Essentials of foreign exchange trading- James chen PDF- Foreign exchange trading has developed at such a blinding speed within the last decade that is has garnered an unprec- edented amount of interest from all corners of the globe. The meteoric rise of forex can be attributed to the many advantages of trading currencies over other financial markets. These advantages will all be discussed within the pages of this book.
Author: James Chen
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“Foreign exchange trading has developed at such a blinding speed within the last decade that is has garnered an unprec- edented amount of interest from all corners of the globe. The meteoric rise of forex can be attributed to the many advantages of trading currencies over other financial markets. These advantages will all be discussed within the pages of this book.
More important than recognizing how forex trading can work to your benefit, however, is knowing exactly how to approach this fascinating market with the proper prudence, attitude, and methodology to achieve consistent profitability. Only in this way can the advantages of forex trading truly be realized. This book will assist you in learning many of the most important aspects of playing the currency game effectively.
I personally began my journey in forex trading when the retail foreign exchange industry was still in its early infancy. Before I ever even looked at a price chart of a currency pair or followed a forex news feed, I placed a live trade on the EUR/USD with real money. When a substantial sum was lost on that first trade, I placed another trade. And then another. And yet another. Admittedly, I kept doing this until I lost almost every single penny in my trading account.
I had absolutely no rational reason or justification to place any of those first several trades in that initial trading account. To me, at that time, forex was purely a game of instinct and gut feel.
Needless to say, those early days taught me a good lesson. Most humans are not instinctively good at trading. For the vast majority of us, guts and instinct left unchecked invariably lead to catastrophic losses at some point in time, usually sooner rather than later. On attaining this realization, I began a tireless quest to become a profitable forex trader. My efforts consisted of a prolonged, single- minded endeavor to absorb forex- specific analytical methodologies, highly touted currency trading strategies, and sound money management techniques. My search for the “holy grail” of foreign exchange trading had begun in earnest.
Over time, I realized that this holy grail of forex, in the traditional sense, was not only elusive but most likely nonexistent. I came to the conclusion that although a bunch of chart indicators all flashing the same signal at the same exact time to enter into a currency trade is a very nice thing to see, it probably would not by itself be able to feed a typical family on a consistent basis. The true holy grail, I eventually found, is a combination of good analytical and trading technique, great risk/money management, and phenomenal discipline. Without these vital components, consistent profitability in forex trading would be difficult to achieve.
This is where the book you are holding comes in. It is not meant to be an exhaustive tome that covers every detailed aspect of the foreign exchange world. Rather, this book is meant to serve as a practical guide to help you develop some of the most important tools and attributes necessary for approaching forex trading in an intelligent and well-prepared manner. Essentials of Foreign Exchange Trading is the kind of book that I wish I had read during the earlier years of my forex trading career.
But even now, after many years of trading this market and analyzing foreign exchange price movements for countless traders around the globe on behalf of FX Solutions, I occasionally find myself neglecting some of the essential concepts of good forex trading. Therefore, I have included all of these key concepts within the pages of this book—
writing them down in this manner has helped me to refocus on what is truly important in one’s quest for profitability in this market.
In short, this book is highly relevant for all who strive to increase their probability of achieving success in forex trading. Once you have read through and digested this book, I would be happy to receive any comments and/or questions you may have. Learning to trade foreign exchange is most certainly a pursuit best accomplished by interacting with other forex traders. In that spirit, you can reach me at anytime simply by e-mailing author@
fxtradingbook.com . I welcome your thoughts.”
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Contents- Essentials of foreign exchange trading- James chen PDF
Chapter 1 Introduction to Foreign Exchange Trading
Trading Money to Make Money
Buying and Selling at Retail
Big and Liquid, Like the Ocean
Playing in the Majors
Leveraged to the Hilt
What Moves the Forex Markets?
What to Expect from This Book
Chapter 2 Basic Foreign Exchange Trading Mechanics 21
Anatomy of a Currency Pair
Going Long and Selling Short
Market Orders—On the Spot
Entry Orders—Waiting until the Price Is Right
Stopping Losses with Stop Losses and Trailing Stops
Profi t Limits—When You’re in the Money
Exit with Caution
Trade Size—Lots and Lots of Lots
Leveraging Margin and Leverage
Margin Call—Insuffi cient Funds
Pips—The Currency of Currency Trading
Spreading the Wealth—Spreads or Commissions?
Interest—Giving and Receiving
Hedging—Two Sides of the Same Coin
Chapter 3 Technical Analysis—Tools for Trading Foreign Exchange 49
Introduction to Technical Analysis
Interpreting Price Action
Basics of Bars and Candlesticks
Keeping Time with Chart Timeframes
Support for Resistance (and Support)
The Trend Will Set You Free
How Trendy—Lines and Channels
The Magic of Moving Averages
Seeing Patterns in the Candles
Currency Charts Take Shape
Indicators of Change
Pointing the Way with Pivot Points
Fibonacci’s Magic Numbers
Riding the Elliott Wave
Getting to the Point & Figure
Chapter 4 Fundamental Analysis—What Drives the
Foreign Exchange Markets
Introduction to Fundamental Analysis—Basic Economics
A Healthy Interest in Global Bank Rates
Carried Away with Trading
Indication of Things to Come—Economic Indicators
No News Is Bad News for News Traders
Chapter 5 Foreign Exchange Trading Methods and Strategies
Rules to Trade By
Position Trading—Settling in for the Long Term
Swing Trading—Riding the Waves
Day Trading—In and Out, Day In and Day Out
Trend Trading—Going with the Flow
Range Trading—Between a Rock and a Hard Place
Breakout Trading (and Fading)—Shooting for the Stars
Pattern Trading—Playing with Shapes
Fibonacci and Pivot Point Trading—Magic Numbers and Self-Fulfi lling Prophecies
Elliott Wave Trading—Two Steps Forward, One Step Back
Divergence Trading—Separate Paths
Multiple Timeframe Trading—Timing Is Everything
Point & Figure Trading—Pointing Out Breakouts
Carry Trading—In the Interest of Interest
News Trading—All the News That’s Fit to Profi t From
Contrarian Trading—The Majority Doesn’t Rule
Backtesting—History Repeats Itself
Autotrading—Robots for Hire
Chapter 6 Important Elements of Successful Foreign
The Boring Side of Success
A Risky Business 196
Fatter Is Healthier (But Only for Trading Accounts)
Risk and Reward
Fix Your Fractions
Trailing Stops—Loyal Followers
Measuring Risk with a Trendline
Plan the Trade and Trade the Plan
About the author
James Chen, CMT, is the director of trading & investing content at Investopedia and former head of research at Gain Capital (NYSE: GCAP). For two decades, he has been heavily involved in the financial markets as a trader, investor, registered investment adviser, and global market strategist.
James is the author of the books “Essentials of Technical Analysis for Financial Markets” (John Wiley and Sons, 2010) and “Essentials of Foreign Exchange Trading” (John Wiley and Sons, 2009), as well as the author/speaker for the instructional video series “High Probability Trend Following.”
He has served as a guest expert for CNBC, Bloomberg TV, Forbes, and Reuters, among other key financial news media, and is a featured speaker at major trading/investing seminars and conferences.
A graduate of Tufts University, James is a chartered market technician (CMT), certified financial technician (CFTe), and registered investment adviser (RIA), as well as a former commodity trading advisor (CTA). He has extensive market expertise in stocks, ETFs, options, commodities, fixed income, and currencies.
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