Getting Started in Currency Trading

Introduction.

About This Book.

How This Book Is Organized.

Companion Web Site.

Disclaimer.

PART 1: THE FOREIGN EXCHANGE MARKETS.

Chapter 1: The FOREX Landscape.

Introduction—What Is FOREX?

What Is a Spot Market?

Which Currencies Are Traded?

Who Trades on the Foreign Exchange?

How Are Currency Prices Determined?

Why Trade Foreign Currencies?

What Tools Do I Need to Trade Currencies?

What Does It Cost to Trade Currencies?

FOREX versus Stocks.

FOREX versus Futures.

Summary.

Chapter 2: A Brief History of Currency Trading.

Introduction.

Ancient Times.

The Gold Standard, 1816–1933.

The Fed.

Securities and Exchange Commission, 1933–1934.

The Bretton Woods System, 1944–1973.

The End of Bretton Woods and the Advent of Floating Exchange Rates.

International Monetary Market.

Into the Millennium.

Arrival of the Euro.

The CFTC and the NFA.

Summary.

Chapter 3: Two Ways to Trade FOREX.

Introduction—Futures Contracts.

Currency Futures.

Contract Specifications.

Currencies Trading Volume.

U.S. Dollar Index.

Volume and Open Interest.

Where to Trade.

FOREX Futures.

Summary.

PART 2: GETTING STARTED.

Chapter 4: Regulation: Past,Present, and Future.

Regulation in the FOREX Market.

Regulation Past.

Regulation Present.

Regulation Future.

Summary.

Chapter 5: The FOREX Lexicon.

Currency Pairs.

Major and Minor Currencies.

Cross Currency.

Exotic Currency.

Base Currency.

Quote Currency.

Pips.

Ticks.

Margin.

Leverage.

Bid Price.

Ask Price.

Bid-Ask Spread.

Quote Convention.

Market Maker and ECN.

Transaction Cost.

Rollover.

Summary.

Chapter 6: Trading Tables.

Pips.

Profit and Loss.

Margin.

Leverage.

The Bid-Ask Spread.

Profit Threshold.

For Futures Traders.

Summary.

Chapter 7: A Guide to FOREX Brokers.

Broker-Dealer Due Diligence.

Demo Accounts.

Market Maker or ECN?

FCM or IB?

Platform Capabilities.

Trading Tools.

The Trader’s Desktop.

News.

Platform Stability and Backbone.

Historical Data.

Data Feed.

Orders.

Margin Requirements.

Order Backup.

Account Minimums.

Pairs, Crosses, and Exotics.

Deposits and Withdrawals.

Transaction Costs.

Trading Hours.

Customer Service.

Documentation.

Requoting.

Stop Harvesting.

Ballooning Spreads.

Financials.

Rollovers and Interest.

FOREX Broker-Dealers.

Popular Broker-Dealers.

The Big Three.

For the Professional.

Fraud, Scams, and Off-Exchange.

Broker-Dealer Due Diligence Form.

Summary.

Chapter 8: Opening a FOREX Account.

Account Types.

Opening the Account: Steps.

Summary.

Chapter 9: Making the Trade.

Orders.

Market Orders.

Limit Orders.

Stop Orders.

Combination Orders.

Specialty Orders.

Order Placement.

Order Execution.

Order Confirmation.

Open Orders.

Summary.

PART 3: THE TOOLS OF THE TRADE.

Chapter 10: Fundamental Analysis.

Supply and Demand.

Interest Rates.

Balance of Trade.

Purchasing Power Parity.

Gross Domestic Product.

Intervention.

Other Economic Indicators.

Forecasting.

Summary.

Chapter 11: Technical Analysis.

Overview.

Bar Charts.

Trendlines.

Support and Resistance.

Recognizing Chart Patterns.

Reversal Patterns.

Continuation Patterns.

Candlestick Charts.

Point and Figure Charts.

Charting Caveat—Prediction versus Description.

Indicators and Oscillators.

Relative Strength Indicator.

Momentum Analysis.

Moving Averages.

Bollinger Bands.

Indicator Caveat—Curve-Fit Data.

Wave and Swing Analysis.

Cycle Analysis.

Trading Systems.

The Technician’s Creed.

Summary.

Chapter 12: A Trader’s Toolbox.

General Principles.

A KIS Toolbox.

A Chart Interpretation Technique.

GSCS Rules.

The Nofri Congestion Phase Method.

Pugh Swing Chart Formations.

A Moving Average and Oscillator Battery.

Contrary Opinion.

Volume and Open Interest.

Heuristics.

Summary.

Chapter 13: The FOREX Marketplace.

Organizing Your Bookmarks.

Portals and Forums.

Charting and Technical Services.

FOREX Education.

News and Calendars.

Live Data and APIs.

Historical Data.

System Development Tools.

FOREX Managed Accounts.

Peter Panholzer.

Advisory Services.

Online Reference Guides.

Spread and Binary Betting.

Periodicals—In Print and Online.

Books.

Summary.

Chapter 14: Retail FX Platforms.

Professional FX Platforms.

Trading Platform Features.

Summary.

PART 4: THE COMPLETE FOREX TRADER.

Chapter 15: The Plan! The Plan!

Parts of the Plan.

Plan Materials.

Mission-Critical Information Sheet.

Biofeedback Form.

The Snowflake Method.

Trade Heuristic Worksheet.

30 Trade Campaign Worksheet.

Continuation Charts.

SnagIt.

Performance Diagnostics.

Record Keeping.

When Things Go Wrong.

Summary.

Chapter 16: Money Management Simplified.

Breaking Even—The Belgian Dentist.

Expectations.

Trader Profiles.

Parameters for Trader Profiles.

The Trade Campaign Method (CTM).

Calculating CTM Profit and Loss.

Protecting Profits.

Stop-Loss Orders—Physical or Mental?

Selecting Currency Pairs to Trade.

Summary.

Chapter 17: Psychology of Trading.

The Trading Pyramid.

Fear and Greed,Greed and Fear.

Profiling Performance.

The Attitude Heuristic.

Characteristics of Successful Traders.

Summary.

Chapter 18: Improving Your Trading Skills.

Techniques.

Skills.

Trading the News.

Summary.

PART 5: EXTRA FOR EXPERTS.

Chapter 19: Options and Exotics.

Options.

An Options Primer.

Basic Options Terms.

The Pros and Cons of Options.

The Four Basic Options Strategies.

Purchasing and Writing Options.

Advanced Options Strategies.

The Greeks.

The Retail FOREX Options Landscape.

Options for Trading.

Options for Money Management.

Exotics.

Trading Exotics.

Summary.

Chapter 20: Computers and FOREX.

Technical Analysis.

Expert Advisors.

Automated Trading and BOTS.

High-Frequency and Ultra-High-Frequency Trading.

Into the Future of FOREX.

The Trend Machine.

Arbitrage.

Pros and Cons of Arbitrage.

Summary.

Appendix A: How the FOREX Game Is Played.

Market Makers and ECNs.

A Peek under the Hood.

Appendix B: List of World Currencies and Symbols.

Appendix C: Euro Currency Unit.

Appendix D: Time Zones and Global FX Trading Hours.

Appendix E: Central Banks and Regulatory Agencies.

Appendix F: Resources.

Periodicals.

Books.

Web Sites.

Online FOREX Tour.

Appendix G: FX Calculation Scenarios.

Calculating Profit and Loss.

Calculating Units Available.

Calculating Margin Requirements.

Calculating Transaction Cost.

Calculating Account Summary Balance.

Glossary.

Index.