Attacking Currency Trends E-Book

Greg Michalowski

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch
• Veröffentlichungsjahr: 2011

Seitenzahl: 535

Beschreibung

The guide for reading long-term trends in the foreign currency market To thrive in the marketplace traders must anticipate, enter, and stay with trends in the foreign exchange market. In this much-needed guide top forex, expert Greg Michalowski clearly explains the attributes of successful traders, and shows how traders can set themselves up for success by drafting an explicit mission statement and game plan. The book also contains the tools and techniques traders need to read the markets and identify when a market is in a trend. Michalowski shows traders how to enter an emerging trend, how to manage the position, and how to exit the position most effectively. * Includes the technical tools needed to invest in the foreign exchange market: moving averages, trendlines, and Fibonacci levels * Shows how to identify a trend and stick with the trend through its duration * Written by Greg Michalowski who was cited by SmartMoney magazine as a "go to" source for making money moves With this book, Michalowski offers an important resource for identifying and riding out long-term trends in the volatile foreign currency.

Leseprobe

Contents

Cover

Series

Title Page

Copyright

Dedication

Acknowledgments

Introduction

MY JOURNEY

THE MARKET PROFILE APPROACH

IT'S A PROCESS

THE JOURNEY AHEAD

Part I: The Foundation for Success

Chapter 1: Stereotyping the Retail Currency Trader

THEY THINK TRADING CURRENCIES IS EASY

THEY HAVE TOO MUCH FEAR

THEY LOSE MONEY

THEY ARE TOO FUNDAMENTAL (NOT TECHNICAL ENOUGH)

THEY DON'T KNOW ENOUGH ABOUT KEY FUNDAMENTAL REQUIREMENTS

THEY FAIL TO ANTICIPATE TRENDS

DON'T BE LIKE THE REST … CHANGE!

Chapter 2: The Six Attributes of a Successful Currency Trader

WHAT ARE YOU GOOD AT DOING?

THERE WILL ALWAYS BE PEAKS AND VALLEYS

1. SKILL OR APTITUDE

2. PRACTICE, PRACTICE, PRACTICE

3. KNOW YOUR RISK

4. CREATE AND EXECUTE A PLAN

5. CONTROL YOUR FEAR

6. BE GREEDY ENOUGH

A FOUNDATION FOR SUCCESS

Chapter 3: The Mission Statement

A TEAM OF ONE

A TWO-PART MISSION STATEMENT

FINDING TRADES THAT SATISFY YOUR MISSION STATEMENT

THE IMPORTANCE OF STAYING ON TREND

Chapter 4: What's Your Game Plan?

EVERY MISSION STATEMENT NEEDS A GAME PLAN

TRADE THE TRENDS

KEEP FEAR TO A MINIMUM

NEVER UNDERESTIMATE A STRONG FOUNDATION

Chapter 5: Rules for Attacking the Trend

RULE 1: KEEP IT SIMPLE (BUT STAY POSITIVE)

RULE 2: HAVE A REASON TO PLACE A TRADE

RULE 3: BE PICKY ABOUT YOUR TOOLS

RULE 4: THE “IF . . . SHOULD” RULE

RULE 5: LOOK AHEAD, BUT NOT TOO FAR AHEAD

RULES RULE

Chapter 6: The Trader's Toolbox

RULES FOR THE TOOLS

HOW TO USE FUNDAMENTAL ANALYSIS

THE ONE THING WE CAN AGREE ON: PRICE

THE TOOLS

IF I HAD A HAMMER

Part II: Tools and Strategies

Chapter 7: Moving Averages

WHAT IS A MOVING AVERAGE?

HOW TO USE MOVING AVERAGES

TIME FRAMES FOR ANALYSIS

ANTICIPATING A TREND

MANAGING A TREND

MANAGING PROFITS

TRADE SETUPS

THE PUSH THAT GETS THE MARKET GOING

Chapter 8: Trend Lines and Remembered Lines

BULLISH TREND LINES

BEARISH TREND LINES

CHANNELS: HIGHWAYS TO RIDE THE TREND

FLAGS AND PENNANTS

FINDING THE GOLDEN TICKET

REMEMBERED LINES

SIMPLE BUT EFFECTIVE

Chapter 9: Fibonacci Retracements: The Hybrid Tool

INTRODUCTION TO FIBONACCI

PLACING RETRACEMENTS ON A CHART

USING FIBONACCI RETRACEMENTS

TRADING SHORTER-TERM CORRECTIONS

USING THE TOOLS TO YOUR BEST ADVANTAGE

Chapter 10: Preparing for the Trade

FIRST THINGS FIRST

ANALYZING THE CHARTS

A COMPOSITE VIEW OF THE CLUES

“IS IT A BOY OR A GIRL, DOC?”

Chapter 11: Executing the Game Plan

THE KICKOFF: THE ENTRY TRADE

MANAGING THE TRADE

FINDING CLUES IN THE CONSOLIDATION PHASE

A BORDERLINE: ALWAYS A LOW-RISK, UNAMBIGUOUS LEVEL

ANOTHER TREND REENTRY

THE KEY ROLE OF BORDERLINES IN HOURLY AND DAILY CHARTS

ATTACK THE CURRENCY TREND

About the Author

Index

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding.

The Wiley Trading series features books by traders who have survived the market's ever-changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether you are a novice trader, a professional, or somewhere in between, these books will provide the advice and strategies needed to prosper today and well into the future.

For a list of available titles, visit our web site at www.WileyFinance.com.

Copyright © 2011 by Greg Michalowski. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at www.wiley.com/go/permissions.

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Library of Congress Cataloging-in-Publication Data:

Michalowski, Greg. Attacking currency trends : how to anticipate and trade big moves in the forex market / Greg Michalowski. p. cm. – (Wiley trading ; 487) Includes index. ISBN 978-0-470-87438-7 (hardback); ISBN 978-1-118-02349-5 (ebk); ISBN 978-1-118-02350-1 (ebk); ISBN 978-1-118-02351 (ebk) 1. Foreign exchange market–Handbooks, manuals, etc. 2. Investments–Handbooks, manuals, etc. 3. Foreign exchange–Handbooks, manuals, etc. I. Title. HG3851.M493 2011 332.4′5–dc22 2010051235

To Deb, Matt, Brian, and Bobby Michalowski

Acknowledgments

I will always remember something Bill Kidder said to me 25 years ago, soon after I met him for the first time. He said, “Your dad was one of my first mentors. He gave me his time and taught me a lot about the markets. He is a good man.” These words are very powerful words and they stuck with me.

Bill was my first trading mentor, and the first thing he taught me, without saying, was to follow in my father’s mentoring footsteps. Over the last few years of my career I have been able to pay the favor forward—to be a mentor. Although it is less personal than the mentoring I received, I do hope it has provided a benefit to your trading. Remember, however, that ultimately you will need to “fish for yourself.”

Other life mentors I would like to acknowledge include my wife, Debbie; my mother and father; my sons, Matt, Brian, and Bobby; my six siblings; and all my extended family members (and it is a very large clan). I cannot thank you enough for all your support and unconditional love. Professionally I would like to acknowledge Tom Bonen, Guy Whittaker, Ted Muller, Kim Hamilton, Tom Bergen, Joe Botkier, Emil Assentato, Shawn Powell, my hardworking colleagues at FXDD. Each has helped form me over the years in some way or another and my appreciation is not forgotten. I would like to acknowledge my “trading apprentices” that ask for advice and support my efforts at FXDD. You provide joy to my life through your successes as traders. I would like to thank the respected traders that have crossed my path on the various social media sites. Even though an alias may be used and we may never physically meet, trading is not as lonely because of you. I would like to acknowledge my spiritual mentors, including the vibrant and positive St. Patrick’s community. I start and end my week at St. Patrick’s and it gives me the direction during all the minutes in between. Last but not least, I give thanks to the ultimate spiritual mentor, God, for giving me wisdom, the humility to accept failure, the will and desire to correct my mistakes, the opportunity to pay it forward, and all the other incredible gifts from His amazing grace.

Introduction

When I was in college at Clemson University, I dreamed of a career on Wall Street. My father, Joseph Michalowski, worked on Wall Street his entire career, working his way through the ranks. There have been very few people I have met who had a professional relationship with my father who did not say, “Your father is a good man. He taught me a lot about the markets.”

One of the highlights of my father's career was working at Chase Manhattan Bank. He was once put in charge of uncovering, unwinding, and being the expert during the Drysdale Government Securities crisis that shocked Wall Street in 1982. The crisis, built on a string of reverse repurchase agreements that went wrong, sent repercussions throughout Wall Street when the boutique firm defaulted on an interest payment totaling $250 million. The knock-on effect of the crisis resulted in the Federal Reserve's issuing that now all-too-familiar statement, “The Fed stands ready as a lender of last resort.”

What was the catalyst for the crisis? The use of too much leverage (i.e., risk) and the lack of a plan and controls. Compare and contrast this to the 2008–2009 financial crisis where the same fundamental faults led to a near-global financial meltdown. Twenty-seven years later the lessons have not been learned.

In addition to his knowledge of interest rate products and the markets, my father was a technician, or a chartist, who would painstakingly construct by hand bar charts of bond prices on grid graph paper. At night, he would tape together the pages when the prices moved above or below the boundary of the paper, or when a new page had to be added as time progressed. He would fold his “moon charts”—as he liked to call them—as deftly as an origamist would fold a piece of paper into a swan.

During the early years of his career and without modern technology, he was able to carve a career as a technical trader by keeping analysis basic, finding good trade locations, defining risk, and trading the trend. There were no Relative Strength Indices or Stochastic Indicators. Shorter time-period moving averages could be calculated if the trader was dedicated enough, but 100 or 200 bar simple moving averages were more difficult and time consuming (if they were even done at all). Exponential moving averages could not be done without the aid of larger computer resources.

Trading technically was simpler then than most technicians find it today. Bar charts and maybe point and figure charts were used predominantly, and to bring them to life, trend lines provided the bells and whistles, defining the trend in the process. My father and most other successful traders made money by attacking the trends. My father's career on Wall Street got me interested in trading, and that became what I wanted to do.

MY JOURNEY

I started my journey as a summer intern in 1981 for an interest rate trading pioneer named William Kidder (no relation to Kidder Peabody, a prominent Wall Street firm at the time). Bill was one of the first to use mispriced interest rate futures to arbitrage the U.S. Bill and Bond markets. In 1981 he started a software company with a goal to build a menu of programs used to exploit arbitrage opportunities in the interest rate markets. The programs would run on Apple IIs, one of the first desktop computers.