Foreign Exchange: A Practical Guide to the FX Markets

In Foreign Exchange, Tim Weithers clearly explains a very complicated subject. Foreign Exchange is full of jargon and conventions that make it very hard for non-professionals to gain a good understanding. Weither’s book is a must for any student or professional who wants to learn the secrets of FX. Tim Weithers provides a superb introduction to the arcana of foreign exchange markets. While primarily intended for practitioners, the book would be a valuable introduction for students with some knowledge of economics. The text is exceptionally clear with numeric examples and exercises that reinforce concepts. Frequent references are made to the economic theory behind the trading practices.

Introduction:

When many of us think of foreign exchange, what comes to mind are those little booths in the airport at which we can exchange, say, our United States Dollars for British Pounds Sterling when on our way to or from a vacation or business trip. Indeed, in some ways, there is nothing more complicated about the market for foreign exchange than that; it is all about buying and selling money. But there are two things to note up front about foreign exchange that make it appear a bit daunting.

First, the realm of foreign exchange is rife with incomprehensible slang, confusing jargon, a proliferation of different names for the same thing, and the existence of convoluted conventions that make working in this field (unless you have already gained a facility with the rules) a real challenge. Banks and other financial institutions can’t even agree as to what this business area or “desk” should be called: FX, Currencies, Treasury Products, ForEx or Forex, Bank Notes, Exchange Rates, . . .

Second, and more fundamentally, what constitutes “foreign” depends upon where you consider “home” (e.g., whether you are from the U.S. or the U.K.). Having taught about this product for years, working for a large global bank, I know that what is “foreign” for me may very well be “domestic” for you. For that reason, I will make every attempt to avoid the use of the expressions “foreign” and “domestic” in our explanations—not so much out of my hope that this book may achieve some degree of international success, but out of my inclination to want to avoid any ambiguity (and also based on the fact that I, as an “ugly American,” would almost always revert to thinking in terms of U.S. Dollars). This will keep me honest. We see later, though, in the context of options that perspective really can and does matter!

Contents:

• Trading Money
• Markets, Prices, and Marketmaking
• Interest Rates
• Brief History of Foreign Exchange
• The Foreign Exchange Spot Market
• Foreign Exchange Forwards
• Foreign Exchange Futures
• Foreign Exchange Swaps or Cross-Currency Swaps or Cross-Currency Interest Rate Swaps or . . .
• Foreign Exchange Options
• Exotic Options and Structured Products
• The Economics of Exchange Rates and International Trade
• Currency Crises
• Technical Analysis
• Where Do We Go From Here?

Foreign Exchange: A Practical Guide to the FX Markets By Tim Weithers pdf