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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 brokers, 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 Broker-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 technical analysis, 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 Interactive Brokers, 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,