Forex Trading Secrets: Trading Strategies for the Forex Market

by James Dicks

Overview

Just a decade ago, the Foreign Exchangewas a market reserved for a select few.Now, anyone can actively trade in this profitablemarket—even those with no formal financialeducation. Enter James Dicks, a leading FOREXexpert and educator who cut his teeth in thisburgeoning market and wants to share his yearsof experienced wisdom with you.

FOREX Trading Secrets is a one-stop sourcebookpacked with everything a trader needsto quick-start success in a 24-hour market. Inaddition to covering every fundamental aspectof the FOREX, this hands-on guide provideshard-won tools and strategies from a seasonedtrader, who helps you minimize your exposure tothe inherent risk in this unique market.

A useful volume you’ll turn to again and again,FOREX Trading Secrets features specific examplesof proven trading strategies working in thereal world, a simple and profitable technique formoney management, and confidence-buildingskills for creating your own source of income.

If you have never traded the FOREX before,FOREX Trading Secrets is the place to start. Itcovers the essential basics, including all majorcurrency pairs, the mechanics of trading, how toplace a trade, and deciding what type of traderyou are. Experienced traders gain expert insightinto the fundamentals, as well as such advancedtopics as creating a successful trading plan,managing risk, mastering your emotions, andbuilding your portfolio. You will benefit from

• An insider’s clarification of theCarry Trade
• Seeing technical indicators andpatterns through a master’s eyes
• The secrets to FOREX diversification
• A detailed explanation of the author’spersonal trading approach
• A Trader’s Ten Commandments

There is no holy grail of FOREX trading, but withFOREX Trading Secrets, all you need is practiceto build a powerful trading toolbox for wealthsecurity in the world’s biggest financial market.

Product Details

ISBN-13:	9780071664226
Publisher:	McGraw Hill LLC
Publication date:	01/14/2010
Pages:	336
Product dimensions:	6.10(w) x 9.10(h) x 1.20(d)

About the Author

James Dicks is president and CEOof a group of financial companies, includingPremierTrade, LLC. He founded FOREX MadeEasy, the largest introducer of spot retail FOREXcustomers in the United States. For more information, visitwww.JamesDicks.com.

Table of Contents

Preface xi

Acknowledgments xiii

Disclaimer xv

Introduction xvii

Part 1 The Basics 1

1 What You Must Know to Get Started 3

Back to the Basics: A History of the Forex 3

Forex versus Stocks 7

Forex versus Futures 9

2 Major Currencies and Pairs 11

The U.S. Dollar 11

The Euro 12

The Australian Dollar 12

The Canadian Dollar 13

The British Pound 13

The Swiss Franc 14

The Japanese Yen 14

The New Zealand Dollar 15

The Dollar Index 15

The Dow Jones Industrial Average (DJIA) 16

Gold CFDs 16

Crude Oil 17

Cross-Rate Currency Pairs 17

Exotic Currency Pairs 18

Chinese Yuan or Renminbi 18

Swedish Krona 18

Norwegian Krone 19

The Iraqi Dinar 19

3 Anyone Can Learn the Forex 21

Forex 101 21

Opening a Position 21

Trading on Margin 23

Managing a Position 23

Closing a Position 24

Pips and Lots 24

The Lot 27

Order Types 27

Where Is the Market Going? 29

Stops and Targets 32

Spreads and Swaps 33

Technical versus Fundamental 34

4 Preparing Yourself Adequately before Jumping into the Market 37

Forex Trading Accounts 37

Choosing a Broker 38

Tools 47

Who Trades the Forex? 49

What Kind of Trader Am I? 50

Trading Techniques 51

The Trader's Levels of Ascension 55

Part 2 Money Management 59

5 The Secret to Making Money 61

Are You Really Fit to Trade in the Forex Market? 61

Trading Plans 62

Rules and Discipline 67

How the Market Works 73

Rules for Working with the Market 74

Paper Trading 77

6 How to Keep Your Profits 81

Money Management 81

Managing Risk 86

Leverage and True Leverage 87

Overtrading and Overconfidence 89

Overleveraging 91

Trade Expectations 92

Part 3 Trading Psychology93

7 Mastering Emotions 95

Trading Psychology 95

Emotions of Trading 99

How to Get Out of a Bad Trade 105

Become a Pro 110

8 Mind over Matter for Huge Profits 113

Affirmations 113

Power of Networking 117

Part 4 Fundamental Analysis 121

9 Economics 123

What Does Economic Release Mean? 123

Fundamental Analysis 123

Dow Theory 125

Fundamental Indicators 127

Japan's Monetary Policy 137

Forex Currency Carry Trade 139

Interventions 140

Gross Domestic Product (GDP) 142

Trading the News 143

What Are Contrarian Indicators? 145

Part 5 Technical Analysis 147

10 Technical Indicators 149

Technical Analysis 149

Types of Charts Showing Price Action 150

Trend Indicators 162

Market and Volatility Indicators 168

Understanding Oscillators 173

A Unique Indicator: Ichimoku Kinko Hyo 176

Divergences 177

11 Technical Patterns 181

Candlesticks 181

Chartism Patterns 185

Reversal Patterns 186

Continuation Patterns 192

Elliott Waves 203

Harmonic Price Patterns 208

Fractals 214

Trading Naked (Only Price Action) 215

12 Support and Resistance 217

Support 217

Resistance 218

Trendlines 219

Moving Averages 219

Other Indicators 220

Entering Positions 221

Exiting Positions 222

Pivot Points: Do They Work? 222

Psychological Levels 226

Using Multiple Time Frames 228

Trend Is Your Friend 231

13 Automated Trading 233

Expert Advisors and Automatic Programming Interfaces (APIs) 233

Advanced Robots: Neural Networks in the Forex 235

Part 6 Building Your Portfolio 239

14 Secrets to Forex Diversification 241

Forex Options 241

Spot Forex Options 246

Forex Futures 247

Forex Exchange-Traded Funds (ETFs) 248

Contracts for Difference (CFDs) 249

Commodities 250

Indices (Securities) 251

15 My Favorite Ways to Trade 253

Breakouts 253

Channeling 258

Hedging 261

Basic Oscillator-Based Strategy 262

Basic Moving-Average Crosses 263

Trading Gaps 264

Daily High-Low 265

Conclusion 269

Appendix 273

Glossary 289

Bibliography 299

Index 301