Getting Started in Currency Trading: Winning in Today's Hottest Marketplace Book

Acknowledgments     xv
Introduction     xvii
About This Book     xvii
How This Book is Organized     xvii
Disclaimer     xix
The Foreign Exchange markets
The FOREX Landscape     3
Introduction-What Is FOREX?     3
What Is a Spot Market?     3
Which Currencies Are Traded?     4
Who Trades on the Foreign Exchange?     4
How Are Currency Prices Determined?     5
Why Trade Foreign Currencies?     5
What Tools Do I Need to Trade Currencies?     8
What Does It Cost to Trade Currencies?     8
FOREX versus Stocks     8
FOREX versus Futures     9
Summary     10
A Brief History of Currency Trading     11
Introduction     11
Ancient Times     11
The Gold Standard 1816-1933     12
The Fed     12
Securities and Exchange Commission 1933-1934     14
The Bretton Woods System, 1944-1973     14
The End of Bretton Woods and Floating Exchange Rates     15
International Monetary Market     15
Current Perspective     16
Arrival of the Euro     16
Summary     18
Spot or Futures FOREX?     19
Introduction-Futures Contracts     19
Currency Futures     20
Contract Specifications     20
Currencies Trading Volume     21
U.S. Dollar Index     22
Summary     22
Getting Started
The Regulatory Environment     25
Regulation Today     25
The Commodity Futures Trading Commission (CFTC)     26
National Futures Association     26
Commodity Futures Modernization Act of 2000     27
The Patriot Act     27
The CFTC Reauthorization Act of 2005     27
Summary     28
The FOREX Lexicon     29
Currency Pairs     29
Major and Minor Currencies     29
Cross Currency     30
Exotic Currency     30
Base Currency     30
Quote Currency     30
Pips     30
Ticks     31
Margin     31
Leverage     32
Bid Price     32
Ask Price     32
Bid/Ask Spread     32
Quote Convention     32
Transaction Cost      33
Rollover     33
The Trader's Nemesis     33
Summary     34
The Calculating Trader     35
Leverage and Margin Percent     36
Pip Values     36
Calculating Profit and Loss     37
Calculating Units Available     44
Calculating Margin Requirements     46
Calculating Transaction Cost     47
Calculating Account Summary Balance     50
For Futures Traders     52
Summary     53
Selecting the Right FOREX Broker for You     55
Broker-Dealer Due Diligence     55
Demo Accounts     56
Market Maker, ECN, or IB?     56
Introducing Brokers     57
Platform Capabilities     58
Trading Tools     58
Order Execution and Accounting     60
News     60
Chat     60
Platform Stability and Backbone     62
Historical Data     62
Data Feed     63
Third-Party Offerings     63
Orders     63
Margin Requirements     64
Order Backup     64
Account Minimums      64
Pairs, Crosses, and Exotics     65
Deposits and Withdrawals     65
Transaction Costs     65
Trading Hours     66
Customer Service     66
Documentation     68
Requoting     68
Financials     68
Rollovers and Interest     69
FOREX Broker-Dealers     69
Popular Broker-Dealers     70
The Big Three     73
For the Professional     74
Fraud, Scams, and Off-Exchange     74
Summary     76
Opening a FOREX Account     77
Account Types     78
Opening the Account: Steps     78
Summary     81
Pulling the Trigger     83
Orders     83
Market Orders     84
Limit Orders     84
Stop Orders     85
Combination Orders     86
Specialty Orders     86
Order Placement Walk-Through     86
Order Execution     86
Order Confirmation     87
Transaction Exposure     87
Summary     88
The Tools of the Trade
Fundamental Analysis     93
Supply and Demand     93
Interest Rates     94
Balance of Trade     94
Purchasing Power Parity     97
Gross Domestic Product     98
Intervention     100
Other Economic Indicators     100
Forecasting     102
Technical Analysis     107
Overview     107
Bar Charts     108
Trend Lines     110
Support and Resistance     111
Recognizing Chart Patterns     111
Reversal Patterns     112
Continuation Patterns     113
Candlestick Charts     115
Point and Figure Charts     117
Charting Caveat-Prediction versus Description     119
Indicators and Oscillators     120
Relative Strength Indicator     120
Momentum Analysis     121
Moving Averages     123
Bollinger Bands     123
Indicator Caveat-Curve-Fit Data     126
Swing Analysis     126
Cycle Analysis     128
Advanced Studies     128
The Technician's Creed     129
Summary     130
The Toolbox Approach     131
General Principles     131
A KIS Toolbox     132
The Goodman Swing Count System     133
GSCS Rules     133
"3C" Stands for Carryover, Compensation, and Cancellation     136
The Nofri Congestion Phase Method     138
Pugh Swing Chart Formations     139
A Moving Average and Oscillator Battery     140
Contrary Opinion     142
Volume     142
Open Interest     142
Heuristics     143
Summary     144
The FOREX Marketplace     145
Organizing Your Bookmarks     146
Cross-Category Services     147
Portals, Forums, Reviews     147
Charting and Technical Services     150
FOREX Education     152
Trading Signals and Software     153
News, Announcement Services, and Calendars     154
Live Data Streams     157
Historical Data     157
System Development Tools     159
FOREX Managed Accounts     161
Peter Panholzer     163
Odds and Ends     164
Summary     166
The Complete Forex Trader
Psychology of Trading     169
The Trading Pyramid     169
Fear and Greed, Greed and Fear     170
Profiling     171
The Attitude Heuristic     171
Characteristics of Successful Traders     172
Summary     173
Money Management Made Simple     175
Breaking Even-The Belgian Dentist     175
Expectations     176
Trader Profiles     176
Parameters for Trader Profiles     178
The Trade Campaign Method (TCM)     179
Calculating TCM Profit and Loss     179
Stop-Loss Orders-A Brief Discussion     181
Selecting Markets     181
Summary     182
Tactics and Strategy     183
Trending and Trading Markets     183
Market Environments (ME)     184
Directional Movement (DM) and Volatility (V)     185
Price and Time Rhythm (PR and TR)     185
Thickness (T)     188
Shape (S)     190
Pretzels (PZ)     190
ME Applications     190
The Three Chart System     193
The Dagger Entry Principle     193
Sitting on Your Hands     194
Time Filters     195
Trading the News      196
Going Against the Crowd     196
Trading Methods     197
The Flyer     197
Bathtub Analysis     198
Summary     198
When and How to Regroup     199
Common Trading Errors     199
Performance Review     201
Heuristics Review     202
When to Say Uncle     202
Summary     202
For the Record     203
Type of Records     203
The Rogers Method     205
The Snaglt Tool     205
Planning Records     206
Summary     206
Extra for Experts
Options and Exotics     209
Options     210
An Options Primer     210
Basic Options Terms     211
The Pros and Cons of Options     212
The Four Basic Options Strategies     213
Purchasing and Writing Options     214
Advanced Options Strategies     214
The Retail FOREX Options Landscape     214
Options for Trading     216
Options for Money Management     216
Exotics     218
Trading Exotics     219
Summary      220
The Final Frontiers     221
Rollovers     221
Hedging     222
Arbitrage     223
Pros and Cons of Arbitrage     227
Artificial Intelligence     228
Complexity Theory Models     228
The Trend Machine     229
Automated Trading and Robots     229
A Last Word     231
How the FOREX Game Is Played     233
Retail FOREX Regulations-CFTC Reauthorization Act of 2005     237
List of World Currencies and Symbols     243
Major Currency Cross Rates     249
Euro Currency Unit     251
Time Zones and Global Banking Hours     253
Central Banks and Regulatory Agencies     255
Resources     259
Glossary     265
Index     277