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Feedback Trading in Currency Markets: International Evidence

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  • Mohammad Tayeh
  • Vasileios Kallinterakis

Abstract

We investigate the presence of feedback trading in 66 currencies for the 2001–2018 period and find that feedback traders are active in many of them, giving rise mostly to positive feedback trading, when present. This suggests that feedback traders assume a stabilizing role, buying when currencies depreciate and selling when they appreciate, with depreciations found to boost positive feedback trading more strongly than appreciations. Feedback trading is found to exhibit long memory for most currencies, while no discernible feedback trading patterns surface within-versus-outside the recent global financial crisis.

Suggested Citation

  • Mohammad Tayeh & Vasileios Kallinterakis, 2022. "Feedback Trading in Currency Markets: International Evidence," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 23(1), pages 1-22, January.
    • Handle: RePEc:taf:hbhfxx:v:23:y:2022:i:1:p:1-22
    DOI: 10.1080/15427560.2020.1821685
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    Cited by:

    1. Fotini Economou & Konstantinos Gavriilidis & Bartosz Gebka & Vasileios Kallinterakis, 2022. "Feedback trading: a review of theory and empirical evidence," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 15(4), pages 429-476, February.
    2. Rainer Baule & Bart Frijns & Sebastian Schlie, 2024. "Feedback Trading: The Intraday Case of Retail Derivatives," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 44(9), pages 1487-1507, September.
    3. Ali, Sara & Badshah, Ihsan & Demirer, Riza, 2023. "Anti-herding by hedge funds and its implications for expected returns," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 31-48.

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