Midland Bank Plc recently acquired a new computer system that gives instant forecasts of moves on the foreign exchange markets. Developed by Zurich, Switzerland-based Olsen & Associates, a research institute for applied economics specialising in financial markets, the Olsen Information System, OIS, is described as a decision-support tool for every specialist in the financial market. There is on-line access to three different services: forecast service, history analysis service and trading model service. These deal with 41 exchange rates, 24 hours a day, all year round. The forecast service assesses short, medium and long-term trends in currency markets. Both the estimated path of future price movements and the probability of the predicted movements are forecast over a timescale of anything from a few minutes to a couple of months. Volatility levels are projected too. The forecasts are updated continually to account for recent political and economic events that could move markets.

Likely path

By displaying the most likely path of a price change, the aim is help users establish a strategy, while the probability range is intended to determine levels of overall risk and set realistic stop-loss levels and profit objectives. Over 50% of predictions are claimed to be correct. The history analysis service provides an analysis of price history. An activity indicator illustrates the force of respective price movements, while an overbought/oversold indicator iden-tifies the best time to open or close a position, based on past experience. Continuously updated summaries show which currencies are overbought or oversold at any given moment. The trading model service evaluates the information provided by the other two services to determine an optimal trading strategy to fit standard or user-specific profiles. Unleveraged annual returns are claimed to be about 15%. The OIS is basically a database that continually collects and processes market-maker quotes from all over the world, and has done since it was set up in 1986. Software developed by Olsen converts the processed data into a simple format and sends it to the user’s personal computer or DECstation in real time. The basic monthly subscription is $5,800, and the service is currently available in the UK, Switzerland and Germany. – Catherine Everett