted to building of the equilibrium model between demand and supply on foreign currency at the Ukrainian Interbank Foreign Exchange Market (non-cash share). The authors discussed that appeared trade-offs are a product of established current foreign arrangement, administrative measures provided by the National Bank of Ukraine and range of fundamental variables, which are traditionally significant for Ukrainian economy. By means of FAVAR modeling model of demand and supply equlibrium on non-cash foreign currency was built on empirical data of Ukrainian Interbank Foreign Exchange Market, splitted into the periods, proposed by the authors. Next, it was discussed disconnection properties in the model and shown log-linearized specification of the one. The efficiency of fulfillment hypothesis on decointegrating of the fundamental variables' time series has been provided in form of critical statistics values. Also, instrument of GAP analysis of deviation from equilibrium state was proposed and the further analysis of a regulation style of monetary authority was provided. In conclusion, it was summarized that increased share of the cash out of the banks has significantly jeopardized the price stability in Ukraine and the NBU interventions would become more effective if the flexible foreign exchange rate will be accompanied with flexible regime of inflation targeting.

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The Hot Money Movement and the Private Exchange Pool Proposal of 1896

The Journal of Economic History ◽

10.1017/s0022050700106199 ◽

1960 ◽

Vol 20 (1) ◽

pp. 31-50 ◽

Cited By ~ 3

Author(s):

Matthew Simon

Keyword(s):

Foreign Exchange ◽

Foreign Exchange Market ◽

The United States ◽

Exchange Market ◽

Democratic Candidate ◽

The Great Depression ◽

Sweeping Generalization ◽

Money Transfers ◽

The One ◽

Hot Money

A Widespread belief exists that those disequilibrating international capital flows known as “hot money movements” and the associated measures instituted to regulate transactions in foreign exchange were peculiar to the post-1914 era and especially to the epoch of the “Great Depression” that commenced after 1929. It is felt that the “relative” stability of world economic and political conditions associated with the operation of the pre-1914 gold standard precluded “hot money” transfers and obviated the need to control the foreign exchange market.1 The experience of the United States during the depression of the 1890's vitiates the accuracy of this sweeping generalization. To be sure, these phenomena were largely unrecognized before the depression of the 1930's, but they nevertheless existed. The purpose of this article is to examine one such pre-1930 hot money movement, the one that occurred during the American presidential election campaign of 1896. The nomination of William Jennings Bryan as the Democratic candidate on a free silver platform at Chicago in July 1896 gave impetus to a major disequilibrating outflow of short-term funds. This condition, in turn, led to an interesting effort to control the foreign exchange market.

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The Emergence ofBull and BearDynamics in a Nonlinear Model of Interacting Markets

Discrete Dynamics in Nature and Society ◽

10.1155/2009/310471 ◽

2009 ◽

Vol 2009 ◽

pp. 1-30 ◽

Cited By ~ 15

Author(s):

Fabio Tramontana ◽

Laura Gardini ◽

Roberto Dieci ◽

Frank Westerhoff

Keyword(s):

Foreign Exchange Market ◽

Three Dimensional ◽

Exchange Market ◽

Dimensional Model ◽

Trading Activity ◽

Nonlinear Dynamic Model ◽

Three Dimensional Model ◽

Numerical Tools ◽

The One ◽

Low Dimensional

We develop a three-dimensional nonlinear dynamic model in which the stock markets of two countries are linked through the foreign exchange market. Connections are due to the trading activity of heterogeneous speculators. Using analytical and numerical tools, we seek to explore how the coupling of the markets may affect the emergence ofbull and bearmarket dynamics. The dimension of the model can be reduced by restricting investors' trading activity, which enables the dynamic analysis to be performed stepwise, from low-dimensional cases up to the full three-dimensional model. In our paper we focus mainly on the dynamics of the one- and two- dimensional cases, with numerical experiments and some analytical results, and also show that the main features persist in the three-dimensional model.

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A Study On Technical Analysis With Reference To International Forex

Think India ◽

10.26643/think-india.v22i3.8470 ◽

2019 ◽

Vol 22 (3) ◽

pp. 1129-1144

Author(s):

Bichith C. Sekhar ◽

A. Umamaheswari

Keyword(s):

Foreign Exchange ◽

Abnormal Return ◽

Foreign Exchange Market ◽

Relative Strength ◽

Exchange Market ◽

Strength Index ◽

Technical Tool ◽

Alpha Beta ◽

Decentralized Market ◽

Currency Conversion

The foreign exchange market (Forex, FX, or currency market) is a global decentralized market for the trading of currencies. The foreign exchange market assists international trade and investments by enabling currency conversion. Our study is to test the technical tools to analyze about the technical impact and its return in the market. For this purpose 13 cross currency pairs were taken as sample size and Jensen’s Alpha, Beta, Relative Strength Index, and Buy and Hold Abnormal Return were used as technical tool for analysis and the conclusion is that it’s not preferred to invest in JPY pairs as the volatility and the return are not up to the mark and its preferred to invest in EURCAD as the return was high when compared to other scripts and the market was moving accordingly to its cross currency pair.

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