Day Trading & Forex Forum

N9ne

Hi all,

I'm new here, but have traded a little FX myself. I'm currently an undergraduate in UK studying Economics. The time has come for me to select a dissertation title and do a bit of research.

As is always the case with dissertations, one requires inspiration, and I'm finding it hard to come by!

My main interest is the FX Market. Since I'm doing an Economics degree, it must be linked; I want to do a dissertation in this field - it will be an empirical (rather than theoretical) approach, and I would like to test for something. The obvious one would probably be whether some given currency pair follows a random walk. However, this seems very bread-and-butter and am looking for something slightly varied.

I thought this would be the best place to ask for ideas and suggestions. Does anyone have any broad or narrow areas they can point me to; something which might make an interesting topic for me to a) research, b) write a dissertation on and c) isn't an untouched area. Point (c) is important because this is an undergraduate dissertation and my knowledge, time and the importance of this dissertation are all limited (but fairly significant).

Thank you for your time and ideas.

Rhody Trader

Take a look at Benoit Mandelbrot's work. His book The (Mis)Behavior of Markets might give you some really interesting ideas for research paths. Be warned, though. He's not a proponent of classic theory where it relates to the markets and provides plenty of solid arguments against the likes of random walk, efficient markets, etc.

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John Forman
Author - The Essentials of Trading

kenobi

Interesting topics you can find in the FX market.

A rather simple one would be the initial market reaction to news announcements in the economic calendar.
You would find some interesting stuff that is actually counterintuitve to the economic theory you were taught

It is simple, and easy to use correlations to prove the point. and you dont need much historical data....there are so many news announcements that you would not need more than 6 months of news announcements.....metatrader will give you enough.

grantx

Kenobi,

Good idea. If i may expand, I would suggest choosing and comparing the most watched data, eg CPI, Input/output prices for two countries - US/Eurozone for US/EUR - and examine how the currencies react to their own, and each others, indicators over the course of a year or two.

Grant.

nine

Adding to the news idea: does the market regularly move in the direction of the news before the news (or in fact do the opposite)? What does this imply?

GammaJammer

How about whether the market correctly values low delta (i.e. deep out the money) options (the so called 'smile' effect). Not even remotely cutting edge, but detailed enough (I would have thought) to give you stuff to write about that can earn you a good mark, and also not so obscure that you will struggle to find reading matter for (a mistake I made rather spectacularly with my own undergraduate final year research project, costing me a 2i in the process and lumping me with a slightly harsh 'desmond').

There are plenty of people on these boards that can help with this one if it takes your fancy. PM me if you have any questions

Good luck

GJ

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"That which doesn't kill me makes me stronger"

N9ne

Thank you all for your replies. They've all been very useful and insightful!

To expand on this, I am thinking perhaps of something rather more applied to economics. I fear my dissertation title may be rejected if it lacks that economics element.

There's a broad area I'm interested in, not necessarily restricted to the FX Market. Perhaps an interesting dissertation would be to explore the relationship between oil, equities and FX. This would be tremendously interesting and would offer me the opportunity to research into the history and the mechanics of not one but three different markets.

However, what would my dissertation specifically be on? I would not be allowed to write a dissertation on merely the 'interactions' between those three very distinct markets. Is there something particular here, which I could explore in greater detail?

kenobi

ok mate, you come to a BB to get a topic for yer dissertation. cool. think ye already got a topic. ye just need to read again. wot has been posted by several of us is pretty economical to us.

right, probably it wasnt explained.

in yer economics course you were told....

a) if BOE raises rates....then X happens to the £
b) if Inflation numbers are up........then X happens to the £ ......

and so on.

i dont really know how good yer Uni is.....but will give you a hint.....use rational expectations and market efficiency theory........

a) test against the first 15 minutes following a news release
b) test against the the 240 minutes following a news release
c) compare to economic theory and what the new info brings into the valuation

you will have so many topics to isolate

well, cant get more "economics" than that.

good luck.