Disentangling the Effects of Geographic Proximity on Forex Social Trading Platforms

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

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-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
Title of host publicationPACIS 2018 Proceedings
Number of pages8
Place of PublicationAtlanta, GA
PublisherAssociation for Information Systems. AIS Electronic Library (AISeL)
Publication date2019
Article number296
Publication statusPublished - 2019
EventThe 23rd Pacific Asia Conference on Information Systems. PACIS 2019 - Shaanxi Guesthouse, Xi’an, China
Duration: 8 Jul 201912 Jul 2019
Conference number: 23
http://www.pacis2019.org/

Conference

ConferenceThe 23rd Pacific Asia Conference on Information Systems. PACIS 2019
Number23
LocationShaanxi Guesthouse
CountryChina
CityXi’an
Period08/07/201912/07/2019
Internet address

Keywords

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

Cite this

Yu, M., Li, Y., Lim, E. T. K., & Tan, C-W. (2019). Disentangling the Effects of Geographic Proximity on Forex Social Trading Platforms. In PACIS 2018 Proceedings [296] Atlanta, GA: Association for Information Systems. AIS Electronic Library (AISeL).
Yu, Mengli ; Li, Yijing ; Lim, Eric T.K. ; Tan, Chee-Wee. / Disentangling the Effects of Geographic Proximity on Forex Social Trading Platforms. PACIS 2018 Proceedings. Atlanta, GA : Association for Information Systems. AIS Electronic Library (AISeL), 2019.
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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.",
keywords = "Geographic proximity, Home bias behavior, Forex social trading, Governmental transparency, Geographic proximity, Home bias behavior, Forex social trading, Governmental transparency",
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booktitle = "PACIS 2018 Proceedings",
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Yu, M, Li, Y, Lim, ETK & Tan, C-W 2019, Disentangling the Effects of Geographic Proximity on Forex Social Trading Platforms. in PACIS 2018 Proceedings., 296, Association for Information Systems. AIS Electronic Library (AISeL), Atlanta, GA, Xi’an, China, 08/07/2019.

Disentangling the Effects of Geographic Proximity on Forex Social Trading Platforms. / Yu, Mengli; Li, Yijing; Lim, Eric T.K.; Tan, Chee-Wee.

PACIS 2018 Proceedings. Atlanta, GA : Association for Information Systems. AIS Electronic Library (AISeL), 2019. 296.

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

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AB - 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.

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Yu M, Li Y, Lim ETK, Tan C-W. Disentangling the Effects of Geographic Proximity on Forex Social Trading Platforms. In PACIS 2018 Proceedings. Atlanta, GA: Association for Information Systems. AIS Electronic Library (AISeL). 2019. 296