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The Sensible Guide to Forex: Safer, Smarter Ways to Survive and Prosper from the Start

Book Description

The Sensible Guide to Forex: Safer, Smarter Ways to Survive and Prosper from the Start is written for the risk averse, mainstream retail investor or trader seeking a more effective way to tap forex markets to improve returns and hedge currency risk. As the most widely held currencies are being devalued, they're taking your portfolio down with them—unless you're prepared.

For traders, the book focuses on reducing the high risk, complexity, and time demands normally associated with forex trading.

For long-term investors, it concentrates on how to hedge currency risk by diversifying portfolios into the strongest currencies for lower risk and higher capital gains and income.

The usual forex materials don't provide practical answers for most retail traders or longer term investors. Virtually all forex trading materials focus on time-consuming, high-leverage, high-risk methods at which most traders fail. Materials about long-term investing in foreign assets rarely take into account the prospects of the related currency. A falling currency can turn an otherwise good investment into a bad one.

Throughout the book, the emphasis is on planning and executing only low risk, high potential yield trades or investments and avoiding serious losses at all costs. Packed with richly illustrated examples every step of the way and including additional appendices and references to online resources, the book is the ultimate guide to forex for retail traders and investors seeking to tap forex markets for better currency diversification and income.

  • Provides traders with safer, smarter, less complex and time-consuming ways to trade forex with higher odds of success. These include the use of such increasingly popular new instruments like forex binary options and social trading accounts that mimic expert traders.

  • Shows investors how to identify the currencies most likely to hold or increase their value, and provides a wealth of ideas about how to apply that knowledge to a long-term, low-maintenance portfolio for both income and capital appreciation.

  • Helps anyone seeking an asset class with low correlation to other markets by explaining how the very nature of forex markets means that regardless of market conditions there's always a playable trend somewhere, regardless of what other asset markets are doing, and how to find and exploit it for a short-term trade or a long-term investment in a currency pair, stock, bond, or other asset

The Sensible Guide to Forex is only book that teaches mainstream risk averse investors and traders how to build a portfolio that's diversified by currency exposure as well as by asset class and sector, via a variety of safer, simpler methods to suit different needs, risk tolerances, and levels of expertise.

Written by Cliff Wachtel, a 30+ year financial market writer, advisor, and analyst, The Sensible Guide to Forex offers practical solutions to the above dilemmas faced by every serious, prudent investor.

A must own for any informed investor-but don't take out word for it - see advanced reviews at: http://thesensibleguidetoforex.com/review/

Table of Contents

  1. Cover
  2. More Praise for The Sensible Guide to Forex
  3. Series
  4. Title Page
  5. Copyright
  6. Dedication
  7. Read This First
    1. CURRENCY RISK: EVERY INVESTOR'S DILEMMA
    2. THE SOLUTION
    3. SOME BACKGROUND
    4. WHY ANY TRADER OR INVESTOR NEEDS THIS BOOK
    5. VISIT THESENSIBLEGUIDETOFOREX.COM FOR ADDITIONAL ONLINE CONTENT
  8. Acknowledgments
  9. Chapter 1: Three Must-Know Forex Facts
    1. FACT 1: EVERYONE NEEDS FOREX DIVERSIFICATION EVEN IF YOU DON'T TRADE ACTIVELY
    2. FACT 2: POTENTIAL FOR BETTER RISK-ADJUSTED RETURNS
    3. FACT 3: YOU CAN DO THIS
  10. Chapter 2: Forex Basics
    1. BASICS OF CURRENCIES AND CURRENCY PAIRS
    2. CURRENCIES TRADE IN PAIRS AND WHY THAT MATTERS
    3. SIZE MATTERS: TYPES OF CURRENCY PAIRS
    4. PIPS: THE UNIVERSAL CURRENCY OF CURRENCIES
    5. LEVERAGE AND MARGIN: THEIR RELATIONSHIP AND IMPACT ON RISK
    6. THE THREE FACETS OF RISK AND RISK CONTROL
    7. THE CORE FOUR: THE MOST IMPORTANT SKILLS FOR SUCCESS
  11. Chapter 3: Technical Analysis (TA) Basics
    1. CANDLE CHART BASICS
    2. SUPPORT AND RESISTANCE (S/R) BASICS
    3. CANDLE CHART TIME FRAMES: LENGTH MATTERS
    4. IDENTIFYING SUPPORT AND RESISTANCE (S/R) TO BUY LOW, SELL HIGH, OR VICE VERSA
  12. Chapter 4: Technical Analysis
    1. PRICE LEVELS
    2. TRENDS AND TREND LINES
    3. FIBONACCI RETRACEMENTS (FIBs): THESE FIBs DON'T LIE
    4. BOLLINGER BANDS (BBs): USE AS S/R IN RANGE-BOUND MARKETS
    5. INTRODUCTION TO JAPANESE CANDLE CHART PATTERNS
    6. INTRODUCTION TO WESTERN CHART PATTERNS
    7. THE MORE S/R INDICATORS, THE BETTER
  13. Chapter 5: Trader Psychology and Risk and Money Management (RAMM)
    1. RAMM: PRESERVING CAPITAL IS YOUR TOP PRIORITY
    2. THE INNER GAME: TRADER PSYCHOLOGY BASICS
    3. WHY TRADE LONGER TIME FRAMES
    4. THE ESSENCE OF GOOD RAMM
    5. THE THREE PILLARS OF RAMM
    6. ACCOUNT SIZE AND AFFORDABLE LOSS PER TRADE
    7. SETTING STOP LOSSES: BASIC TECHNIQUE AND PSYCHOLOGY
    8. LEVERAGE AND MARGIN
    9. POSITION SIZING
    10. AVOID HAVING TOO MANY OPEN POSITIONS
    11. ENTRIES NEAR STRONG SUPPORT, EXITS NEAR STRONG RESISTANCE
    12. ENTRIES AND EXITS: SINGLE VERSUS MULTIPLE
    13. RISK-REWARD RATIOS (RRRS)
    14. IF YOU FAIL TO PLAN, YOU PLAN TO FAIL
    15. WHAT CONDITIONS DO YOU NEED FOR SUCCESS?
    16. SAFETY IN NUMBERS: BUILD A TEAM
  14. Chapter 6: Essentials of Fundamental Analysis
    1. USING FUNDAMENTAL ANALYSIS (FA) AND TECHNICAL ANALYSIS (TA) TOGETHER
    2. AN OVERVIEW OF FA: MAIN FUNDAMENTAL DRIVERS OF FOREX TRENDS
    3. MACROECONOMIC DATA AND INDICATORS
    4. NEWS TRADING: DAY TRADING BASED ON SHORT-TERM FUNDAMENTALS
    5. FA BASICS: EASY TO UNDERSTAND AND HARD TO APPLY
    6. THEREFORE, GET THEE TO AN ANALYST
    7. COMBINING FA AND TA: AN EXAMPLE
  15. Chapter 7: Pulling It All Together with Trade Examples
    1. IDENTIFYING AND EXECUTING LOW-RISK, HIGH POTENTIAL YIELD TRADES
    2. TYPES OF TRADES
    3. TRADE EXAMPLE 1: A SWING TRADE
    4. TRADE EXAMPLE 2: A BREAKOUT TRADE
    5. MORE KEY TRADER PSYCHOLOGY: DISTINGUISHING BETWEEN GOOD TRADES AND WINNING TRADES
  16. Chapter 8: Technical Analysis
    1. DOUBLE BOLLINGER BANDS (DBBS)—USE AS MOMENTUM INDICATORS
    2. MOVING AVERAGE CROSSOVERS
    3. OSCILLATORS
    4. MOVING AVERAGE LAYERING INDICATES TREND STRENGTH
  17. Chapter 9: Technical Analysis
    1. CATCH A WAVE: TIMING OR CYCLE INDICATORS
    2. COMBINING TECHNICAL INDICATORS: WHICH ONES AND HOW MANY?
    3. BACK TESTING: LEARNING FROM THE PAST
    4. INTERMARKET ANALYSIS: READING INTERMARKET CORRELATIONS AND DIVERGENCES
    5. WHY THESE RELATIONSHIPS MATTER
    6. CURRENCIES VERSUS COMMODITIES
    7. THINKING LIKE A PRO, ONE STEP BEYOND TECHNICAL ANALYSIS
  18. Chapter 10: Alternatives to Traditional Methods
    1. AUTO-TRADING SYSTEMS: WELCOME TO THE MACHINE
    2. CURRENCY FUNDS: FOREX ETFS, ETNS, AND MORE
    3. MANAGED ACCOUNTS: SHOULD YOU SEEK PROFESSIONAL HELP?
  19. Chapter 11: Newer, Smarter Methods
    1. FOLLOW THE LEADERS: FOREX SOCIAL NETWORKS AND TRADING
    2. GREAT TOOL, BUT REQUIRES SKILL TO USE
    3. BINARY OPTIONS: TRADING MADE EASIER
  20. Chapter 12: Forex for Income
    1. RIDE LONG-TERM FOREX TRENDS FOR LOWER RISK, HIGHER INCOME
    2. CASE STUDY: CANADA 2000–2011: APPLYING FOREX TRENDS TO EQUITIES INVESTING
    3. THE CARRY TRADE: USING DIRECT FOREX TRADES AS AN INCOME VEHICLE
  21. Chapter 13: Now What? Next Steps
    1. WHERE YOU’VE BEEN
    2. WHERE YOU’RE GOING
  22. Appendix A: Recommended Free Online Resources
    1. FOREX SITES
    2. OTHER FAVORITE FINANCIAL SITES
    3. INDIVIDUAL ANALYSTS
  23. Appendix B: How to Calculate Pip Values and Examples
    1. DEFINITION
    2. CALCULATION
    3. EXAMPLE: EURUSD
    4. HANDY RULE OF TENS
    5. EXAMPLE USDCAD
    6. EXAMPLE USDJPY: RULE OF TENS DOESN'T APPLY WITH THE JPY
  24. Appendix C: Forex Trading Time Zones, Liquidity, and Why These Matter
    1. THREE MAJOR TRADING SESSIONS AND WHY THEY MATTER
    2. MARKETS TEND TO FOLLOW EACH OTHER
    3. WHAT STOPS THE FOLLOW-THROUGH?
  25. Appendix D: More on Leverage and Margin
  26. Appendix E: How the Mathematics of Loss Demands Keeping Losses Per Trade Low
  27. Appendix F: Choosing a Forex Broker
    1. SUGGESTED SEARCH TERMS TO FIND BROKER REVIEWS
  28. Appendix G: Low Correlations to Other Markets via Social Trading Means There's Always a Bull Market Somewhere
    1. TRADE LEADER NONCORRELATIONS TO THE MARKETS
    2. MARKET CORRELATIONS
    3. LOOKING AT THE TRADE LEADERS
    4. DIVERSIFICATION OF APPROACH
  29. About the Author
  30. Index