Getting Started in Currency Trading: Winning in Today's Hottest Marketplace
While the Foreign Exchange (FOREX) market can be a very profitable place, you must have a firm understanding of how to operate within this environment if you intend on achieving any success. That's why you need Getting Started in Currency Trading, Second Edition. This reliable resource-written for both newcomers and those with some FOREX experience-puts trading world currencies in perspective, and shows you exactly what it takes to make it in this field. Topics include:\ \ The rapidly...
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AN UP-TO-DATE INTRODUCTION TO ONE OF TODAY'S HOTTEST AREAS OF TRADING GETTING STARTED IN CURRENCY TRADING SECOND EDITION "As a novice trader of currencies, Mr. Archer's book has been an invaluable resource for me, as my dog-eared and dilapidated copy can surely attest. Concise yet comprehensive, he provides the framework for developing a trading strategy that new traders can easily follow and veterans can surely benefit from. For anyone involved in trading FOREX, I cannot recommend this book enough as mandatory reading."—Jeff Marsick, Research Analyst, Avatar Associates "This book by Michael Duane Archer evaluates with remarkable profundity and extent the world of currency trading. The author's experience is enormous and dates back to the beginning of foreign exchange trading as we know it today. A brilliant reference companion and a must for any currency trader's library."—Peter Panholzer, DynexCorp While the Foreign Exchange (FOREX) market can be a very profitable place, you must have a firm understanding of how to operate within this environment if you intend on achieving any success. That's why you need Getting Started in Currency Trading, Second Edition. This reliable resource—written for both newcomers and those with some FOREX experience—puts trading world currencies in perspective, and shows you exactly what it takes to make it in this field. Topics include: The rapidly expanding and evolving online trading marketplace for spot currencies, generally referred to as retail FOREX The process of initiating and liquidating a live market order The advantages and disadvantages of fundamental and technical analysis The wealth of FOREX products and services now available from third-party vendors The psychology of trading and the stresses that may accompany this endeavor Advanced strategies such as options, exotics, and arbitrage
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Acknowledgments xvIntroduction xviiAbout This Book xviiHow This Book is Organized xviiDisclaimer xixThe Foreign Exchange marketsThe FOREX Landscape 3Introduction-What Is FOREX? 3What Is a Spot Market? 3Which Currencies Are Traded? 4Who Trades on the Foreign Exchange? 4How Are Currency Prices Determined? 5Why Trade Foreign Currencies? 5What Tools Do I Need to Trade Currencies? 8What Does It Cost to Trade Currencies? 8FOREX versus Stocks 8FOREX versus Futures 9Summary 10A Brief History of Currency Trading 11Introduction 11Ancient Times 11The Gold Standard 1816-1933 12The Fed 12Securities and Exchange Commission 1933-1934 14The Bretton Woods System, 1944-1973 14The End of Bretton Woods and Floating Exchange Rates 15International Monetary Market 15Current Perspective 16Arrival of the Euro 16Summary 18Spot or Futures FOREX? 19Introduction-Futures Contracts 19Currency Futures 20Contract Specifications 20Currencies Trading Volume 21U.S. Dollar Index 22Summary 22Getting StartedThe Regulatory Environment 25Regulation Today 25The Commodity Futures Trading Commission (CFTC) 26National Futures Association 26Commodity Futures Modernization Act of 2000 27The Patriot Act 27The CFTC Reauthorization Act of 2005 27Summary 28The FOREX Lexicon 29Currency Pairs 29Major and Minor Currencies 29Cross Currency 30Exotic Currency 30Base Currency 30Quote Currency 30Pips 30Ticks 31Margin 31Leverage 32Bid Price 32Ask Price 32Bid/Ask Spread 32Quote Convention 32Transaction Cost 33Rollover 33The Trader's Nemesis 33Summary 34The Calculating Trader 35Leverage and Margin Percent 36Pip Values 36Calculating Profit and Loss 37Calculating Units Available 44Calculating Margin Requirements 46Calculating Transaction Cost 47Calculating Account Summary Balance 50For Futures Traders 52Summary 53Selecting the Right FOREX Broker for You 55Broker-Dealer Due Diligence 55Demo Accounts 56Market Maker, ECN, or IB? 56Introducing Brokers 57Platform Capabilities 58Trading Tools 58Order Execution and Accounting 60News 60Chat 60Platform Stability and Backbone 62Historical Data 62Data Feed 63Third-Party Offerings 63Orders 63Margin Requirements 64Order Backup 64Account Minimums 64Pairs, Crosses, and Exotics 65Deposits and Withdrawals 65Transaction Costs 65Trading Hours 66Customer Service 66Documentation 68Requoting 68Financials 68Rollovers and Interest 69FOREX Broker-Dealers 69Popular Broker-Dealers 70The Big Three 73For the Professional 74Fraud, Scams, and Off-Exchange 74Summary 76Opening a FOREX Account 77Account Types 78Opening the Account: Steps 78Summary 81Pulling the Trigger 83Orders 83Market Orders 84Limit Orders 84Stop Orders 85Combination Orders 86Specialty Orders 86Order Placement Walk-Through 86Order Execution 86Order Confirmation 87Transaction Exposure 87Summary 88The Tools of the TradeFundamental Analysis 93Supply and Demand 93Interest Rates 94Balance of Trade 94Purchasing Power Parity 97Gross Domestic Product 98Intervention 100Other Economic Indicators 100Forecasting 102Technical Analysis 107Overview 107Bar Charts 108Trend Lines 110Support and Resistance 111Recognizing Chart Patterns 111Reversal Patterns 112Continuation Patterns 113Candlestick Charts 115Point and Figure Charts 117Charting Caveat-Prediction versus Description 119Indicators and Oscillators 120Relative Strength Indicator 120Momentum Analysis 121Moving Averages 123Bollinger Bands 123Indicator Caveat-Curve-Fit Data 126Swing Analysis 126Cycle Analysis 128Advanced Studies 128The Technician's Creed 129Summary 130The Toolbox Approach 131General Principles 131A KIS Toolbox 132The Goodman Swing Count System 133GSCS Rules 133"3C" Stands for Carryover, Compensation, and Cancellation 136The Nofri Congestion Phase Method 138Pugh Swing Chart Formations 139A Moving Average and Oscillator Battery 140Contrary Opinion 142Volume 142Open Interest 142Heuristics 143Summary 144The FOREX Marketplace 145Organizing Your Bookmarks 146Cross-Category Services 147Portals, Forums, Reviews 147Charting and Technical Services 150FOREX Education 152Trading Signals and Software 153News, Announcement Services, and Calendars 154Live Data Streams 157Historical Data 157System Development Tools 159FOREX Managed Accounts 161Peter Panholzer 163Odds and Ends 164Summary 166The Complete Forex TraderPsychology of Trading 169The Trading Pyramid 169Fear and Greed, Greed and Fear 170Profiling 171The Attitude Heuristic 171Characteristics of Successful Traders 172Summary 173Money Management Made Simple 175Breaking Even-The Belgian Dentist 175Expectations 176Trader Profiles 176Parameters for Trader Profiles 178The Trade Campaign Method (TCM) 179Calculating TCM Profit and Loss 179Stop-Loss Orders-A Brief Discussion 181Selecting Markets 181Summary 182Tactics and Strategy 183Trending and Trading Markets 183Market Environments (ME) 184Directional Movement (DM) and Volatility (V) 185Price and Time Rhythm (PR and TR) 185Thickness (T) 188Shape (S) 190Pretzels (PZ) 190ME Applications 190The Three Chart System 193The Dagger Entry Principle 193Sitting on Your Hands 194Time Filters 195Trading the News 196Going Against the Crowd 196Trading Methods 197The Flyer 197Bathtub Analysis 198Summary 198When and How to Regroup 199Common Trading Errors 199Performance Review 201Heuristics Review 202When to Say Uncle 202Summary 202For the Record 203Type of Records 203The Rogers Method 205The Snaglt Tool 205Planning Records 206Summary 206Extra for ExpertsOptions and Exotics 209Options 210An Options Primer 210Basic Options Terms 211The Pros and Cons of Options 212The Four Basic Options Strategies 213Purchasing and Writing Options 214Advanced Options Strategies 214The Retail FOREX Options Landscape 214Options for Trading 216Options for Money Management 216Exotics 218Trading Exotics 219Summary 220The Final Frontiers 221Rollovers 221Hedging 222Arbitrage 223Pros and Cons of Arbitrage 227Artificial Intelligence 228Complexity Theory Models 228The Trend Machine 229Automated Trading and Robots 229A Last Word 231How the FOREX Game Is Played 233Retail FOREX Regulations-CFTC Reauthorization Act of 2005 237List of World Currencies and Symbols 243Major Currency Cross Rates 249Euro Currency Unit 251Time Zones and Global Banking Hours 253Central Banks and Regulatory Agencies 255Resources 259Glossary 265Index 277
