, 12Investors (tax category), 186ISP (Internet service provider), 45JJapan, 197JoC (industrial price index), 78J.P. Morgan, 14KKey reversals, 72Keynes, John Maynard, 193–196, 198LLane, George C., 107Language, trading screen, 177, 178Leading indicators, 79–80
INDEX
213
Lefevre, Edwin, 52Leverage, 145–146Limit-entry orders, 163Limit orders, 159, 161, 166changing, 168deleting, 168–169placing, 167–168Limited-Liability Corporations (LLCs),189–190Live trading account, 157Livermore, Jesse, 52LLCs (see Limited-Liability Corporations)Lock in profits, 40, 41London, 20–23Long-term charts, 149Losses, 144Lots, 24Low offer, 158
Money management principles (Cont.):never overleverage your account,145–146protect your profits, 147set realistic goals, 146and success in trading, 152trade with money you can afford to lose,147trade with sufficient capital, 140use risk-to-reward ratios, 141–143use stops, 144–145when in doubt, stay out, 145Morgan Stanley, 14Morning star, 85Moving-average convergence/divergence(MAC/D), 116, 118, 119Moving averages, 95, 100–101, 110–117Multiple Accounts window, 163
MMAC/D (see Moving-average convergence/divergence)Major resistance, 95, 98Major support, 95, 98Margin amount, 140, 162Margin call, 24, 162Margin trading, 23–24Market exchange rate, 158Market makers, 4, 6Market orders, 164–166Market patterns, 87, 91–97Market price, 158Marshall Plan, 194Miniaccount, 140, 146Minimum required amount, 140Mistakes (of investors):emotional involvement, 7–9listening to experts, 4–6trading against trend, 2–4unwillingness to sell, 6–7Momentum, 119, 120Money management principles, 139–148accept losses, 144be patient and persistent, 141exercise discipline, 140–141follow trading rules, 143–144keep a trading log, 147–148
NNational Association of PurchasingManagers (NAPM), 76National Family Opinion ConferenceBoard, 79New York Stock Exchange (NYSE), 6News, 44, 80, 150Newspapers, 75Nixon, Richard M., 13No-touch options, 38, 39Nonhedged portfolios, 184Notebook, 45NYSE (New York Stock Exchange), 6O180-minute chart, 86, 87, 89100k account, 140One-touch options, 38Open Positions window, 159–161Option pricing models, 36–37Options, 35American-style, 37call, 36, 37currency, 35–42, 181digital, 38, 39double no-touch, 39, 40double one-touch, 39–41European-style, 37
INDEX
214
Options (Cont.):foreign exchange, 182no-touch, 38, 39one-touch, 38put, 36, 37Orders window, 163–164Oscillator, momentum, 119, 120, 122“Out of the money,” 36Over bought condition, 57PPar rates, 195, 196Parallel trendlines, 138Patience, 141Peaks, 91Pegging, 13, 14, 197, 198Persistence, 141Piercing lien, 84Pip movement, 24Pip system (see Price interest point system)Plaza Agreement of 1985, 197PMI (purchasing managers’ index), 76Political factors, 74Portfolio management, 183–184Portfolios:fully-hedged, 183–184nonhedged, 184Poverty, world, 196–197PPI (producer price index), 76Premiere Tradefx, 32PremiereTrade, 46, 156, 157PremiereTrade Dealing Station, 156Accounts window, 161–162Change Order Rate box, 171–173changing price on stop/limit orders, 168Close Position box, 169–170completing trades, 166customizing trading screen, 173–175Dealing Rates window, 157–159Delete Order box, 173deleting stop/limit orders, 168–169Entry Order box, 170–171Market Order box, 164–166Multiple Accounts window, 163Open Positions window, 159–161options with, 175–178Orders window, 163–164
PremiereTrade Dealing Station (Cont.):placing stop/limit on open positions,167–168reports, 173Premium, 37“Price ceiling,” 101“Price floor,” 101Price interest point (pip) system, 24, 161Price levels, 151Price trends, 53, 82–83Pricing (currency options), 36–37Producer price index (PPI), 76Profit/loss, 161Profit taking, 57Profits:accelerating, 41–42locking in, 40, 41protecting, 147Purchasing managers’ index (PMI), 76Put options, 36, 37QQuarterly reports, 30Quotations, executable, 46–47RRally tops, 151–152, 153, 154Ranger markets, 91Rate of change (ROC), 122, 123Real-time exchange rates, 46Regular account, 140Relative strength index (RSI), 119, 120,122Reminiscences of a Currency PairOperator (Edwin Lefevre), 52Reports, 150, 173Resistance, 68, 95, 98, 99Resistance levels, 151Retail sales, 78Retracement moves, 91Retracements, 2Reversal bars, 70, 72Reversals, 53Reward, 141Risk:currency, 183–184financial, 179
INDEX
Risk management, 179–184and fluctuations in floating exchangerates, 180forward transactions for, 180–182with portfolio management, 183–184scaled-in selling for, 181–182by taking out “insurance,” 182by working an exposure, 183Risk-to-reward ratios, 141–143ROC (see Rate of change)Rollover of positions, 158RSI (see Relative strength index)Rule of alternation, 138Rule of equality, 138SScaled-in selling, 181–182Securities and Exchange Commission(SEC), 30“Sell” exchange rate, 158Sell signal, 101Selling:executing sell order, 158at rally tops, 151–152, 154scaled-in, 181–182Semipegged currencies, 14Shame transactions, 191Shooting star, 85Short-term charts, 149Shorting, 58Sideways markets, 53Sideways trends, 55, 56, 91, 95–97Signal (trigger) line, 116Simple moving averages, 101, 110, 111Singapore, 2160-minute chart, 86, 90Software programs, 45–48, 156 (See alsoPremiereTrade Dealing Station)Sound features, 176–177Spinning tops, 85Spot foreign currency market, 10Spot rate, 24S&R (see Support and resistance)Stars, 86Stochastic indicators, 107, 109, 110Stop-entry orders, 164Stop-loss orders, 159, 161
215
Stops (stop orders), 142–145, 150, 166changing, 168deleting, 168–169placing, 167–168Strike price, 37Sub S Corporations, 189–190Subscribe list box, 174, 175Success, steps to, 149–154buy at bottoms/sell on tops, 151–154check news and market announcements,150choose trend to trade, 150–151identify current long- and short-termtrends, 149–150identify support/resistance levels, 151use proper money management, 152use studies and indicators for entry, 151Support, 57, 67, 95, 98, 99Support and resistance (S&R), 95, 98Support breakdown, 67–68Support levels, 151Swaps, 181Switzerland, 21Symmetrical triangle, 58, 61–63TTails, 83Tax code, 186–188Technical analysis, 23, 32–33, 81–101assumptions of, 82–83bar/candlestick charts in, 83–86definition of, 81fundamental analysis vs., 33–34market patterns in, 87, 91–97moving averages in, 95, 100–101support and resistance in, 95, 98, 99terms used in, 86–90Telephone, 45, 47Television, 4410-day moving average, 115, 11610 k’s, 3010 q’s, 30Third-world nations (see Developingnations)30-minute chart, 87Ticket number, 159Time intervals, 149–150
INDEX
216
Time stamp, 159, 161, 164Time value, 36Trade corporations, 188–191Traders (tax category), 186–187Trading, as business (see Businessof trading)Trading accounts, 156–157Trading log, 45, 143, 147–148Trading rules, 143–144Trading screen:customizing, 173–175language on, 177, 178Trading station, 155–178Accounts window, 161–162changing price on stop/limit orders, 168closing an open position, 169–170completing trades, 166customizing trading screen, 173–175Dealing Rates window, 157–159deleting stop/limit orders, 168–169entry orders, 170–173install/run dealing software, 156Multiple Accounts window, 163Open Positions window, 159–161open trading account, 156–157options with, 175–178Orders window, 163–164placing market orders, 164–166placing stop/limit on open positions,167–168PremiereTrade Web site, 156reports, 173Trading theory, 52–72ascending triangle in, 63–65and continuances of trends, 55cycles in, 53descending triangle in, 65–67double bottom in, 68–70downtrend trading strategy in, 58, 60and falling broadening formation, 67head and shoulders in, 70–72and sideways trends, 55, 56support/resistance in, 67–68symmetrical triangle in, 58, 61–63trends in, 53, 54and uptrends, 55, 57–59Trendlines, 53, 54, 138
Trends:choosing, 150–151downtrends, 91, 93, 97as friend, 52identifying, 149–150long- and short-term, 149–150price, 53, 82–83of price moves, 82–83sideways, 55, 56, 91, 95–97trading against, 2–4in trading theory, 53, 54uptrends, 55, 57–59Trigger line, 116Triple three waves, 138Troughs, 9125-day moving average, 115, 116UUBS Warburg, 14United States, 194–197University of Michigan, 79Unwillingness to sell, 6–7Uptrends/upswings, 55, 57–59, 91, 96Usable margin, 162VVolume, 122, 124WWave degree, 138Weighted moving averages, 101, 112, 113Whipsaws, 101White, Harry Dexter, 193–195White board, 45Wholesale price index, 76Wicks, 83Wilder, Welles, 107Window size, changing, 174Workstation, 43–50computer, 44–45Internet connection to, 45location of, 43–44software programs, 45–48World Bank, 194, 196–198World poverty, 196–197ZZigzag waves, 137
About the AuthorJames Dicks, the founder of 4x Made Easy™, is the president and CEO ofPremierefx, LLC. He is an author, teacher and CEO of a growing networkof international companies focused on helping investors from all walks oflife learn how to diversify their portfolios and practice good money management. Mr. Dicks has inspired and founded the fastest-selling financialsoftware for trading the FOREX, and is the leading trainer in the world forinternational currency trading and investing. Mr. Dicks has held numerousprofessional licenses in the securities field starting in early 1991, and occupies investment advisor or capital development positions for growing entities.Trading for more than 13 years, James has witnessed markets of all typesand started trading the FOREX as a way to better diversify his portfolio, thesame way big banks and Fortune 1000 companies do. With a simple messageof diversification and good money management, James shares with you thelargest financial market in the world.James is a dynamic trainer and motivator, speaking on nationally syndicated radio shows and appearing nationally before thousands of peopleeducating them on personal finance, real estate, and investing. He is a current member of the Marine Corps League, and is proud to have served inthe United States Marine Corps.
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