What is the Scale of Market Quakes (SMQ)?
The Scale of Market Quakes (SMQ) objectively measures the impact of political and economic events on the currency markets and is a decision support tool for traders, retail and institutional investors, government officials and commentators. The development of the SMQ was inspired by the Richter Scale which measures the intensity of earthquakes. Financial markets are subject to seismic shocks caused by political, economic and other events. The SMQ, which is computed on a tick by tick basis, measures the price impact of these events. It provides a clear metric of the relevance of events and contributes to reducing uncertainty of decision makers. The SMQ service that has been developed for the currency markets is part of a large project to build a comprehensive global information system. Olsen invites companies, non-government and government organizations, universities and private individuals to participate.
Is the SMQ in real-time?
The SMQ is calculated in real-time, but implicit in the specification of the SMQ is a two-hour time delay in measuring the impact of events. This comes from the fact, that news events not only impact prices before the event but also at and after the actual announcement.
What does the chart show?
The chart shows - for the chosen currency or currency pair - the evolution of the SMQ; basically the activity at any moment in the respective market. The blue striped area is the actual SMQ value, the light green are indicates the standard deviation and the top yellow line the price of the instrument at hand. The number to right shows the current value; the indicator to the right shows the trend (up/down arrow, dot for stable). The characters represent news events.
What does the radar show?
The radar chart depicts all SMQ values for the crosses with the currency in the center. The larger the area, the higher the activity in a currency.
Is there a more technical description?
See the Scale of Market Quakes paper for a detailed technical explanation.
Where can I see more?
Visit www.olsenscale.com for further and indepth information. You can sign up to our news alert, read the weekly summaries, compare news events, and much more.
