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Applied FX Trading

Exam number: 6013

Semester: from 4th semester (Schwerpunktbildung)

Duration of the module: One semester

Form of the module (i.e. obligatory, elective etc.): Elective

Frequency of module offer: Irregularly.

Prerequisites: Knowledge in micro- and macroeconomics, math and statistics. For example, you should know how to perform an OLS regression in Excel or Stata. Basic knowledge with respect to macroeconomic models of the open economy (Mundell-Fleming model, monetary model) as well as the basic equilibrium conditions (PPP, UIP). Grundlagenausbildung should be completed. Students should have attended the course International Monetary Economics or an equivalent course. Capacity limited to 40 students. Places will be assigned according to the following scheme: First come first serve. Please send an email to Boeing@europa-uni.de.

Applicability of module for other study programmes:
Obligatory or elective in other study programmes. For further information check regulations of the study programme.

Person responsible for module: Prof. Dr. Georg Stadtmann

Name of the professor: Prof. Dr. Georg Stadtmann

Language of teaching: English

ECTS-Credits (based on the workload): 6

Workload and its composition (self-study, contact time):
Contact time (lecture, tutorials, seminar etc.) 33,75 h; self-study: 146,25 h

Contact hours (per week in semester): 3

Methods and duration of examination:

  • Three solutions to case studies. Group work 3 * 10 %
  • Participation in the final exam (90 min). Weight: 70 %.

Emphasis of the grade for the final grade: Please check regulations of the study programme

Aim of the module (expected learning outcomes and competencies to be acquired):
We will get to know and evaluate several exchange rate theories commonly implemented in FX markets to “MAKE MONEY”! We will test traditional theories (UIP, PPP) based on macroeconomic fundamentals such as PPP or UIP. A large part of the course will also deal with the efficient market hypothesis and the profitability of technical trading strategies.
Students should start a demo account already at the beginning of the semester to get in touch with the trading platform. http://www.fxcm.de/

B|Orders in Motion
The course is closely related to the overall research and education theme B|Orders in Motion of the European University Viadrina. We will talk about different style of market orders such as Market Range or At Best Orders which give you either price certainty or execution certainty. Hence, these two different order types vary with respect to the permeability of the order. So called Entry Orders are not executed directly, but only after the market rate crosses the border defined by the trader. In this respect we will learn to distinguish Limit Entry and Stop Entry Orders. We will also learn how we can modify or cancel entry orders. Thereby, we address the issue of the durability of orders and borders. We will also define and talk about Dynamic Trailing Stop Orders which shift borders in a predefined order due to developments of the market rate.

Contents of the module:
All lectures will take place during the first block of the semester.
Lecture:
1. Forward rates: CIP and UIP
2. Technical trading rules
3. Momentum strategies
4. Disposition effect
5. To be announced

Teaching and learning methods:
Lecture with tutorials, seminar, self-studies

Literature (compulsory reading, recommended literature):
A textbook will be announced via Moodle and during the first lecture. PDFs of articles will be provided via Moodle.
Czarnitzki, D.; G. Stadtmann (2005): The disposition effect – empirical evidence on purchases of investor magazines, Applied Financial Economics Letters, Vol. 1, pp. 47–51.
db x-trackers Currency Carry ETF
db x-trackers Currency Valuation ETF
db x-trackers Currency Momentum ETF
Deutsche Bundesbank (2005): Exchange rates and interest rate differentials: recent developments since the introduction of the euro, Monthly Report 07/2005, pp. 26 – 42.
Frenkel, M.; G. Stadtmann (2004): Trading Rule Profitability and Interventions in the Dollar-Deutschmark Market, Journal of Economics and Statistics (Jahrbücher für Nationalökonomie und Statistik), Vol. 224/6, pp. 653 -- 672.
FXCM: Traits of successful traders: A four part series.
FXCM (2011): FXCM Trading Station II: User Guide to the No Dealing Desk FOREX Execution Platform.
Neely, Christopher J. (1997):Technical Analysis in the Foreign Exchange Market: A Layman’s Guide, FEDERAL RESERVE BANK OF ST. LOUIS Review, SEPTEMBER /OCTOBER 1997, 23 – 38.
Stadtmann, Georg (2003): An Empirical Examination of the News Model: The Case of Borussia Dortmund GmbH & Co. KGaA, ZfB 74. Jg. (2004), H. 2, 165–185.
Stadtmann, Georg (2006): FREQUENT NEWS AND PURE SIGNALS: THE CASE OF A PUBLICLY TRADED FOOTBALL CLUB, Scottish Journal of Political Economy, Vol. 53, No. 4, September 2006, 485 – 504.

Further information:
Registration via E-Mail required.