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21 Mar 2013
Forex Flash: Market volatility and the human body - Nomura
FXstreet.com (Barcelona) - Nomura Strategist Saeed Amen has conducted a fascinating study, looking at the relationship between calories burnt by traders against market volatility.
He begins by noting that it is fairly clear that during the US employment report and similar intraday
events, the market becomes busier and this can be seen objectively in terms of increased volume and intraday volatility around the data point. he asks, “Does this translate into impacting traders physically?” He conducted his own experiment with a calorie counting device to answer this question.
He finds that traders are impacted if we measure calorie burn from body movement, which increases slightly. Whilst this might not be significant if we consider a single trader, if we consider the whole market, then we could envisage some feedback impact back into the market. He writes, “Indeed, other research, such as in John Coates’ book The Hour Between Dog and Wolf, suggests that making and losing money impacts the body and this can change the way we behave. He suspects that this feedback loop could be one of the reasons behind over-extended markets, although this idea is difficult to test.
He finishes by commenting, “To better answer this question of whether greater trader physical activity is leads to more exaggerated trends in markets, we plan to do further experiments. In particular, we plan to look at other measures of trader physical activity, such as measuring heart-rate which might more quickly pick up changes.”
He begins by noting that it is fairly clear that during the US employment report and similar intraday
events, the market becomes busier and this can be seen objectively in terms of increased volume and intraday volatility around the data point. he asks, “Does this translate into impacting traders physically?” He conducted his own experiment with a calorie counting device to answer this question.
He finds that traders are impacted if we measure calorie burn from body movement, which increases slightly. Whilst this might not be significant if we consider a single trader, if we consider the whole market, then we could envisage some feedback impact back into the market. He writes, “Indeed, other research, such as in John Coates’ book The Hour Between Dog and Wolf, suggests that making and losing money impacts the body and this can change the way we behave. He suspects that this feedback loop could be one of the reasons behind over-extended markets, although this idea is difficult to test.
He finishes by commenting, “To better answer this question of whether greater trader physical activity is leads to more exaggerated trends in markets, we plan to do further experiments. In particular, we plan to look at other measures of trader physical activity, such as measuring heart-rate which might more quickly pick up changes.”