Currency Trading in the Forex and Futures Markets

by Garner, Carley

• ISBN13: 9780132931373
• ISBN10: 0132931370
• Edition: 1st
• Format: Hardcover
• Copyright: 2012-01-19
• Publisher: FT Press

Summary

Currency trading offers immense potential to stock and futures investors seeking new speculative opportunities. However, there are several ways to trade in currencies, and many unsuspecting traders have been burned by aggressive marketing campaigns and gimmicks luring them into unfavorable trading environments. In this book, best-selling trading author Carley Garner covers everything new currency traders need to know to avoid those pitfalls and start earning big profits. Currency Trading in the Forex and Futures Marketsbegins by demystifying all the essentials, from quotes and calculations to the unique language of Forex trading. Readers learn all they need to know about choosing trading platforms and brokerage firms; working with leverage; controlling transaction costs; managing liquidity, margins, and risks; and much more. Garner thoroughly explains the currency spot market (Forex); currency futures traded on the Chicago Mercantile Exchange (CME); and currency ETFs. She candidly discusses the advantages and disadvantages of each, cutting through the "smoke and mirrors" often associated with currency trading. Readers will also find a full section on currency market speculation, including a clear introduction to fundamental and seasonal analysis in currency markets. With her guidance, new currency traders can identify the markets and approaches that best fit their objectives, and avoid the pitfalls that have often victimized their predecessors.

Author Biography

Carley Garner is an experienced futures and options broker and co-owner of DeCarley Trading in Las Vegas, Nevada. She is also the author of A Trader’s First Book on Commodities and Commodity Options published by FT Press. She has contributed to the FT Press Delivers line of digital products, Insights for the Agile Investor. Her e-newsletters, The DeCarley Perspective, The Stock Index Report, and The Bond Bulletin have garnered a loyal following.

Carley is a Magna Cum Laude graduate of the University of Nevada Las Vegas, where she earned dual bachelor’s degrees in Finance and Accounting. She jumped into the options and futures industry with both feet in early 2004 and has become one of the most recognized names in the business.

Throughout her fast-paced career, Carley has been featured in the likes of Stocks & Commodities, Futures, Active Trader, Option Trader, Your Trading Edge, Equities, Expiring Monthly, and Pitnews magazine. Carley is often interviewed by news services, such as Reuters and Dow Jones Newswire, and has been quoted by the Investor’s Business Daily and The Wall Street Journal. She has also participated in radio interviews and can be found on the speaking circuit. Carley is also proactive in providing free trading education; for details, visit www.DeCarleyTrading.com.

Table of Contents

Introduction to the World of Currencies	p. 1
What Is FOREX?	p. 5
FX Swung the Door Open to Currency Volatility	p. 7
Counterparty Risk	p. 7
FOREX Hours	p. 8
FOREX Regulation	p. 10
The Basics of FOREX Margin	p. 10
Market Liquidity: Myths Versus Truths	p. 14
Making "Cents" of Currency Pairs	p. 17
Calculating Leverage and Margin	p. 19
The Nuts and Bolts of Trading FX Pairs	p. 20
Sticking to the Majors	p. 22
FOREX Simplified	p. 23
FX Brokers and the Reality of Transaction Costs	p. 25
ECN FX Brokers (Non-Dealing Desk)	p. 25
Dealing-Desk FX Brokers (Non-ECN)	p. 27
Pros and Cons of Each Brokerage Type	p. 30
Tips and Tricks for Navigating FX Brokerage Firms	p. 38
Is FOREX the Currency Casino?	p. 51
Who Is to Blame for Excessive Losses in FX by Retail Traders?	p. 53
Self-Directed FOREX	p. 54
Trading Crude Oil, Gold, and Silver in FX Accounts	p. 55
FX Leverage Versus Futures Leverage	p. 57
FOREX Trading Quotes and Calculations	p. 59
How FX Pairs Are Quoted	p. 59
FOREX Pricing	p. 60
The True Value of a Pip	p. 61
What Are Currency Futures?	p. 65
Contract Expiration	p. 67
Futures Markets Have High Standards	p. . .68
How Can a Futures Exchange Guarantee Every Trade?	p. 68
Futures Bid/Ask Spread	p. 73
Futures Margin	p. 73
The Bottom Line	p. 81
Calculating in Currency Futures	p. 83
Rules to Simplify Calculating Profit and Loss in Futures	p. 83
Calculating in the Euro, Swiss Franc, and Yen Futures	p. 86
Aussie and Canadian Dollars	p. 88
British Pound	p. 89
Diversity of the Dollar Index	p. 90
E-micro Currency Futures	p. 93
Currency ETFs Versus FOREX and Futures	p. 97
What Are Currency ETFs?	p. 97
Which ETFs Are Available?	p. 99
The Good and Bad of Currency ETFs	p. 100
The Bottom Line	p. 107
Order Types and Choosing a Currency Trading Platform	p. 109
Order Types	p. 109
What You Need to Know About Currency Trading Platforms	p. 117
FX Order Entry Pad	p. 118
Futures Trading DOM (Depth of Market)	p. 120
Currency Options	p. 125
Options Basics	p. 126
Not All Options Are Created Equally	p. 128
The Bottom Line	p. 132
Currency Market Fundamental	p. 133
Currency Fundamental Analysis	p. 133
Unconventional Forms of Fundamental Analysis	p. 139
Getting Technical with Currencies	p. 159
Not All Currency Technicians Are Created Equal	p. 160
Technical Technology	p. 162
Computer-Generated Oscillators and Indicators	p. 163
Popular Advanced Charting Tools	p. 170
Drawing Trend Lines and Channels	p. 175
Currencies Gap!	p. 177
Keep It Simple, Stupid (KISS)	p. 180
Tips and Tricks for Currency Traders	p. 183
It Takes Money to Make Money	p. 184
Trade Less to Make More	p. 186
Are Protective Stops Really "Protective"?	p. 187
Give Yourself a Chance!	p. 189
Position Sizing	p. 190
Price Averaging	p. 192
Risk Capital Only	p. 196
Conclusion	p. 197
Currency Lingo	p. 199
Pip	p. 200
Pip Spread	p. 200
Bid	p. 200
Ask	p. 200
Offer	p. 200
Big Figure Quote	p. 201
Ballooning of Pips	p. 201
Stop Harvesting/Price Spiking	p. 201
Requoting	p. 202
Over the Counter	p. 202
Off-Exchange Currency Trading	p. 202
Liquidity Provider	p. 203
ECN (Electronic Communications Network)	p. 203
Trading Lots and Contract Size	p. 203
FCM	p. 204
Dealer	p. 204
Introducing Broker	p. 205
Retail Foreign Exchange Dealer (RFED)	p. 205
FOREX Dealer Member	p. 205
Associated Person (AP)	p. 205
Clearing	p. 205
Going Short	p. 206
Going Long	p. 206
Currency Cross or Cross-Currency Pair	p. 206
Loonie or Canuck Buck	p. 207
Swissy	p. 207
Kiwi	p. 207
Cable	p. 207
Book	p. 207
High-Frequency Trading	p. 208
P&L	p. 208
Bank Rate	p. 208
Exotics	p. 208
EA (Expert Advisor)/Automated Trading Systems	p. 209
Flat or Square	p. 210
Gap	p. 210
Jobber	p. 211
STP	p. 211
Swap/Rollover	p. 211
Rollover/Carry Charges	p. 211
Purchasing Power Parity (PPP)	p. 212
Index	p. 213
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