market makers), 40Rollovers, 31, 143–144charges, 37definition of, 181Round trip, definition of, 181RSI (relative strength indicator),101–102Securities Act (1933), 14Securities Exchange Act (1934), 14Settlement, definition of, 181Short position, definition of, 181Software development, 174Spot market, 3–4Spot price, definition of, 181Spread, definition of, 181Square, definition of, 181
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Sterling, definition of, 181Stocks versus currency trading, 8Stop-loss orders, 46, 136definition of, 181differential, 130Stops, setting, 116Strategy, tradingexercise contrary opinion, 125gauge market sentiment, 125identify market environment, 122–124identify state of market, 122if in doubt, stay out, 125know market expectation, 126overview, 121–122time your trade, 125trade logical transaction sizes, 125trade with money you can afford tolose, 122trading tactics, 126–128Supply and demand, 73–74Support and resistance, 91Support levels, 181Swap, definition of, 181Swing analysis, 107–108Swissy, definition of, 182Symbols and currencies, list of,153–158Tactics of currency trading, 126–128dagger entry rule, 132eclectic approach, 128market timingday of week, 133market closing, 133market opening, 133overview, 132–133time of day, 133overview, 121selecting markets to trade, 128–129selecting trading parametersduration, 130stop-loss order differential, 130take-profit order differential, 130trade unit size, 130summary, 134trading matrices, 130–132
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INDEX
Tactics of currency trading (continued)trading strategyexercise contrary opinion, 125gauge market sentiment, 125identify market environment,122–124identify state of market, 122if in doubt, stay out, 125know market expectation, 126overview, 121–122time your trade, 125trade logical transaction sizes, 125trade with money you can afford tolose, 122trading tactics, 126–128Take profit orders, 46, 130, 136Taxes, 140Technical analysisadvanced studies, 108bar charts, 88–90candlestick charts, 96–98continuation patterns, 93–94definition of, 182into the future, 109gaps, 95–96indicators and oscillatorsBollinger bands, 104–107momentum analysis, 102–104moving averages, 104overview, 101relative strength indicator (RSI),101–102swing analysis, 107–108overview, 87point and figure (P&F) charts,98–100recognizing chart patterns, 91reversal patterns, 92–93support and resistance, 91technician’s creed, 109trend lines, 90–91Ticks, 29definition of, 182Time of day, 133
Time zones and global banking hours,165–166Timing your trade, 125Trade capital allocation, 116–117Trade unit size, 130Trading. See Currency tradingTransaction costs, 31, 36, 63–65definition of, 182Transaction date, definition of, 182Transaction exposure, 49–50Trend lines, 90–91Triangle, trading, 113Turnover, definition of, 182Two-way price, definition of, 182Units available, calculating, 60–62Unrealized gain/loss, 182Uptickdefinition of, 182rule, 182U.S. Dollar Index, 24U.S. prime rate, 182Value date, 182Variation margin, 182Volatility, 122–123definition of, 182Web sites, 172–174charts, 173–174data, 173link pages, 174online brokers and dealers, 172–173Week, day of, 133Weekly trade plan and evaluation,139–140What to do if things go wrongcommon trading mistakes, 136–137correcting errors, 137–138evaluating your performance, 135when to say “uncle,” 138Whipsaw, definition of, 182Yard, definition of, 182
About the Authors
Michael Duane Archer has been an active commodity futures and FOREXtrader for over 30 years. Mike has also worked in various registered advisorycapacities, notably as a CTA (Commodity Trading Advisor) and as an InvestmentAdvisor. He is currently CEO of CommTools, Inc., a corporation focusing onnonlinear solutions to trend forecasting, with a special emphasis on cellularautomata models.James L. Bickford is a 27-year software engineering veteran, technical analyst, and a very active FOREX day trader with an academic background in appliedmathematics and statistics. He has numerous books to his credit and recentlypublished Chart Plotting Algorithms for Technical Analysts.
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