This Is How a Currency Trader Actually Picks What to Buy and Sell

Tracy Alloway (0:10)

Hello, and welcome to another edition of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:15)

And I'm Joe Weisenthal.

Tracy Alloway (0:17)

So Joe, I have a little bit of a confession to make.

Joe Weisenthal (0:21)

Okay, I'm listening.

Tracy Alloway (0:24)

I'm glad you're taking it seriously. That makes me feel better.

Joe Weisenthal (0:26)

Oh, that wasn't facetious. I'm listening, I wanna know what it is.

Tracy Alloway (0:30)

Yeah, okay, so I know I'm supposed to be covering and writing about markets, but there is one market that I actually really dislike covering and writing about.

Joe Weisenthal (0:42)

That's interesting. I actually don't, sometimes I can guess where you're going with things, but in this case, I actually didn't know there was an area of the markets you didn't like.

Tracy Alloway (0:50)

Ah, good, okay. Me fainting enthusiasm has been working. The market is the currency market, the FX market. Yeah, and the reason I find it so frustrating, I guess from an analytical or a news writing perspective, is whenever anything is happening, like the dollar is gaining or sterling is falling, everyone starts to point out that it's relative. Like, oh, the dollar is only up against the euro and sterling is only down against the Japanese yen.

And it just drives me crazy, because I find it so difficult to pinpoint individual trends that might be affecting currencies when everyone views it through this prism of relativity.

Joe Weisenthal (1:33)

That's so funny because I really like currencies and I really like covering it. And I like it for the exact same reason because I see it as like this puzzle of trying to isolate out what's really going on. So you can say, okay, the euro is rallying, but it's not rallying against the dollar and it is rallying against the pound, but it's sort of flat against the yen. And so what I like about it is precisely this reason that it leads to this sort of like impure deductive reasoning where you look at all the different relationships and then you could sort of isolate, okay, what is the variable that's really moving? And I sort of see it like a puzzle, but I would say I never knew this about you before that just drove you nuts.

Tracy Alloway (2:16)

One man's trash is another man's treasure, I guess. Well, look, I think I have a way to make us both happy on this episode then. We're going to talk about the currency market and I'm personally gonna try to get a better handle on it. And I guess you are going to revel in the intellectual puzzleness of it all. So it'll be fun for both of us.

Joe Weisenthal (2:38)

And to be fair, there's a lot I want to know too, because I think I have some idea and I like this sort of all the relativity and the zero-sum-ness of it all.

But I have to admit that like I don't really know how someone, a currency trader, just sort of looks at the world and starts to figure out what to buy and what to sell. So even though I'm into it, I kind of feel like, you know, I'm starting from scratch in terms of really understanding it.

Tracy Alloway (3:02)

Ah, well, you're in luck because we have a currency trader.

Joe Weisenthal (3:05)

Thank you.

Tracy Alloway (3:15)

Without further ado then, let's bring on our guest for this episode. It is Ken Veksler, the CIO of Accumen Management. Ken, thanks for coming on.

Ken Veksler (3:25)

Thank you guys, good to be here.

Tracy Alloway (3:27)

Did I upset you with my intro or?

Ken Veksler (3:30)

No, it was actually, it was quite interesting listening to the two of you back and forth on that because it's exactly that. I mean, it's a double edged sword. So in very rare instances, is the currency market about absolutes? And in those instances, you're either along for the ride or you're chasing the train that's already left.

So, and on the other hand, it's as Joe pointed out, it is a puzzle and frankly, sometimes it's a puzzle where you just want to pick it up and throw it off the table and start all over again. But yeah, I mean, no, you haven't upset me.

Joe Weisenthal (4:03)

So Ken, what is it that you do? I mean, I wanna in a little bit, I wanna talk about the state of the currency markets over or currently and how different currencies are doing. But in terms of what you do on a day-to-day basis, how do you begin the process of identifying potential trades?