Psychological keys to foreign exchange decision-making

Erwin Schrödinger Fellowship J 1955 Psychological keys to foreign exchange decision-making Thomas OBERLECHNER 09.10.2000 This research aims to study key psychological factors underlying individual and collective decision-making processes in the U.S. foreign exchange market. The study is designed around an in-depth exploration of three key areas. These areas are (1) an exploration of the psychological variables involved in expectation formation in the financial markets, including psychological characteristics of different forecasting styles as well as the reasons and implications for technical vs. fundamental factors in forecasting the market future; (2) an analysis of explicit and implicit use of market metaphors by trading decision-makers as well as implications of these metaphors for individual and collective market behavior; (3) an attempt to determine the psychological variables and personality traits of successful traders in order to establish psychological profiles of trading candidates with high potential for successful decision-making in the financial markets. For the proposed research, new qualitative and quantitative data will be gathered from trading decision-makers working at selected market participants such as investment funds companies and investment banks in the Boston/New York trading area. Data-gathering research tools will include a newly designed quantitative questionnaire survey and qualitative semi-structured in-depth interviews. Since the investigated research topics build on the applicant`s previous research with trading participants and financial news services in the European foreign exchange market, the new data from U.S. foreign exchange institutions will also allow for comparisons of psychological characteristics of market participants in the United States and in Europe.