ForexTradingSecrets-TradingStrategiesfortheForexMarket

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FROM THE BESTSELLING AUTHOR 0F FOREX MADE EASY

FOREX TRADING SECRETS

TRADING STRATEGIES


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FOREX TRADING

SECRETS

TRADING STRATEGIES FOR THE FOREX

MARKET

JAMES DICKS

New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore

Sydney Toronto


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Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Except as permitted under the United States

Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a

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ISBN: 978-0-07-174709-7

MHID: 0-07-174709-5

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To be successful you have to have a mentor. Someone who can inspire you, someone that will listen to

you, someone that will give you sound advice whether you want to hear it or not. If you dont have a

mentor, that someone to help you get to the top, then keep looking. For me its My Uncle Jack. I know

there were many times that he felt I was not listening but I always was. Thanks for everything you do, this

book is dedicated you.


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ContentsPreface 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

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vi C

ONTENTS

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 24Pips 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 Traders 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


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C

ONTENTS

Part 3 Trading Psychology 93

7 Mastering Emotions 95 Trading Psychology 95 Emotions of Trading 99 How to Get Out of a Bad Trade105 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 Japans 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

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viii C

ONTENTS

Elliott Waves 203 Harmonic Price Patterns 208 Fractals 214 Trading Naked (Only Price Action) 215

12 Support and Resistance 217Support 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


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C

ONTENTS

CONCLUSION 269 APPENDIX 273 GLOSSARY 289 BIBLIOGRAPHY 299 INDEX 301

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