Essentials of Foreign Exchange Trading by James Chen

By James Chen

This foreign exchange ebook presents readers with genuine, sensible info on the way to exchange the foreign currencies industry successfully. It starts off through protecting introductory info at the currency industry, together with simple buying and selling mechanics and the advantages of foreign currency trading, after which is going directly to describe particular foreign exchange equipment and abilities in step by step aspect. This comprises hugely functional info on technical and basic research, threat and cash administration, and strong foreign currency trading options. those thoughts have confirmed super powerful in assisting investors play the foreign money video game to win.

JAMES CHEN, CTA, CMT (Montville, NJ) is leader Technical Strategist at FX suggestions, a number one foreign currency echange dealer. knowledgeable on foreign currency trading and technical research, he's additionally a registered Commodity buying and selling consultant (CTA) and a Chartered marketplace Technician (CMT). Mr. Chen writes day-by-day foreign money research, leads foreign currency trading seminars, and has authored a variety of articles on foreign exchange procedure and technical research for significant monetary courses. those contain Forbes.com, Futures journal, Technical research of shares and Commodities journal, and shares, Futures and recommendations (SFO) journal.

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Other participants in the foreign exchange market are not generally considered speculative players, and therefore may not be as influential in their trading activities as the participants described above. These include the central banks, which, as discussed earlier, are not considered speculative in their market activities. Rather, central banks get in the game primarily to further their economic policy agendas. indd 13 1/13/09 9:52:01 AM I n t r o d u c t i o n t o F o r e i g n E x c h a n g e Tr a d i n g Because of their vast importance in helping ultimately to determine currency value, however, central banks certainly have the potential to impact currency prices with their attempts at currency manipulation.

Whereas a stop loss is, by definition, a static order to close a trade at a predetermined loss level, a trailing stop loss is a dynamic order to close a trade at progressively better prices. The primary purpose of a trailing stop loss order is to limit losses while automatically locking in gains. A trailing stop loss accomplishes this by systematically moving the stop loss as the price moves in favor of the position. For example, a trader buys the EUR/USD pair. The trader then wishes not only to limit losses if price goes against this long position, but also to lock-in gains if price favors the position.

Indd 40 1/13/09 9:56:21 AM Interest—Giving and Receiving prevail during quiet markets, but then widen the spreads considerably and without notice during the faster, more volatile markets. These faster markets usually occur around relatively frequent economic news announcements. Widened spreads during trading can potentially wreak havoc on open and/or pending positions. This could potentially include missed or prematurely triggered trade entries, stop losses, profit limits, or even margin calls.

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