After learning new words, brain sees them as pictures


When we look at a known word, our brain sees it like a picture, not a group of letters needing to be processed. That’s the finding from a Georgetown University Medical Center (GUMC) study published in the Journal of Neuroscience, which shows the brain learns words quickly by tuning neurons to respond to a complete word, not parts of it.

Neurons respond differently to real , such as turf, than to nonsense words, such as turt, showing that a small area of the brain is “holistically tuned” to recognize complete words, says the study’s senior author, Maximilian Riesenhuber, PhD, who leads the GUMC Laboratory for Computational Cognitive Neuroscience.

“We are not recognizing words by quickly spelling them out or identifying parts of words, as some researchers have suggested. Instead,  in a small brain area remember how the whole word looks—using what could be called a visual dictionary,” he says.

This small area in the brain, called the visual word form area, is found in the left side of the visual cortex, opposite from the fusiform face area on the right side, which remembers how faces look. “One area is selective for a whole face, allowing us to quickly recognize people, and the other is selective for a whole word, which helps us read quickly,” Riesenhuber says.

The study asked 25 adult participants to learn a set of 150 nonsense words. The  associated with learning was investigated with functional magnetic resonance imaging (fMRI), both before and after training.

Using a specific fMRI technique know as fMRI-rapid adaptation, the investigators found that the visual word form area changed as the participants learned the nonsense words. Before training the neurons responded like the training words were nonsense words, but after training the neurons responded to the learned words like they were real words. “This study is the first of its kind to show how neurons change their tuning with learning words, demonstrating the brain’s plasticity,” says the study’s lead author, Laurie Glezer, PhD.

The findings not only help reveal how the brain processes words, but also provides insights into how to help people with reading disabilities, says Riesenhuber. “For people who cannot learn words by phonetically spelling them out—which is the usual method for teaching reading—learning the whole word as a visual object may be a good strategy.”

In fact, after the team’s first groundbreaking study on the visual dictionary was published in Neuron in 2009, Riesenhuber says they were contacted by a number of people who had experienced reading difficulties and teachers helping people with reading difficulties, reporting that learning word as visual objects helped a great deal. That study revealed the existence of a neural representation for whole written real words—also known as an orthographic lexicon —the current study now shows how novel words can become incorporated after learning in this lexicon.

“The visual word form area does not care how the word sounds, just how the letters of the word look together,” he says. “The fact that this kind of learning only happens in one very small part of the brain is a nice example of selective plasticity in the ,”

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Wordwide FX’s One-on-One with Greg Michalowski, Chief of Education at ForexLive. Part II


A conversation between Greg Michalowski, Chief of Education at Forexlive, and Isabel Galera, co-founder and owner of Wordwide FX – Financial Translations. Part II: On the Markets

Isabel Galera: Let’s talk a little about the markets… I remember back in 2012 that the market was beating the EURUSD down. Everyone was tense and edgy. Do you have the same feeling now that the EUR and the USD are heading towards parity? It seems to me that everyone is good with that, since the depreciation will help exports in Europe. Am I wrong or…?

Greg Michalowski: The currency mechanism caused by free floating exchange rates allows for the weak to get stronger and the strong to get weaker.   Thankfully for traders who are focused on attacking trends, and for the EU as well, the US has been on a steady recover over the last few years. It may not be great from historical standards, but on a comparative basis to Europe, the US economy has seen stronger employment and GDP. This has allowed for the EURUSD to finally move lower. – especially post-ECB QE and post-US QE taper.

However, as the weak get stronger from the benefits of a weaker currency and the strong get weaker from a stronger currency – all things being equal – the tide can turn.

With the EURUSD moving from 1.3800 to 1.0500 in the last year or so, that is a 23% benefit to European exporters and a 23% hardship for American multinationals. From the European side, if that move does not help Europe economy, and get it off its back, then there are structural competitive issues that will need to be addressed and solved from the EU side. For example, in a technology world, can Italy or Greece compete vs. the US at any exchange rate? Maybe not.

Putting that aside, at some point, there is line that is crossed whereby the US starts to slow because of the US dollars appreciation. Although it may seem that Europe would be happy to have the EURUSD not only go to parity but all the way down to 0.8500, that move does come at a cost. For example, if the US stock market crashes and the US enters a recession that may not be so good – even if the EU should benefit competitively from a lower Euro. Remember, the US has to buy your goods in order to benefit. If they don’t – because they enter a recession – all ships can sink at the same time.

So my guess is most of the work has been done. Now it is a balancing act to see if the EU recovers, the US stays steady, and all boats are lifted instead of sinking.

IG: How is the downfall affecting other European currencies like the GBP or the CHF?

 GM: The EURGBP and the EURCHF have of course moved lower. In addition to general EURO weakness, the EURCHF had the de-pegging which added another layer of volatility and currency adjustment for that pair.

Fundamentally, because of proximity to EU nations, and the fact each are smaller economies (compared to the US) the impact from the Euro’s tumble can lead to hardships that the US might be able to get over.

In Switzerland, the SNB de-pegging in January and subsequent plunge is still a work in progress with the implications still a mystery, but the bright spot, is it could have been worse for them. Nevertheless, it now opens up the prospects for a higher CHF from safe haven flows should the EU falter, stock markets plunge or other geopolitical reason. It also can be a real problem for the Swiss export economy and deflationary prospects in Switzerland. If that happens, the EURCHF should rise (CHF depreciate), but that “safe haven” status could keep the CHF from depreciating. That might lead the SNB to lower rates to even more negative levels or intervene. I do not expect them to re-peg though.

I think the EURCHF will probably trade 0.9900 to 1.0900 for the rest of the year.

For the UK, the country has weathered most of the storm from the Euro area. Until recently, it was thought the BOE would also tighten in 2015. That picture has changed, however, and we are seeing a little more weakness in the GBP vs the EUR and the USD as well.

The May election will likely create havoc for the GBP in the short term. I go back to the Scotland referendum where the market sold off the GBPUSD, rallied on the day and sold off from there. That was in the low to mid 1.600’s.   We are below 1.5000 now. So maybe we sell off, then rally afterwards. For the EURGBP, 0.7550 should cap things. The recent low at 0.7000 area was a nice low too. That is my best guess for the wide range.

IG: A strong currency is not always an indicator of a strong economy. I’m thinking, the EUR has been one of the strongest currencies in the last years but the Eurozone economy has been pretty wobbly. How do we account for that?

GM: It takes two to tango (or to move a currency), and at times “the market” traders and central bankers also get it wrong.

Remember, there were times in the last few years, when the US was the laughing stock of the world as a result of government shutdowns due to budgetary problems and debt ceiling limits. So politics was an issue and the dollar was sold off on the back of that debacle.

Also although US employment was coming down, there were always other concerns about the employment picture that kept the Fed’s pedal to the metal with regard to QE and the Fed rhetoric more dovish. Higher oil prices also kept the dollar weak in the past. Not anymore.

In the EU, the ECB was not engaging in QE. That was bullish for the EU. Also Draghi at times talked the EURO up, kept rate higher and pretended to see/ hope for a recovery. Whereas, the Fed was more dovish, the ECB was more hawkish.

In hindsight, perhaps the ECB and the Fed should switch their speeches.

Anyway, those things helped contribute to the market getting it wrong. Ultimately, it did not help the EU economy get on a road to recovery. For the US, it might have helped it recover more quickly, however.

IG: The USD is gaining strength every day against most currencies. I remember a few years ago, no one seemed to like a strong dollar. Do you think “the market” will “talk it down”, so to say?

GM: The data and the earnings from multinationals will determine the dollars fate. Can US companies afford more dollar strength? One can argue they can if domestic demand and employment stays strong, the dollar can rise. Domestic demand can do wonders – especially when consumption is 2/3rds of US GDP.

If domestic consumption can keep growth at 2.4-3.3% growth, that will be the best case scenario for the EU as well.

However, if that line in the sand is crossed and US employment growth slows and, domestic consumption slows, the dollar strength could correct or slow. I don’t expect the EURUSD going back to the high for the year from January 2 at 1.2100 area, but can it trade 1.1200-1.1300? Maybe.

IG: One more question, Greg… We started 2015 with the belated “Christmas present” from the SNB, and there are so many things going on in the markets… Do you think volatility has decreased to a point where it’s less risky to invest in FX?

GM: There will always be risk in the markets – even in currency pairs that are “pegged”. Pegged can become de-pegged and cause all sorts of problems as we experienced with the SNB decision.

Some people think the EURUSDs move from 1.2100 to 1.0500 was “volatile”. I don’t. I see that as a trend. Trends tend to be fast, directional and go larger trading ranges.   Is that volatile? No. I look at it as a period where traders can make the most money with the least risk. All you have to do is get and stay on the trend, and you make money fast with little risk.

Conversely, if you are not attacking the trend, you are in trouble. You lose money fast and with lots of risk to your capital.   Whose fault is that? Most traders who lose will blame the volatility of the FX market. In reality it was the traders own stubbornness and inability to recognize that trends are fast, directional and go farther than anyone thinks.

To me, volatility is when the market goes up one day, down another, up and down and up again in the same day. That is volatile to me. That type of market is the most risky for me simply because I expect sellers who pushed the price lower, to sell again when the price corrects 38.2-50%. Logic says to me that traders – who sold 4 hours ago on the break of 1.0800 – would be happy to sell again when it corrects 40% into that area.   How can you not like selling again?

When it does not find the seller at 1.8000 and instead moves the other way up to 1.0860 (with no news), that means the story changed from bearish to bullish – just because. That type of market volatility is “more risky” to me. You can die from a thousand superficial knife wounds from that type of “volatile” market action. It is like being in a bar fight. There are few winners in an all-out brawl in a bar. One broken glass in the hands of a crazy small guy, can stop the biggest and strongest guy.   Random.

Last summer when the World Cup was going on, and traders were also on vacation mode, people said the market was “less volatile”. Did anyone make money then? No. It was randomness of the volatile up and down action.

In September when the market trended, those who got killed from the “volatility” of the trend, really died from a self-inflicted stab wound. It was not “the markets” fault or because of volatility (i.e., a large directional and fast move). It was a trend and they traded against the trend.

So if we repeat World Cup 2014 in 2015, I will be sitting on the sidelines mostly watching the bar fight play out and waiting for the next trend.

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Wordwide FX’s one-on-one with… Greg Michalowski, Chief of Education @ForexLive


A conversation between Greg Michalowski, Chief of Education at Forexlive, and Isabel Galera, co-founder and owner of Wordwide FX – Financial Translations.


Isabel Galera: Hello Greg, it’s really nice talking to you, as always. We met each other a while ago, when Wordwide FX started working for FXDD Malta in 2012. We provided real-time translations into Spanish and Japanese. From the point of view of a forex educator, do you think it’s important for financial companies to translate analyses and educational content to get to audiences that might not be that good at English?

Greg Michalowski: Yes. The forex market is a global market with traders in all corners of the world.   Although English is understood by many, there is a segment of traders who do not speak or read it well. As a result, I have always felt that if my work can be correctly translated into other languages – and WordwideFX does that quickly and efficiently – it will increase the reach of the analysis and can only be a benefit for traders, and for us as well.

IG: I think it’s great you signed up for ForexLive. How do you see the future of the portal?

GM: We are very positive about our future but understand it will take time to build what we want – especially from a technology perspective. The great news is that ForexLive has a very dedicated following, and that following continues to grow. Our main mission is to providing meaningful and timely forex related analysis and news so that traders of all levels can benefit. Our engagement numbers support that mission. However, that is just the beginning. There is more we can do and will do.

IG: Wordwide FX started a partnership with ForexLive to publish some of your content in Spanish –something I’m especially proud of. Thank you and Adam for your trust. How do you think ForexLive will benefit from that?

GM: The great news about our relationship is we know that what we write is being translated quickly and correctly. It is not “lost in translation”; it is timely.   We do trust you and that is a credit to what you do and how you do it. So congratulations! 

As a result of translations, we are seeing our audience in Spanish speaking countries move higher. That in turn is leading toward interest from Spanish brokers who want to sponsor pages and advertise on our site. ForexLive provides potential advertisers an audience of traders and potential traders who log in when they start their trading day, and log out when they end their trading. That is a lot of time. If a trader who speaks Spanish, reads a Spanish post that is sponsored by a Spanish broker, that broker is getting exposure that is unmatched. What we offer, by having our work translated in other languages, is a valuable proposition.

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