Thursday, December 4, 2008

Forex Simplified

A market expert doesn't often illustrate the possible pitfalls of forex trading with analogies about shoe shopping as Marilyn McDonald does in "Forex Simplified," but that is part of this book's charm. It is both entertaining and educational, with a conversational tone and genuine enthusiasm for forex trading not always found in similar tomes.

The book is geared towards beginning forex traders, offering basic definitions and outlining common traps for novice traders. She advises avoiding companies that promise little or no risk and firms that pressure you into trading immediately. She explains the importance of researching a company's track record before trading, and the book emphasizes throughout that forex trading involves risk and requires discipline.

The book includes a chapter on the benefits and components of both fundamental and technical analysis as they apply to forex. She explains macroeconomic indicators, asset markets and politics as well as the finer points of technical analysis including trends and types of indicators.

Another chapter offers advice on economic news and how it affects the market. McDonald says that beginning traders especially shouldn't trade the news, because, just like in the movie Fight Club, there are two rules in Trade Club: 1 ) The market doesn't make any sense, and 2) Even when it seems like it is making sense, the market doesn't make any sense.

There is a section on automated trading and how to write and test automated strategies, as well as a chapter on the role that emotions can play in trading. McDonald encourages traders to stay focused and set goals and stick to them. She says you will get emotional when you trade, but don't let your emotions get in the way of making rational decisions. The book also offers steps for developing a trading plan that includes strategies for buying, selling and holding, and advice on the best times to trade. McDonald notes that while a lot of forex traders say the best time to trade is at 2 a.m., the best time to trade is really any time there's more than one market open (i.e., when there's higher volume and higher liquidity). The book is breezy in tone, but by no means short on valuable information. Its appendices offer further research and graphs on common indicators, chart patterns and a guide to reading candlestick patterns, as well as more information on specific economic reports and a glossary of common forex terms. "Forex Simplified" is a great resource for the beginning forex trader and an interesting read.


elin said...'s so cool..good job

Armand said...

Thanks for your comment!

Mike Peters said...

Great article. Keep up the good work.

M said...

I have always been suspicious of Forex. You can lose a lot of money that way.

joan said...

I don't know about forex trading. I will learn soon if i'm ready. thanks for sharing

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