Getting Started in Currency Trading PDF is intended to introduce the novice investor to the exciting, complex, and potentially profitable realm of trading world currencies on the foreign exchange markets (FOREX). It also serves as a reference guide for stock and futures traders who wish to explore new trading opportunities.
Author: Michael Archer
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Getting Started in Currency Trading PDF
This book is intended to introduce the novice investor to the exciting, complex, and potentially profitable realm of trading world currencies on the foreign exchange markets (FOREX). It also serves as a reference guide for stock and futures traders who wish to explore new trading opportunities. My primary focus is on the rapidly expanding and evolving online trading marketplace for spot currencies, generally referred to as retail FOREX.
From the beginning I must emphasize that currency trading may not be to everyone’s disposition. The neophyte investor must be keenly aware of all the risks involved and should never trade on funds he or she deems necessary for survival. Currency trading is a form of speculation—attempting to profit by absorbing a risk that already exists. This differs from gambling in which one creates a risk in order to take it. Savings and investment should be covered before considering speculation.
If you have some experience with leveraged markets such as futures or options, you owe yourself a look at FOREX. Those who have never traded will find it the most laissez-faire of all speculative adventures.
How This Book Is Organized
There are six main parts to this book:
1. Part 1—The Foreign Exchange Markets
The FOREX Landscape, A Brief History of Currency Trading, Two Ways to Trade FOREX.
I open the book with a brief overview of the FOREX markets, an event-by-event–based historical overview of currency trading, and the two primary methods for participating in the markets as a retail trader.
I hope to dispel any myths the reader has about FOREX.
2. Part 2—Getting Started
Regulation: Past, Present, and Future, The FOREX Lexicon, Trading Tables, A Guide to FOREX Brokers, Opening a FOREX Account, and Making the Trade.
Regulation has been slow to come to retail FOREX, but it is making up for lost time.
Every lucrative industry has its own gamut of highly specialized terms or jargon, and currency trading is no exception. You must thoroughly comprehend this jargon before attempting to initiate any trades. With a little familiarization, the language of currency trading will become second nature.
I assist the new trader in selecting a reputable online currency dealer and explain the steps involved in opening a trading account. The actual step-by-step processes of initiating and liquidating a trade are examined in detail with a complete explanation of each order type.
This section must be understood before the reader proceeds to the later sections.
3. Part 3—The Tools of the Trade
Fundamental Analysis, Technical Analysis, A Trader’s Toolbox, The FOREX Marketplace, and Retail FX Platforms.
Historically, there have been two major schools of thought in analyzing markets whether they are stocks, commodity futures, or currencies: fundamental analysis and technical analysis. I explore the advantages and disadvantages of both schools in the chapters in this section. I offer ideas on selecting from these trading tools to assemble a basic, personal trading approach that you can easily build upon with experience. A full chapter reviews the wealth of FOREX products and services now available from third-party vendors. Detailed study of several popular online trading platforms completes the section.
4. Part 4—The Complete FOREX Trader
The Plan, The Plan!, Money Management Simplified, Psychology of Trading, Improving Your Trading Skills.
The prospective trader is given the outline of a trading plan. I place much emphasis on money management, the art and science of avoiding losses; and I offer a technique the new trader can use easily and effectively.
I expose the trader to the psychology of trading and the stresses that may accompany same. I place much emphasis on money management and psychology—two key topics vital to success but often neglected in the search for the holy grail of trading methods. Improving Your Trading Skills proffers a series of techniques and skills from which you can pick and choose to flesh out your own trading program.
5. Part 5—Extra for Experts
Options and Exotics, Computers and FOREX.
A single chapter covers options and exotics, two areas of FOREX trading that have blossomed recently. Computer trading is big business in all the organized markets. A final chapter briefly discusses the use of computers to assist in and automatically execute trading decisions. It is important for even the small retail trader to understand how the “big guns” trade FOREX and to understand the impact of computers on the markets, directly and indirectly.
The appendixes are a ready reference of FOREX-specific information, much of which the trader finds useful to have at hand while learning and trading. I point you to Appendix A, How the FOREX Game Is Played. The web sites in Appendix F are meant to offer a self-guided tour of the world of currency trading.
The author’s attempt has been to make Getting Started in Currency Trading an all-in-one introduction as well as a handy computer-side reference guide. Alas, only you, gentle reader, may judge the level of my success.
I have been a full-time participant in the markets for 43 years. I’ve acted as a private trader through it all, but also as an SEC registered Investment Advisor, a NFA CTA, a branch manager for Heinold (Honolulu) a researcher and a teacher/mentor.
My ‘go-to’ method of trading has always been Goodman Wave Theory, a trading method taught to me by Charles B. Goodman in the 1970s and early 1980s. The Goodman Method is an holistic, self-contained trading approach built on the core principles of Goodman Wave Theory – Propagation, Nesting and 3-C. It treats the market as a process with the primary component of prices being a 1-2-3. In Goodman, prices ‘propagate into larger and larger 1-2-3s. Rather than 1-2-3-4-5, Goodman teaches a 1-2-3 becomes a ‘1’ to a larger 1-2-3. It also uses ‘overlays’ to narrow down the possibilities until the trader has a candidate which Mr. Goodman called ‘a high-percentage sitting duck.’
I’ve also done work on applying Cellular Automata to markets and have presented papers on that theme to the University of Chicago Symposium on AI, the Chemnitz University Conference on Machine Learning and Automata 2008.
I do not maintain a website at this time, but offer mentoring, videos and literature on Goodman Wave Theory and the Goodman Method of Trading. I may be contacted at firstname.lastname@example.org
– Michael Duane Archer
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