Disentangling the effects of geographic proximity on forex social trading platforms

Mengli Yu, Yijing Li, Eric T.K. Lim, Chee Wee Tan

Research output: Unpublished conference presentation (presented paper, abstract, poster)Conference presentation (not published in journal/proceeding/book)Academic researchpeer-review

Abstract

Forex social trading is a nascent financial innovation that endows investors with opportunities to speculate on global currencies online by following and emulating investment strategies from savvy traders. Although social trading has been touted as a means of lowering distance barriers and facilitating interactions among investors, the geographical dispersion of forex markets confines traders' expertise to domestic currencies due to the cost of information gathering, thereby culminating in home bias behavior. Espousing geographic proximity theory, we endeavor to explore leading traders' home bias propensities on forex social trading platforms and uncover how such behaviors may affect their performance and their appeal to followers from afar. Furthermore, we strive to delve into the role of governmental transparency of currency issuers on reconciling followers' preference for profitable home-biased leading traders. In so doing, we quantify the influence of geographic proximity on leading traders' performance and followers' subscription tactics, which in turn yield insights into optimized emulative trading strategies for forex social trading.

Original languageEnglish
Publication statusPublished - Jul 2019
Externally publishedYes
Event23rd Pacific Asia Conference on Information Systems: Secure ICT Platform for the 4th Industrial Revolution, PACIS 2019 - Xi'an, China
Duration: 8 Jul 201912 Jul 2019

Conference

Conference23rd Pacific Asia Conference on Information Systems: Secure ICT Platform for the 4th Industrial Revolution, PACIS 2019
Country/TerritoryChina
CityXi'an
Period8/07/1912/07/19

Keywords

  • Forex social trading
  • Geographic proximity
  • Governmental transparency
  • Home bias behavior

ASJC Scopus subject areas

  • Information Systems

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