Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves

Cover......Page 1
Title Page......Page 5
Copyright......Page 6
Contents......Page 9
Preface......Page 11
About the Author......Page 13
Chapter 1 Foreign Exchange—The Fastest Growing Market of Our Time......Page 15
 Nikkei and U.S. Dollar......Page 16
 Chinese Yuan Revaluation and Bonds......Page 17
 Comparing the FX Market with Futures and Equities......Page 18
  24-Hour Market......Page 19
  Customizable Leverage......Page 20
  No Trading Curbs or Uptick Rule......Page 21
  Perfect Market for Technical Analysis......Page 22
  Analyze Stocks Like Countries......Page 23
 FX versus Futures......Page 25
  No Limit Up or Down Rules/Profit in Both Bull and Bear Markets......Page 26
  Execution Quality and Speed/Low Error Rates......Page 27
  Centralized Markets......Page 28
  Hierarchy of Participants......Page 29
  Dealing Stations—Interbank Market......Page 30
 Bretton Woods: Anointing the Dollar as the World Currency (1944)......Page 31
 The End of Bretton Woods: Free Market Capitalism Is Born (1971)......Page 32
 Plaza Accord—Devaluation of the U.S. Dollar (1985)......Page 34
  The UK Joins the Exchange Rate Mechanism......Page 36
  Soros Bets Against the Success of UK Involvement in the ERM......Page 37
  Ballooning Current Account Deficits and Nonperforming Loans......Page 39
  Currency Crisis......Page 40
 Introduction of the Euro (1999)......Page 41
Chapter 3 What Moves the Currency Market......Page 45
 Fundamental Analysis......Page 46
  Capital Flows......Page 47
  Trade Flows: Measuring Exports versus Imports......Page 49
  Trading Tip: Charting Economic Surprises......Page 50
 Technical Analysis......Page 52
  Balance of Payments Theory......Page 53
  Equity Markets......Page 55
  Summary of Trade and Capital Flows......Page 56
  Purchasing Power Parity......Page 57
  The Monetary Model......Page 59
  Real Interest Rate Differential Model......Page 61
  The Asset Market Model......Page 62
  The Currency Substitution Model......Page 64
 What Are the Best Times to Trade for Individual Currency Pairs?......Page 67
  Asian Session (Tokyo): 7pm to 4am EST......Page 68
  U.S. Session (New York): 8am to 5pm EST......Page 69
  European Session (London): 3am to 12pm EST......Page 70
  US-Europe Overlap: 8am to 12pm EST......Page 72
  European–Asian Overlap: 2am to 4am EST......Page 73
Chapter 5 What Are the Most Market Moving Economic Data?......Page 75
 Relative Importance of Data Changes over Time......Page 76
  GDP Is No Longer a Big Deal......Page 77
  How Can You Use This to Your Benefit?......Page 78
 Resources......Page 79
Chapter 6 What Are Currency Correlations, and How Can We Use Them?......Page 81
 Positive/Negative Correlations—What They Mean and How to Use Them......Page 82
  Calculating Correlations Yourself......Page 83
  Sample Correlations Results......Page 85
 Keep a Trading Journal......Page 87
  Currency Pair Checklist......Page 88
  Existing or Completed Trades......Page 92
  Have a Toolbox—Use What Works for the Current Market Environment......Page 94
  Profiling a Range Environment......Page 95
  Identifying a Trending Environment......Page 97
  Intraday Trade (Range)......Page 98
  Medium-Term Trend Trade......Page 99
 Risk Management......Page 100
  Placing the Stop Loss......Page 101
Chapter 8 Technical Trading Strategy: Multiple Time Frame Analysis......Page 105
Chapter 9 Technical Strategy: Trading with Double Bollinger Bands......Page 115
 Using Double Bollinger Bands to Pick Tops and Bottoms......Page 117
  Using Double Bollinger Bands to Join a New Trend......Page 121
Chapter 10 Technical Trading Strategy: Fading the Double Zeros......Page 125
 Strategy Rules......Page 126
  Examples......Page 127
Chapter 11 Technical Trading Strategy: Waiting for the Deal......Page 131
 Strategy Rules......Page 132
  Examples......Page 133
Chapter 12 Technical Trading Strategy: Inside Days Breakout Play......Page 137
  Further Optimization......Page 138
  Examples......Page 139
Chapter 13 Technical Trading Strategy: Fader......Page 143
  Examples......Page 144
  Further Optimization......Page 147
 Strategy Rules......Page 149
  Examples......Page 150
Chapter 15 Technical Trading Strategy: Channels......Page 153
 Examples......Page 154
Chapter 16 Technical Trading Strategy: Perfect Order......Page 157
 Examples......Page 158
Chapter 17 Fundamental Trading Strategy: Pairing Strong with Weak......Page 163
Chapter 18 Fundamental Trading Strategy: The Leveraged Carry Trade......Page 167
 How Do Carry Trades Work?......Page 168
 Why Do Carry Trades Work?......Page 169
 How Much Risk Are You Willing to Take?......Page 170
 When Will Carry Trades Not Work?......Page 171
  Risk Aversion and Carry Trade Profitability......Page 172
  Low Interest Rate Currency Appreciation......Page 173
  Time Horizon......Page 174
Chapter 19 Fundamental Trading Strategy: Macro Event Driven Trade......Page 175
  European Sovereign Debt Crisis (2009-2013)......Page 176
  Global Financial Crisis (2007-2009), Subprime......Page 178
  Political Uncertainty: 2004 U.S. Presidential Election......Page 179
  G7 Meeting Dubai September 2003......Page 180
  U.S. War Against Iraq......Page 181
Chapter 20 Quantitative Easing and Its Impact on Forex......Page 183
 UK Quantitative Easing......Page 184
 Eurozone Quantitative Easing......Page 189
Chapter 21 Fundamental Trading Strategy: Commodity Prices as a Leading Indicator......Page 191
 Gold......Page 192
 Oil......Page 193
 Trading Opportunity......Page 194
Chapter 22 Fundamental Strategy: Using Bond Spreads as a Leading Indicator for FX......Page 195
 Calculating Interest Rate Differentials and Following the Currency Pair Trends......Page 196
 Interest Rate Differentials: Leading Indicator, Coincident Indicator, or Lagging Indicator?......Page 197
Chapter 23 Fundamental Trading Strategy: Risk Reversals......Page 201
 How Can You Use This Information?......Page 202
  Examples......Page 203
Chapter 24 Fundamental Trading Strategy: Using Option Volatilities to Time Market Movements......Page 205
  Who Can Benefit from This Technique?......Page 206
 Tracking Volatilities on Your Own......Page 208
Chapter 25 Fundamental Trading Strategy: Intervention......Page 209
 Japan......Page 210
 Switzerland......Page 211
 Eurozone......Page 214
  Broad Economic Overview......Page 217
  Monetary and Fiscal Policy Makers—The Federal Reserve......Page 219
  Important Characteristics of the U.S. Dollar......Page 220
  Important Economic Indicators for the United States......Page 223
 Broad Economic Overview......Page 227
  The EMU Criteria......Page 229
  Open Market Operations......Page 230
  ECB Minimum Bid Rate (Repo Rate)......Page 231
  PMIs......Page 233
  German Industrial Production......Page 234
  Preliminary GDP......Page 235
  Individual Country Budget Deficits......Page 236
 Broad Economic Overview......Page 237
 Monetary and Fiscal Policy Makers—Bank of England......Page 239
  Important Characteristics of the British Pound......Page 240
  Employment Situation......Page 243
  UK Housing Starts......Page 244
 Broad Economic Overview......Page 245
  Central Bank\'s Goals......Page 246
  Their Tools......Page 247
 Important Characteristics of the Swiss Franc......Page 248
  KoF Leading Indicators......Page 250
  Retail Sales......Page 252
 Economic Overview......Page 253
 Abenomics......Page 254
  Open Market Operations......Page 255
  Important Characteristics of the JPY......Page 256
  Industrial Production......Page 258
  GDP......Page 260
 Broad Economic Overview......Page 261
  Central Bank\'s Goals......Page 262
  Cash Rate......Page 263
  Monetary Policy Meetings......Page 264
  Important Characteristics of the Australian Dollar......Page 265
  Balance of Goods and Services......Page 266
  Producer Price Index......Page 268
 Broad Economic Overview......Page 269
 Monetary and Fiscal Policy Makers—Reserve Bank of New Zealand......Page 270
  Objectives for Fiscal Policy......Page 271
  Commodity-Linked Currency......Page 272
  Population Migration......Page 273
  Consumer Price Index......Page 274
  Producer Price Index......Page 276
 Broad Economic Performance......Page 277
  Central Bank Goals......Page 278
  Important Characteristics of the Canadian Dollar......Page 279
  Trade Balance......Page 281
  Producer Price Index......Page 282
Index......Page 283
EULA......Page 291