As part of the assessment of FX risk, it is important to understand the trader psyche as well as the effect of the seismic changes that have taken place in the trading world in the past 20 years.
In terms of psyche, or what makes a trader tick, not much has changed over the years. A trader wants to make money; he wants to make money for himself, for his bank or fund, and for his sense of wellbeing.
While the basic trading instinct, to make money, remains the same, in the past two decades traders have had to adapt to a changing world, one where computers, rather than humans, play an ever increasing role.
This chapter explores these changes.
While currencies have been traded for thousands of ...