You are previewing FX Trading: A Guide To Trading Foreign Exchange, 2nd Edition.
O'Reilly logo
FX Trading: A Guide To Trading Foreign Exchange, 2nd Edition

Book Description

Your total plain-English guide to trading Forex

Open 24 hours a day, 5½ days per week, and trading nearly $4 trillion (US) per day, Forex is the biggest, fastest growing financial market in the world. Your complete A-to-Z guide, FX Trading gets you up to speed on everything you need to know to make a killing trading Forex. Starting with the basics of money management, analysis, and FX market trading mechanics, it swiftly advances into more advanced territory, discussing trading strategies and wealth management.

From quotations, pips and spreads to the pros and cons of using online brokers and websites to FX risk management, FX Trading is an indispensable tool of the trade for beginners and experienced Forex traders alike.

  • Helps you to see past the media hype, while alerting you to common Forex trading mistakes and pitfalls and how to avoid them

  • Filled with invaluable expert insights and proven strategies, backed by numerous examples, charts and checklists

  • Updated to reflect the enormous growth in Forex trading and the new players involved, as well as the many changes wrought by the global financial crisis and the rapid evolution of electronic trading platforms

Table of Contents

  1. Cover
  2. Table of Contents
  3. Title Page
  4. Preface
  5. Chapter 1: Money management - an overview
  6. Chapter 2: What is foreign exchange?
    1. Market segments: wholesale, clients (of wholesale) and brokers
    2. Why different sources quote different highs and lows
    3. Volume of data
    4. Brief history of the FX market
    5. Bringing Europe together and the birth of the euro
    6. The rise of the Chinese yuan
    7. The global financial crisis of 2008 and the currency markets
    8. European stresses and the euro
    9. Excellent sources of information on foreign exchange topics
  7. Chapter 3: Show me the money!
    1. Which currencies should you trade?
  8. Chapter 4: Talking the talk
    1. Price maker and price taker
    2. Long and short
    3. Pips
    4. Big figure
    5. Handle
    6. Bid and ask
    7. Spread
    8. Quoting conventions - which currency comes first?
    9. Direct and indirect quotes
    10. Calculating profit or loss for an FX trade
    11. Other influences on profitability
    12. Bulls and bears
    13. Inverted charts
    14. Local media reporting
  9. Chapter 5: Who's who at the FX marketplace
    1. Why does foreign exchange trading exist?
    2. Three broad groups of participants
    3. Who else is in the FX 300?
  10. Chapter 6: Trading platforms for retail traders
    1. Choosing an online margin FX provider
    2. Questions to ask when choosing a broker
    3. How do margin FX brokers make money?
    4. The next step
  11. Chapter 7: Factors influencing FX markets
    1. Supply and demand
    2. The balance of payments
    3. Interest rates and money supply policy
    4. Inflation and deflation
    5. Asset prices
    6. Commodity prices and terms of trade
    7. Government budget and fiscal policy
    8. Credit ratings
    9. Currency controls
    10. Politics and wars
    11. Industrial relations, social unrest and nature
    12. Market sentiment
    13. Big trades
    14. Data releases, speeches and minutes
    15. Fundamentally, its only a beginning
  12. Chapter 8: Technical analysis for traders
    1. What is technical analysis?
    2. Assumptions made in technical analysis
    3. Short-term chart analysis
    4. Long-term bar chart analysis
    5. Chart patterns
    6. Trend following indicators
    7. Momentum oscillator indicators
    8. The moving average convergence divergence indicators (MACD)
    9. Bollinger Bands
    10. Candlestick charts
    11. Ichimoku Kinko Hyo charts
    12. Currencies are often observed moving in unison
    13. Trade the market, not your opinion of the market
    14. Use of tools that require a figure for the daily close
    15. Identify the current type of market activity
    16. Start with the big picture
    17. Volume
    18. Keep it simple
  13. Chapter 9: FX fundamental analysis for traders
    1. How do we determine exchange rates?
    2. Theories of exchange rate determination
    3. Economic indicators
    4. Economic reports
    5. Economic reports schedule
    6. Sources of economic information
  14. Chapter 10: FX trading at the big end of town
    1. What is institutional FX?
    2. The players
    3. Market makers and price discovery
    4. Currency arbitrage
    5. The 21st century generation of FX broking and trading
    6. Institutional online portals and the rise and rise of electronic brokers
    7. The big guys are just like us - only bigger
  15. Chapter 11: Introduction to FX trading strategy
    1. Trend following
    2. Range trading
    3. Trading the breakout from a tight range - straddling the market
    4. Mean reversion
    5. Pivot points
    6. Forward rolls, forward points and carry trades
    7. Options
    8. Option pay-off diagrams
  16. Chapter 12: Money management - the fundamentals
    1. The fixed fractional method
    2. Risk management with open positions
    3. FX risk calculator
  17. Chapter 13: (Your) Wealth on the global stage
    1. Accept you live in a currency volatile world
    2. The triple bet
    3. The mismatch of assets and life's liabilities
    4. Wealth creation, protection and transfer in the international setting
    5. First step - knowing your needs
    6. Benefits of wealth management
    7. Where to now? The checklist
    8. Some final points
  18. Chapter 14: New technology
    1. Trading platforms
    2. Back-end technologies
    3. Virtual private server (VPS)
    4. Algorithmic trading
    5. Social trading networks
    6. The future
  19. Conclusion and next steps
  20. Appendix: World currency codes