Index

“A Bust to the Markets” Axis Financial Services (money (Archer), 361 manager), 353 “A Conversation with the Gnomes” (Archer and Treuren), 257 Baby markets, 355 Account types, 107, 109 Baby Pips, 133 Advisory services, 143–144 Back-testing, 345–346, 359 Agent computing, 361 Backup computers, 112 Algorithmic trading, 363 Baht, 333, 334 American style option, 326 Balance of trade, 178–179 AnalyzerXL, 141 Ballooning (pip) spreads, 84, 93, Anti-hedging, 40 111, 190, 334 Anti-hedging regulations, 116. Bands, 11 See also National Futures Bank lot size, 9 Association (NFA) Bank lots, 59 Application program interface Banking hours, 319 (API), 358 Bar charts, 150–152 Application service providers Barron’s, 95 (ASPs), 359 Base currency, 48–49, 67 Archer, Michael Duane, 257, Basic market paradigm (BMP), 361, 363 234–236, 257, 320 Artificial intelligence (AI), 362 Bathtub analysis, 234, 273–274, 280 Asian session, 8 Bear market, 11 “A Simple Cellular Automata Bear swings, 316 Model forCOPYRIGHTED Predicting FX Beginning MATERIAL point (BP), 239, 266 Prices” (Archer), 363 Belgian dentist, 256 Ask price, 29, 52 Bernanke, Ben, 19 ATC , 106 Best FX Trader (money manager), 353 AUDUSD example, 255 Beyond Candlesticks: More Japanese Australian Dollar (AUD), 4 Charting Techniques Revealed Automated order entry, 130 (Nison), 159 Automated trading method, 341 Bickford, James L. “Jim,” 10, 83, 85, Automated trading system, 339, 340 88, 169, 183, 191, 225, 234, Automatic trailing stops, 119 314, 363

405

bindex.indd 405 4/10/2012 4:45:45 PM 406 Index

Bid price, 29, 52 Central clearinghouse, 16 Bid-ask spread, 13, 52, 117, 368 Centralized exchange, 4 Biofeedback, 211–213, 218, 293, 320 CFTC. See Commodity Futures Bland, John, 131, 188 Trading Commission (CFTC) Bollinger, John, 167 Chaos theory, 363 Bollinger Bands, 167–169 Chart library, 274 Bollinger on Bollinger Bands Chart pattern recognition, 154 (Bollinger), 167 Chart patterns, 315 Bounce 1 swing, 249 Chart time frame, 198 Bounce 2 swing, 249, 250 Charting warnings, 162–163 Bounce 3 swing, 250 Chicago Mercantile Exchange BoxOption, 329 (CME), 22, 29 Box-top (order), 121 Chinese Yuan, 4, 22–23 British Pound Sterling (GBP), 4 Ching, Derek, 173 -dealer checklist, 106 CME Group, 33 Broker-dealer reviews, 132–133 Combination orders, 121 Brokers, 69 Commissions, 9 Bull market, 11 Commitment of Traders (COT), 31 Bull swings, 316 Commodity Futures Modernization Butterfly option strategy, 328 Act of 2000, 37–38 Buy (call), 28 Commodity Futures Trading Buy signal, 153 Commission (CFTC) Buyer, 325 about, 36–37 Buying a call, 330 brokers, 92 Buying a put, 330 currency futures, 29 daily limits set by, 15 Calls, 325, 327 foreign equivalents, 43 Camtasia (software), 213 Reauthorization Act of 2005, Canadian Dollar (CAD), 4 38–39, 41 Cancellation, 243, 244 regulations, 35, 41–42, 103, 108, Candlestick bar, 158 190, 337 Candlestick charts, 157–159 in retail FOREX, 25 Capital requirements for retail role expansion, 12 FOREX broker-dealer, 41 Commodity pool operator (CPO), Capital Spreads, 102 108, 337 Carryover, 243, 244 Commodity trading advisers Cascino, Anthony, 143 (CTAs), 41, 108, 337 Cash market, 28 Compass FX (money manager), 353 Catastrophe theory, 363 Compensation, 243, 244 Cellular automata (CA), 343, 361, Computer trading 362, 363 about, 357 Central banks, 7, 11, 19, 177 agents, 359

bindex.indd 406 4/10/2012 4:45:45 PM Index 407

arbitrage, 365–370 Crowd psychology, 7 arbitrage pros and cons, 370–371 Currency Bulletin (Pecival), 144 automated trading system, 359 Currency College, 133 bots, 359 Currency futures, 29 cloud computing, 359–360 Currency options, 28, 33 expert advisor (EA), 358–359 Currency pairs, 3, 11, 292 FOREX future, 362–363 Currency prices, 6 Grid programs, 364 Currency Trader, 144 high and ultra high-frequency Currency trading history trading, 360–362 ancient times, 17–18 Pac Man programs, 364 Bretton Woods Agreement of , 357–358 1944, 21 trend machine, 363 Commodity Futures Trading summary, 371 Commission (CFTC), 25 Computer-assisted traders, 339 Euro arrival, 23, 25 Computer-assisted trading Federal Reserve System (the Fed), method, 341 18–20 Condor option strategy, 328 floating exchange rate, 21–22 Consumer price index (CPI), foreign exchange timeline, 24 181, 189 future of, 22–23 Continuation charts, 216 gold standard, 18 Continuation patterns, 155–157 international money market, 22 Contract, 28 National Futures Association Contract specifications, 29–30 (NFA), 25 Contraction, 314 Securities and Exchange Contrary opinion reports, 355 Commission (SEC), 20–21 Correlation, 54–55, 312 Currency trading volume, 30 Costs and fees. See also Transaction Currency transactions, 16 costs Currenex (trading platform), 80 FOREX broker selection, 87–89 Current Bulletin (Percival), 188 FOREX manager fees, 351–353 Curve-fit data, 169–170 lot fees, 13 Curve-fitting, 229 trading costs, 13–14 Cycle analysis, 172 weekend transaction costs, 318 Counter order, 86 Dagger entry Counterparties to trades, 86 principle, 258 Counterparty FCM, 41 technique, 256–258 Covered writer, 327 Data services, 142 Cross rate, 369 Day traders, 14, 202, 248, 286 Crosses, 5 Dealer intervention, 15, 87 Crossing the bridge, 258–259 Declining memory effect, 354 Cross-platform hedge, 190 Deficit, 178

bindex.indd 407 4/10/2012 4:45:45 PM 408 Index

Delta (option term), 328 Economic indicators, 176, 184–186 Demo account Edge Capital markets, 143 opening, 124 Educational resources, 133–135 trading functions, 107 Electronic communications Denver (magazine), 257 networks (ECNs), 9, 13, 53, Depth of markets (DOM), 87 84, 334 Diagnostics process, 284, 290–293 Elliot Wave Theory (EWT), 172, Digital reading, 363 173, 236 DiNapoli, Joe, 173 Elliott, Ralph N., 172 DiNapoli Levels, 173 Elliott, T. S., 147 Dines Letter, 143 Emerging markets or currencies, 355 Directional movement (DM), 347 Emerging pairs, 332 Discretionary traders, 339 Emotions, 211 Discretionary trading method, 341 Employment index, 182 Disk Trading, 142 Ending point (EP), 239, 241, 266 Divergence, 314 Entry library, 292 Divine Ratio, 172 eSignal, 106, 140, 142 Dobson, Ed, 145, 146 Euro Dollar (EUR), 4, 22, 25 Dodd-Frank Wall Street Reform Euro Money, 145 and Consumer Protection Act, European Monetary Union 25, 33 (EMU), 22 Dorsey, Thomas J., 162 European session, 8 Dow, Charles, 159 European style option, 326 Downtrend market, 234 Eurozone countries, 23 Drummond, Charles, 173 EURUSD Trader, 143 Due Diligence Form, 339 Everything (software), 274 Due diligence process, 338 Evolutionary changes, 290 account access, 349 Execution of trading plan contract, 349 entering the trade, 215 money path, 349–350 exiting the trade, 216 red flags, 350–351 monitoring the trade, 216 references, 348 reality check, 215 registration and regulation, 348 Exotic option, 326 transparency, 349 Exotics website, 348–349 described, 4–5, 324 summary, 356 pairs, 332–333 Dukascopy, 101 trading, 333–334 Durable goods, 182 summary, 334–335 Expansion, 314 ECNs. See Electronic Expert advisor (EA), 221 communications networks Expert advisor (EA) vs. expert (ECNs) system, 359

bindex.indd 408 4/10/2012 4:45:45 PM Index 409

Fear and greed, 320–321 FOREX (FX) basics Feder, Jens, 354 about, 57–58 Federal Open Market Committee base currency, 67 (FOMC), 19 bid-ask spread, 62–63 Federal Reserve Board (FRB), calculations, 67 19–20, 180 leverage, 62 Federal Reserve System (Fed), lot sizes, 59 18–20 margin, 80–81 Fee calculation, 349 profit and loss, 59–60 Fibonacci number series, 172 profit threshold, 63–66 50 percent rule, 237 quote currency, 67 Filters, 226 summary, 66–67 Financial information, 109 FOREX (FX) markets Financial Markets Association FOREX futures, 27 (FMA), 38–39 forwards FOREX, 27 Financial Services Authority options trading, 27 (FSA), 43 spot (cash) market, 27 FinSpreads, 102 summary, 15–16 First in first out (FIFO), 39, 40, 124 FOREX (FX) money managers “Five Digit Pricing,” 52 registration, 41 Flash crash, 362 FOREX accounts Flash executions, 360 about, 105–106 Floating, 250 demo account, 106–107 Ford, Henry, 20 live account, 107–111 Forecasting models, 184 live account steps, 109–111 Foreign economic indicators, 187 redundancy, 111–112 Foreign exchange market (FOREX, summary, 113 FX). See also Trading platforms FOREX broker selection about, 3–4 account options, 92–93 base currency, 48–49 ATC brokers, 94 cross currency, 48 Big Four broker dealers, 100–101 currency pairs, 47 broker-dealer checklist, 103 described, 3 broker-dealer due diligence, vs. equities, 14 84–85 exotic currency, 48 broker-dealers, 93–98 vs. futures, 14–15 complaints and resolution, 92 major currency, 48 costs, 87–89 minor currency, 48 customer service, 90–91 pips, 56–57 demo accounts, 85–86 terms used in, 47–55 electronic communications Foreign regulation, 43 networks (ECNs), 86–87 Foreign regulatory agencies, 39 financial stability, 91–92

bindex.indd 409 4/10/2012 4:45:45 PM 410 Index

FOREX broker selection (continued) Forex Patterns and Probabilities FOREX.com, 97–98 (Ponsi), 169 frauds and scams, 102–103 Forex Peace Army, 84, 93, 132, 356 games played by brokers, 93 FOREX Shockwave Analysis , 96 (Bickford), 191 issues, 83–84 FOREX spot account, 108 liquidity provider, 89 Forex Trading Education, 134 market-maker brokers, 86–87 FOREX trading funds, 108 MB trading, 94–96 FOREX trading plan, 207–218 off exchange, 102–103 FOREX TSD (forum), 106 PFG Best, 98 ForexTester, 140 popular choices, 98–100 Forwards FOREX, 4 for professional and non-U.S. Forwards trading, 33 traders, 101–102 “Four Digit Pricing,” 52 spread betting, 102 Fractals (Feder), 354 trading pair palette, 91 Fraud, 12, 44, 341, 356 summary, 103 Fundamental analysis, 175, FOREX calendar, 135 193–194, 340 FOREX currency symbols, 5 Fundamental factors Forex Factory, 188 balance of trade, 178–179 Forex Journal, 144 consumer price index (CPI), 181 FOREX Magazine, 144 durable goods, 182 FOREX marketplace employment index, 182 about, 129–130 gross domestic product advisory services, 143–144 (GDP), 180 broker-dealer reviews, 132–133 housing starts, 182–183 data services, 142 industrial production (IP), 181 educational resources, 133–135 interest rates, 177 fun stuff, 146 intervention, 180 management tools, 136–138 parity and purchasing power news and calendars, 135–136 (PPP), 179–180 portals and forums, 130–132 producer price index (PPI), 181 programming services, 142–143 purchasing managers index, 181 references, periodicals and books, retail sales, 182 144–146 Futures Commission Merchants system development tools, (FCMs), 36, 38, 43, 84, 341, 138–142 348, 350, 351 summary, 147 Futures contract, 28 FOREX News Calendar Futures FOREX, 4 Indicator, 193 Futures Magazine, 145 Forex Online Learning, 133 Futures traders, 66 FOREX options, 324 FX AlgoTrader, 146

bindex.indd 410 4/10/2012 4:45:45 PM Index 411

FX All (trading platform), 80 Goodman Waltz FX Options Trade Board, 329 breaking even, 264 FX Week, 145 fire starter, 265–266 FXPro, 101, 334 PTS template, 261–262 Samba, 265 Gain Capital, 97, 334 steps, 259–260 Game theory, 361 stop-loss order, 263 Gamma (option term), 328 taking profits, 264–265 Gann, William D., 172 trading the line, 266–269 Getting Started in Currency Trading, Goodman wave, 240 90, 293 Goodman Wave Theory (GWT) Getting Started in Currency Trading, 1-2-3 axiom, 236–237 1st ed. (Archer and Bickford), 3C principle, 243–244 10, 83, 85, 88, 169, 183, about, 233–234 191, 314 Basic Market Paradigm, 234–236 Getting Started in Currency Trading, basic setup, 245 2nd ed. (Archer), 35 vs. Elliott Wave Theory, 172 Getting Started in Currency Trading, Goodman vs. Elliott, 240–241 3rd ed. (Archer), 33, 35, 102, ideal matrix, 237–239 357, 360 intersection principle, 241–243 Getting Started in Currency Trading, matrix in, 239 4th ed. (Archer), 70, 98 under and over counts, 244 Getting Started in Futures propagation principle, 239–240 (Lofton), 31 summary, 246 GFT FOREX, 334 Goodman Works, 134 Ghost trading, 279–280 Goodman Works FX Bullish Global View (Bland forum), 131, Consensus, 314 188, 194 Goodmanisms, 297–301 Global Viewpoint Inc. (GVI) Goodman’s law of trading systems, forums, 131 229–230 Go Forex, 133 Gordago, 140 Going against the crowd, 315 Gould, Bruce, 283 Gold standard, 22 Governmental regulation, 12. Goodman, Charles B., 147, 162, See also National Futures 204, 216, 221, 226, 233–234, Association (NFA) 256, 297, 304, 371 Great Depression, 20 Goodman Method, 214, 217 Grid systems, 116 Goodman setups, 253 Gronfelt, Arne, 310 Goodman swing count system Gross domestic product (GDP), 180 (GSCS), 241, 316 Gross price movement, 304 Goodman vs. Elliott, Grubstake, 284, 285 240–241 Guerilla trader, 64, 201, 248

bindex.indd 411 4/10/2012 4:45:45 PM 412 Index

Harmonization issue, 42 Internet connections, 111 Harry Schultz Letter, 143 Intersection principle, 241–243 Harvesting stops, 119 Intersections, 242 Hawaii Forex (Ching), 134, 173 Intervention, 180 Hedges, 6 Intrinsic value, 325 Hedging activity, 5, 39, 190 Introducing Broker (IB), 41, 84 Hicks, Abraham, 213 Invest2 Forex (money manager), 354 High leverage, 10 Investopedia, 144 High-frequency trading (HFT), 6, Inward look, 245 360, 361 Hill, Napoleon, 213 Japanese Candlestick Charting Holt Advisory, 143 Techniques (Nison), 159 Homma, Munehisa, 157 Japanese Yen (JPY), 4 Homogratus, Felix, 135 Jonathan’s Wave, 362 HotSpotFX (trading platform), Jumbo swing, 249 80, 101 Housing starts, 182–183 Keene, James R., 159 Hunter, Lew, 303 Keynes, John Maynard, 175 Hypothesis testing, 273–274 King Kong syndrome, 320

IB Times, 95 Lagging indicators, 188 ICE FX, 33 Latency, 371 Ideal matrix, 237–239 Laydowns, 272 IFTI (money manager), 353 Leading indicators, 187–188 IG Index, 102 Level of interdeterminacy, 243 In the money, 325 Leverage, 9, 25, 33, 44, 51 Indicator battery, 221 Leverage regulations, 324, 333 Indicator warnings, 169–170 Limit on close (LOC) order, 121 Indicators Limit on open (LOO) order, 121 comparison of, 173–174 Limit orders, 116, 117 and oscillators, 163 Lindsay, Charles, 237 Individual account, 341 Line (profit maximization Industrial production (IP), 181 technique), 256 Inside swings, 316 Liquidity, 6, 10, 12, 15, 48, 333, 334 Insider trading, 12 Liquidity provider, 87 Institutional trading, 6 Live accounts, 106 Intel4x (money manager), 354 Lofton, Todd, 31 Interbank market, 11 Long position, 6, 28, 48, 49 Interbank system, 35 Long vs. short, 292 Interest rates, 177 Looking inward, 275–276 International Money Market Looking outward, 275–276 (IMM), 22, 29, 33 Lot fees, 88

bindex.indd 412 4/10/2012 4:45:46 PM Index 413

Lot sizes, 9, 59, 104 Meditation, 320 Low margin, 10 Meisler, Jay, 131 Mercury charts, 31–32 Magnum Program, 354 MetaTrader, 106, 111, 123, 124, Major currency, 4 146, 163, 188, 193, 208, 209, Major pairs, 5, 42–43, 48, 332 210, 213, 217, 224, 264, 314, Managed FOREX, 337–356 358, 360 about, 337–338 Method stop-loss, 226 costs and fees, 351–353 Mexican Peso, 333 managed account types, 341 Micro lot size, 9 manager spotlights, 353–355 Micro-accounts, 13, 93, 124 manager types, 339–340 Micro-lots, 59 Panholzer, Peter, 354–355 Middlemen, 9 performance analysis, 344–346 Mini-accounts, 93 pros and cons, 338–339 Mini-lots, 9, 59 reasons for, 338 Minor currency, 4 research and resources, 356 Minors, 5 trading methods, 341–344 Mixed fees, 353 summary, 356 Molanis Strategy Builder, 146 Managed Forex (money Momentum analysis, 165–166 manager), 354 Money management, 174, Management fees, 352–353 255–269, 358 Management pools, 350 Money managers, 108 Management tools, 136–138 Money supply, 20 Manager checklist, 340 Months, 30 Margin account, 50–51 Moore’s Law, 358 Margin requirements, 20, 42–43, Moving average, 225 335, 370 Moving average convergence Marginal products, 176 divergence (MACD), 166 Margins, 6, 44 Moving averages, 166–167 Market environments (ME), 221, Moxham, Steve, 131, 133 291–292 MQL4 Code Base, 146, 358 Market flows, 355 MQL5, 358 Market hours, 10 Multiple 3-C counts, 278 Market makers, 9 Myer’s Energy and Finance, 143 Market orders, 115, 116, 117, 334 Market price cornering, 11 Naked writer, 327 Market Traders, 133 National bankruptcy, 23 Market-maker brokers (dealers), 13, National Futures Association (NFA) 53, 84 about, 37 Matrix, 237, 239 broker registration, 36, 92, 102 Maximum leverage, 36, 40 currency futures, 29

bindex.indd 413 4/10/2012 4:45:46 PM 414 Index

National Futures Association (NFA) NFA (National Futures (continued) Association). See National currency manager, 337 Futures Association (NFA) foreign equivalents, 35 Nibbling, 260 “Know-Thy-Customer” Rules, 38, Ninja Trader, 106, 138, 139–140, 42, 110 163, 209, 358 leverage regulated, 24 Nison, Steven, 157, 159 margins, 51 Nixon, Richard M., 22 in retail FOREX, 25 No dealing desk (NDD), 53, 86 role expansion, 12 Nofri, Eugene, 311 Rule 2–43, 25, 39, 40–43, 86, 93, Nonfarm payroll report (NFP), 182, 116, 190, 333, 342 186, 188, 189 summary, 44 Nonlinear methods, 363, 371 Navigation, 113 Norlin, George, 17 NeoTicker, 80 North American Session, 8 Nest, 276 Net price change, 304 Oanda (web site), 313 Neural networks, 343 One cancels the other order NEVER rules, 120 (OCO), 121 New Concepts in Technical Trading 1-2-3 axiom, 236–237 Systems (Wilder), 343 Online trading, 12 New Impact, 191 Open orders, 123–124 New York Board of Trade, 30, 33 OpenQuant, 80 New Zealand Dollar (NZD), 4 Options, 28 News and calendars, 135–136 about, 323–324 News Squawk, 136 advanced option strategies, 328 News traders, 7, 98 basic options strategies, 327 News trading, 175–195 described, 324 about, 175–176 Greeks, 328 FOREX news, 188 hedging with, 323 fundamental analysis, 176 options primer, 324–325 fundamental discussion, 183–188 options pros and cons, 326 fundamental factors, 177–183 options terms, 325–326 fundamental problems, 176–177 options vs. spot FOREX, 330 key news releases, 188 purchase vs. writing, 327–328 reality vs. expectations, 189 retail FOREX options, 329 shockwave analysis, 191 risk management with, 330–331 strategy, 191, 193 summary, 334–335 tactics, 191, 192–193 Options pricing, 325, 326 traders response to, 189–190 Options trading, 4 summary, 193–194 Order confirmation, 123 NextChart, 146 Order execution, 122

bindex.indd 414 4/10/2012 4:45:46 PM Index 415

Order placement, 39, 121–122 Personal information, 109 Orders, 115–117. See also Trading Pip currency, 49 Out of the money, 325 Pip spreads, 10, 48, 87 Outside swings, 316 Pips, 10, 49, 352 Outward look, 245 Pips values, 13–14 Overlap, 55 Platform checklists, 106 Overlays, 245, 275 Point & Line Method Overnight charges, 89 (Drummond), 173 Over-the-counter (OTC) FOREX Point and Figure Charting options, 329 (Dorsey), 162 Over-the-counter (OTC) Point and figure charts, market, 11 159–162, 316 Points, 49 Pac Man programs, 342, 344, Ponsi, Ed, 169 347–348 Pooled accounts, 341 Pain thresholds, 203–204 Portability, 360 Pairs, 5 Portals and forums, 130–132 PAMM account, 341 Position sizing, 13 Paragon FX, 101 Position traders, 202, 248 Parity and purchasing power (PPP), Positioning changes, 355 179–180 Premium, 325 Parlane, Graham, 143 Price adjustments, 40–41 Patriot Act, 38 Price fields, 150 Pending execution, 115 Price memory, 149, 173, 354 Percentage of retracement, 172 Primary brokers, 111 Percival, John, 144, 188 Pro Trader Plus (trading Performance analysis platform), 80 assets under management Proactive trading (AUM), 345 about, 271 equity cycle and drawdowns, bathtub analysis, 273–274 344–345 chart library, 274 equity exposure, 345 ghost trading, 279–280 reward and risk, 344 laydowns, 272 track record, 345–346 looking inward, 275–276 weaknesses, 346 looking outward, 275–276 Performance analysis methods multiple 3-C counts, 278 market environments (ME), propagation, 274–275 347–348 sitting on your hands Sharpe ratio, 346 (SOYH), 280 Performance fees, 352 stations, 278 Performance-only fees, 353 summary, 281 Perry Wysong’s Insider, 143 Producer price index (PPI), 181, 186

bindex.indd 415 4/10/2012 4:45:46 PM 416 Index

Profiles, 209 Reserve currency, 21 Profit-loss ratio, 64, 287–288, 291 Retail FOREX, 5, 6 Programming services, 142–143 Retail FOREX brokers, 323 Prolific Investments (money Retail FOREX options manager), 354 Oanda, 329 Propagation, 274–275 PFG Best, 329 Propagation 2 Swing, 250 SaxoBank, 329 Propagation 3 swing, 253 Retail sales, 182 Propagation principle, 239–240 Return point, 241 Propagation trade setup (PTS), 245 Return setups, 245, 247, 253 about, 247 Return zone, 241, 251 AUDUSD example, 249–253 Reversal patterns, 154 time frames, 248–249 Review Pips, 133 summary, 253 Rho (option term), 328 Psychology of traders, 174 Risk-avoidance, 256 Pugh, Burton, 151–152, 234 Risk-avoidance approach, 286 Purchasing managers index, 181 Rockefeller, John D., 256 Purchasing power parity (PPP), 180 Rollover charges, 89 Pure Logik Trading, 143 Rollovers, 14, 54 Puts, 325, 327 Round-turn, 53

Quote conversion, 52 SaxoBank, 334 Quote currency, 49, 67 Scalpers, 64, 201–202, 286 The Science and Secrets of Wheat Range, 364 Trading (Pugh), 234, 237 Recordkeeping, 84, 109, 111 Scripting languages, 358 Red Paladin, 360 Secondary brokers, 111 Rednor, Peter, 320 Securities Act of 1933, 20 References, periodicals and books, Securities and Exchange 144–146 Commission (SEC), 29, 360 Registration of FOREX Securities Exchange Act of 1934, 20 manager, 348 Sell (put), 28 Regulation. See also National Futures Sell signal, 153 Association (NFA) Sell the bid and buy the ask, 52 in FOREX market, 35–45 Sentiment analysis, 355 future of, 43–44 Session carryover charges, 89 history of, 36–39 Session Lines, 213 present, 39–43 Sessions, 292 Relative strength indicators (RSI), Sharpe, William F., 346 163–164, 169, 220, 343 Sharpe ratio, 345, 346 Repropagation, 251 Short position, 49 Requoting, 15, 84, 87, 93, 111, 334 Sideways market, 234

bindex.indd 416 4/10/2012 4:45:46 PM Index 417

Signal services, 130, 314 Stations, 278 Simple system Stock markets, 10–11 about, 219–220 Stop harvesting, 84, 93, 111 general principles, 220–221 Stop orders, 116, 118–121 KIS toolbox, 221–222 Stop-loss orders, 63, 119, 120, 122, momentum index, 226–227 153, 215, 216, 293 moving average crossover, Strike price, 325 223–226 Success to Commodities: The Congestion not so simple, 229–230 Phase System (Nofri), 311 pairs to trade, 229–230 Suitability/know-your-customer stop-loss and take-profit requirement, 42 rules, 228 Support and resistance levels, 153 trading rules, 227–228 Swing, 238 summary, 230 Swing analysis, 171 Sitting on your hands (SOYH), 211, Swing charts, 152, 316 216, 280 Swing traders, 171 Smithsonian Agreement, 22 Swiss Franc (CHF), 4 SMW principle, 272 System development tools, 138–142 Snagit (software), 84, 217 SnapDragon, 142 Take-point order, 63 Sortino Ratio, 346 Take-profit order, 122, 153, 215, Specialty orders, 121 216, 244, 293 Speculative hedges, 324 Technical analysis Speculators, 5, 6 about, 149 Speed, 364 bar charts, 150–152 Spice Cap (money manager), 354 Bollinger Bands, 167–169 Spike Charts, 146 candlestick charts, 157–159 Spot (cash) markets, 4, 14 chart pattern recognition, 154 Spot currency trading, 14 charting warnings, 162–163 Spot FOREX, 28 continuation patterns, 155–157 Spot FOREX futures, 33 curve-fit data, 169–170 Spot FOREX open interest, 32 cycle analysis, 172 Spot gold trading, 33, 36 indicator warnings, 169–170 Spot silver trading, 33, 36 indicators and oscillators, 163 Spot trading in gold and silver, momentum analysis, 165–166 25, 40 moving averages, 166–167 Spread betting, 4, 28, 33 point and figure charts, 159–162 Spreads, 88 references on, 230 Standard accounts, 93 relative strength indicators (RSI), Standard lot size, 9 163–164 Standard lots, 59 reversal patterns, 154 Standard setups, 245 support and resistance levels, 153

bindex.indd 417 4/10/2012 4:45:46 PM 418 Index

Technical analysis (continued) golden FOREX ratios, 287–288 technician’s beliefs, 173 pre-trade checklist, 288 technician’s warning, 173–174 tracking trades, 288 , 175, 194, 340 trade lot sizing, 286 trading systems, 173 two-day trader worksheet, trendlines, 153 285–286 wave and swing analysis, 171–172 worksheet, 284 summary, 174 summary, 295 Technical factors, 7 3-C principle, 243–244, 264 Technician’s beliefs, 173 3-D setup, 247, 253 Technician’s warning, 173–174 Tick symbols, 30 Techniques tools for trading Ticks, 49–50 bullish consensus, 314–315 Time frames, 12 contrary opinions, 314–315 Time hash, 266 correlation and transitivity, Time series analysis, 173 312–314 Time studies directional movement (DM), day of week, 319 304–305 flyers, 319–320 market environments (ME), 304 Goodman price-time swing market environments (ME) chart, 317 applications, 308–309 market closing, 319 market environments (ME) market opening, 318–319 temperatures, 308 time filters, 316, 318 Nofri congestion phases, 311–312 time of day, 319 price rhythm, 305–308 Time zones, 319 Pugh charts, 315–316 Tipping point (TP), 239 range finder, 310–311 Tools for trading, 13 three chart system, 309–310 about, 303–304 time rhythm, 305–308 fear and greed, 320–321 volatility (V), 304–305 techniques, 304–316 TechSmith, 217 time studies, 316–320 Templates, 209, 242 summary, 321 Theta (option term), 328 Traders, characteristics of successful, Think and Grow Rich (Hill), 213 293–294 Third party products and services, 13 Traders Press, 145 30-trade campaign program Trading, 115–124 about, 283 combination orders, 121 capital allocation, 284–288 costs, 13–14 characteristics of successful limit orders, 117 traders, 293–294 market orders, 117 diagnostics process, 290–293 open orders, 123–124 formula, 287 opening demo account, 124

bindex.indd 418 4/10/2012 4:45:46 PM Index 419

order confirmation, 123 professional, 80 order execution, 122 proprietary, 69 order placement, 121–122 Trading profiles, 205 orders, 115–117 day traders, 202 specialty orders, 121 guerilla trader, 201 stop orders, 118–121 position traders, 202 summary, 124 scalpers, 201–202 Trading against the box, 342 selection of, 203–204 Trading against yourself, 55 Trading psychology, 174 Trading day, 8 Trading questions, 289 Trading indicators, 169 The Trading Rule That Can Trading market hours, 8 Make You Rich (Dobson), Trading markets, 225 146, 237–238 Trading methods for managed Trading space FOREX about, 197 artificial intelligence (AI), 343 charts and bars, 198–200 breakout, 343 market as a process, 204–205 divergence, 343 trading profiles, 201–202 due diligence process, summary, 205 348–351 Trading styles, 339 grids and Pac Man systems, 342 Trading systems, 173, 354, 358 hedges, 342 Trading Tables, 56 nonlinear algorithms, 343–344 Trading transactions, 8–9 quality of market, 342 Trading vs. trending markets, 220 trend following, 342 Trailing stops, 119 Trading plan, 207–218 Transaction costs, 10, 53–54, 318, about, 207–208 368, 370 components of, 208–209 Transaction speed, 10 elements of, 209–211 Transitivity, 313, 314 execution of, 215–216 Transitivity arbitrage, 370 post-trade plan, 216–218 Transitivity pair, 55 pre-trade plans, 211–214 “The trend is your friend” summary, 218 (axiom), 236 Trading platforms Trend Machine, 362 about, 69–70 Trend reversal, 343 checklist for, 80–82 Trending indicators, 169 eSignal, 76–78 Trending markets, 225 features of, 71–74 Trendlines, 153 MetaTrader, 74–75 Treuren, R. David, 257 MultiCharts, 78–79 Triangular arbitrage, 366, 370 Ninja Trader, 75–76 Trident (Lindsay), 237 other selections, 79–80 24 hour market, 10

bindex.indd 419 4/10/2012 4:45:46 PM 420 Index

Ultra-high-frequency trading Waltz (trade-in-progress (UHFT), 6, 360, 361 technique), 256 Under and over counts, 244 Watch list, 214 Under-over propagation, 264 Watch profile, 210 Uptrend market, 234 Wave analysis, 171 U.S. dollar index, Wave and swing analysis, 171–172 30–31 Wealth Lab, 141 U.S. dollar (USD), 4 Weekend transaction costs, 318 U.S. Treasury, 19 Whipsawing, 171, 342 Wilder, Welles, 343 Vanilla option, 326 Winners-to-losers ratio, 63–64, 65, Vega (option term), 328 286, 287, 291 Very short term trading, 340 Writer, 325 Virtual private server Writing a call, 327 (VPS), 360 Writing a put, 327 Volatility (V), 347 described, 304 Young, Joseph, 144 vs. liquidity, 12 YouTube, 106 Volume and open interest, Yuan, 4, 22–23 31–32 Volume of trading, 27 Zloty, 333

bindex.indd 420 4/10/2012 4:45:46 PM