ies andchallenges, 177–187fundamentals of, 3–5path to success in, 189–193price patterns for, 131–141styles and setups, 143–159using simulation accounts, 173–176Forex volatilitycurrency price volatility, 105–107finding optimal location for a stop and,162–163momentum indicators and oscillators,114–115moving average crossovers, 112–113multiple moving averages, 113optimizing use of indicators, 124–126relative strength indicator, 116–117
INDEX
stochastic group of indicators, 117–120technical indicators, 107trend-related indicators, 109, 111–112turning trading idea to trading system,126–129volume indicators, 107–109volatility/resistance and supportindicators, 121–124Fourier analysis, 79Fractal adaptive moving average, 111Friedman, Milton, 4Fukuia, 4Futures columns, selected, 201–203GGBPJPY, 106GBPUSD, 112, 164GDP. See Gross domestic product (GDP)Globalization, 38Gold:Australia as producer of, 45Central banks role regarding, 33–34as commodity, 33–35prices of, 33Goldman Sachs Commodity Index, 47Google, for accessing information anddata, 76–77Great Britain:British Pound, 62–66housing data and, 13Greed, 133, 134, 136Gross domestic product (GDP):of China, 27economic growth and, 19mortgage equity withdrawals and, 7oil prices in US and, 21projection in Mexico, 53yield curve and future of, 23HHedger, 155, 157Hildebrand, Phillip M., 34
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Char Count=
211
Index
HMI. See Housing Market Index (HMI)Hong Kong, as trade partner of China, 29Horioka, Charlesv, 56Horizontal support, projecting, 81–83Household disposable income, in Japan,56Housing data:in Forex price movements, 7–9Great Britain and, 13as leading indicator, 8Housing equity sector stocks, 12–13Housing Market Index (HMI), 9–11Housing sentiment indicators, 9–12“Hugging the band,” 133–134Hug trader. See Trend trader$100,000 trading challenge, 187Hurricane Katrina, 21IR , 45, 61, 62, 64, 67iBoxxFXIFO Business Climate Survey, 42IMF. See International Monetary Fund(IMF)Imports, 27, 29, 53Indicators, optimizing use of, 126Inflation:background about, 15–16Forex price movements and, 19in Japan, 57in the United States, 17–18Institute of Supply Managers, 42Interest rates:Forex price movements and, 19in Great Britain, 13interest rates differentials and, 5in Japan, 53, 57long-term, 23in Mexico, 55in New Zealand, 53short-term, 23on ten-year Treasury note, 22on three-months Treasury bill, 22
International Index Company, 45International Monetary Fund (IMF),19–20, 21Internet:for accessing information and data,76–77users in China, 27Intraday trader, 146Investor/business confidence indicatorsWeb sites, 42IQ testing, of Forex fundamentals,195–199Iran, 22ISM Nonmanufacturing Survey, 42
JJ. P. Morgan Dollar Index, 72Japan:Australian Dollar and, 50as Australia trading partner, 44as one of China’s trade partners, 28stagnation era in, 56–57“The Lost Decade” in, 56Yen, 55–57Japan and the World Economy, 56Job data, economic growth and, 20–21Joplin, Scott, 100
KKiwi. See New Zealand Dollar (Kiwi)
LLearn4x:trading pad, measuring performancewith, 192–193Web site of, 178Lennar Corp. (LEN), 13Lennar Homes, 12Levy, David, 72
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Linear regression channel, 123–126Lockhart, Russell, 121Log of first 50 trades, 178–185Long-term interest rates, 23Loonie. See Canadian Dollar (Loonie)MMACD. See Moving average convergencedivergence (MACD)“Major Foreign Holders of U.S. TreasurySecurities,” 73Maki, Atsushi, 56“Maple Leaf Rag,” 100Mapping price action:projecting support and resistancepoints, 81–83Renko charts, 88–90three-line break charts, 85–88trend lines, 83–85Market:business confidence and consumersentiment and, 41–42inefficiencies, 128Median adaptive moving average, 111Mental stops, 165MEWs. See Mortgage equity withdrawals(MEWs)Mexican Peso, 53–55Miller, Stuart, 13Minsky, Marvin, 191Mishkin, Frederic S., 22Momentum indicators and oscillators,114–115Mortgage equity withdrawals (MEWs),7–8Moving average, 109Moving average convergence divergence(MACD), 114–115, 145Moving average crossover, 112–113Multiagent behavior, 132Multilot trading, 166–168
INDEX
Multiple moving averages, 113Multiple time frames, 138–140Music, Forex trading and, 98NNAHB. See National Association ofHousing Builders (NAHB)National Association of Housing Builders(NAHB), 9–10National Australian Bank BusinessSurvey, 42News trading, tactics for, 155–157New York Board of Trade (NYBOT), 70New York Times, 7New Zealand Central bank, 53New Zealand Dollar Australian Dollar(NZDAUD). See NZDAUDNew Zealand dollar Euro (NZDEUR).See NZDEURNew Zealand dollar Japan yen (NZDJPY).See NZDJPYNew Zealand Dollar (Kiwi), 52–53New Zealand dollar-U.S. dollar(NZDUSD). See NZDUSDNikkei 225 Index, 55–56NYBOT. See New York Board of Trade(NYBOT)NZDAUD, 53NZDEUR, 53NZDJPY, 53NZDUSD, 87–88OOberlechner, Thomas, 96OECD. See Organization for EconomicCo-operation and Development(OECD)Oil-producing countries, 21OPEC. See Organization of PetroleumExporting Countries (OPEC)
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August 22, 2007
PParabolic paths of Forex prices, 134Pattern-based trading, 131–141PBOC. See People’s Bank of China(PBOC)People’s Bank of China (PBOC), 28Performance, gauging, 190–193Person, John, 109Petrodollars, role in economic growth,21–22Philadelphia Business Outlook Survey,42Pip spreads, 189Pivot point support and resistance,101–102Post-news retracement, 156Post-news retracement trader,158–159Probability of recession, calculating,24–26Profit limits strategies, 165–166Profit-limit test, 175Prorealtime, 161Psychological aspect, in trading, 166Psychological support and resistance,102The Psychology of the Foreign ExchangeMarket (Oberlechner), 96QQatar, 22Quick back-testing with excel, 127–128
Char Count=
213
Index
Organization for Economic Co-operationand Development (OECD):Economic Outlook report, 49, 58projection of GDP in Mexico, 53Web site of, 19Organization of Petroleum ExportingCountries (OPEC), 22, 73
14:4
RRanking system, 167Recession:calculating probability of, 24–26economy and, 23Relative strength indicator (RSI),116–117Renko charts, 88–90Renko scalp setup, 149Renminbi value, in March 2007, 28Reserve Bank of Australia, 50Reserve currencies, of China, 29Resistance point, projecting, 81–83Richmond Fed Manufacturing Survey, 42Risk-adjusted return, 127–128Risk control, components of, 161–164Risk management, back-testing for, 129Roth, John Pierre, 66–67RSI. See Relative strength indicator (RSI)Russia, 22, 27, 29SSAFE. See Chinese State Administrationof Foreign Exchange (SAFE)Scalper, 148–151Search engines, for accessing informationand data, 76–77Secrets of the Underground Trader (Yuand Lockhart), 121Sequential wins, 175Set-and-forget trader, 151–152Shanghai Composite Index, 31Sharpe ratio, 127Short-term interest rates, 23Simple moving average, 109, 111Simulation accounts:about, 173preparing to trade, 175–176using, 174–175why simulation doesn’t work, 174why simulation works, 174
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August 22, 2007
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Slide trader. See Trend traderSnaglt, 167SNB. See Swiss National Bank (SNB)Sortino ratio, 127South Korea, as trade partner of China,29Spot Forex, volume indicators in, 107–109Stagnation era, in Japan, 56–57Standard deviation, as measure ofvolatility, 106Standard & Poor’s (S&P)/Case-Schillerhome price index, 11STARC (Stoller average-range channels)bands, 123Statistical envelopes, 121–126Stochastic analysis, 117–118Stochastic group of indicators, 117–120Stoller average-range channels.See STARC (Stoller average-rangechannels) bandsStop losses strategies, 161–164Stop loss test, 175Strategy(ies):aggressive, tactics for, 156for different account sizes, 177–187of Forex trader, 143, 144profit limits, 165–166stop losses, 161–164Summers, Laurence H., 73Support, horizontal, projecting, 81–83Support and resistance:choosing time intervals, 95–96Fibonacci levels of, 91–95Fibonacci tones, 99–100music of Forex, 96–99pivot point, 101–102price and time in Forex, 102–104psychological, 102Surplus, in China, 72Surprise, 134, 136Swiss Franc, 66–68Swiss National Bank (SNB), 66–68
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TTaiwan, as trade partner of China, 29Tankan Report, 42Technical analysis:language of, 102–103timing trade with, 80traders and, 98volume information and, 107–109Technical aspect, in trading, 166Technical indicators:advantage of, 10914 key, 107momentum indicators and oscillatorsas, 114–115Telegraph, 13$10,000 first-50-trade challenge, 178–186“The Lost Decade,” in Japan, 56Three line break charts, 85–88Three-line reversal, 85Tichet, 4Time series, 127Time/Time frame:in optimizing indicators, 126as tool of analysis, 138, 140trade and, 138, 140traders and, 98Trade partners, of China, 28–29Trader log of Ross, 178–186TradeSignal, 161Trade-weighted index charts, 175Trade-weighted index (TWI), 44–45,46–47, 62, 69Trading analysis, mapping price action,81–90Trading idea turning to trading system:back-testing for risk management, 129finding the fittest system, 127market inefficiencies, 128quick back-testing with excel, 127–128Trading on the break (bull ride), 156–157Trailing stops, 164–165Treasury bill, 22
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August 22, 2007
UU. S.-China Economic and SecurityReview Commission, 29U. S. Dollar Index (USDX), 33pattern of, 69–71structure of, 71–72U. S. dollar-New Zealand dollar(USDNZD). See USDNZDU. S. sentiment indicators Web sites, 42U. S. Treasury report, 73United States. See also United Statesdollareconomy of, 69–71exports to China, 27foreign debts of, 72–74housing sector in, 37–38job data in, 20–21measures of inflation in, 17–18as trade partner of China, 28United States’ central bank-the FederalReserve, 5, 72United States dollar. See also UnitedStatesequity markets and, 38performance of, 69–74reserve currencies of China and, 29United States Treasury securities, 72–73University of Michigan Sentiment, 42Uridashi bond, 58
Char Count=
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Index
Treasury note, 22Trend changes, three-line break charts in,85–88Trend lines:technical indicator for, 109use and benefits of, 83–85Trend-related indicators, 109, 111–112Trend trader, 146–148Triangular moving average, 111$25,000 first-50-trade challenge, 186TWI. See Trade-weighted index (TWI)
14:4
U.S. dollar Great Britain Pound(USDGBP). See USDGBPUSDCAD, 135USD-CHF, 93, 157USDGBP, 62USDJPYas best trading instrument for yen, 59Dow Jones Industrial Index and, 5fifteen minute chart, 145, 148four-hour chart, 94–95one-minute chart, 138, 139using three-line break chart, 86USDNZD, 53USDX. See U. S. Dollar Index (USDX)VValue-at-risk (VaR), 129VaR. See Value-at-risk (VaR)VisualCharts, 161Volatility in Forex. See Forex volatilityVolatility/resistance and supportindicators, 121–124Volume data sources, 109Volume indicators, 107–109WWall Street Journal, 31Web sites:British housing data, 13checking trade-weighted index charts,175Commitment of Traders Report, 108emotional contagion, 132International Monetary Fund, 19–20investor/business confidenceindicators, 42learning how to trade, 178monitoring activities in China, 31Organization for EconomicCo-operation and Development, 19
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August 22, 2007
216
Web sites (continued)Snaglt, 167tracking Canadian economy,52U. S. sentiment indicators, 42U. S. Treasury report, 73U. S. treasury securities, 74World Bank, 58
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YYield curve, economic growth and, 22–24“YOUR MONEY Mortgage Lesson No.1:Home Is Not a Piggy Bank,” 7Yu, Jea, 121Yuan, China revalues, 28–29Z
XXiachuan, Zhou, 31
Zero volatility, 106Zew Economic Sentiment Indicator, 42Ziochuan, 4
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