Mastering the Currency Market is a comprehensive guide to currency and futures trading strategies and techniques for both highly volatile and nonvolatile markets. You will learn that to be a successful trader is to be a man or woman for all seasons. It means independence, but more than that it means having a quiet conﬁdence in what the future holds. Well-rounded traders know they can make money regardless of the underlying fundamentals or overriding realities. The more volatile markets become—that is, the faster a market moves—the faster a trader can make money. Equally, when a market slows down, a trader downshifts to countertrending methods. Regardless of the certainty or uncertainty of economic conditions, markets will move and astute traders will beneﬁt. With so many experienced ﬁnancial leaders and commentators pointing to a sustained recession for years to come, it is not a question of whether traders will be successful; it is a matter of how successful in light of the levels of economic uncertainty in the current ﬁnancial marketplace.
There is deﬁnitely a dark side to trading. People lose, and losing is stressful. Trading certainly can be stressful, but when it is taught in a supportive environment, studied thoroughly, and practiced on a regular basis, the decision-making process involved in trading can be a healthy development. The way to avoid the stress and ease the learning curve for as long as it takes, is to demo trade: open a practice or simulation account. We highly recommend that you open a demonstration account and promise yourself that you will not risk live money until you’ve proved to yourself that you consistently can show a proﬁt in the demo account. When you get to that point of consistency, you will have shown a level of patience and discipline that can pay handsome dividends not just in trading but in life.
Before you venture too far into this book, we need to cover the physiological impact trading will have. Your nervous system is going to work against you as a trader. As part of our physical makeup, we all have what is called the autonomic nervous system, which regulates subconscious biological functions such as heartbeat, digestive processes, perspiration, and vision. Within the autonomic nervous system are the sympathetic and parasympathetic branches. The sympathetic branch is what we rely on when we are angry or afraid. It is what increases our heartbeat and adrenaline ﬂow during times of stress, making us literally jumpy. This physical change is also what we call the ﬁght or ﬂight response, which was useful 10,000 years ago when people lived in caves but today can make for a very tough learning environment.
The excitement of making seemingly easy money, followed, sometimes just seconds later, by fear of loss and failure will break most people down quickly. The emotional ups and downs we create in our minds, followed by the physical changes in our blood pressure and adrenal glands, make for a tough environment in which to learn and then retain knowledge. The automatic ﬁght or ﬂight response hardwired into your head will work against you as a trader. There will be times when you click the mouse to enter or exit a trade and instantly ask yourself, “Why did I do that?” because you realize you are not following your trading plan. Before you get angry at yourself, realize that you are not the only trader who ever let emotion override logic. In fact, you are programmed to react that way.
Luckily for us, along with the ﬁght or ﬂight function regulated by the sympathetic branch of the autonomic nervous system, there is the parasympathetic branch, which can have a calming effect on us and our bodies. It is this sympathetic branch that we want to stimulate as we are learning and studying trading lessons. You will get the most out of this book by studying it in a relaxed and pleasant atmosphere. If you currently are trading, you should consider taking a break from it while you study this material. Learn what stimulates the sympathetic branch of the autonomic nervous system and engage in that activity before studying this material and again afterward. Get in the habit of taking care of your mind and body in this way until it is habitual. You will ﬁnd that by taking the time to put yourself in a relaxed, meditative state before starting your day and again before quitting in the evening, you will remain much calmer and more focused than the millions of other people online who are risking their hard-earned money every day in the marketplace.
- TYPES OF FINANCIAL MARKETS
- THE WHY OF PRICE VALUATION
- CHARTS FOR TRADING
- CANDLESTICK CHARTS
- SUPPORT AND RESISTANCE
- CHART PATTERNS
- TECHNICAL INDICATORS
- TRADING TECHNIQUES
- TYING THE TECHNICAL INDICATORS TOGETHER: TRADE SIGNALS AND QUANTIFYING TRENDS
- TRADING PSYCHOLOGY
- TRADING THE APPROPRIATE TIME FR AME
- RISK AND MONEY MANAGEMENT
- CREATING A TRADING PLAN AND KEEPING A TRADING JOURNAL