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Tài liệu tham khảo Trading Foreign Exchange
P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeHow to Make aLiving TradingForeignExchangei P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeFounded in 1807, John Wiley & Sons is the oldest independent publishingcompany in the United States. With offices in North America, Europe,Australia, and Asia, Wiley is globally committed to developing and mar-keting print and electronic products and services for our customers’ pro-fessional and personal knowledge and understanding.The Wiley Trading series features books by traders who have survivedthe market’s ever-changing temperament and have prospered—some byreinventing systems, others by getting back to basics. Whether a novicetrader, professional, or somewhere in-between, these books will providethe advice and strategies needed to prosper today and well into the future.For a list of available titles, please visit our Web site at www.WileyFinance.com.ii P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeHow to Make aLiving TradingForeignExchangeA Guaranteed Income for LifeCOURTNEY D. SMITHJohn Wiley & Sons, Inc.iii P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeCopyrightC2010 by Courtney D. Smith. 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 transmit-ted in any form or by any means, electronic, mechanical, photocopying, recording, scan-ning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United StatesCopyright Act, without either the prior written permission of the Publisher, or authorizationthrough payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or on the Web atwww.copyright.com. 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Neither the publisher nor author shall be liable for any loss of profit or anyother commercial damages, including but not limited to special, incidental, consequential, orother damages.For general information on our other products and services or for technical support, pleasecontact our Customer Care Department within the United States at (800) 762-2974, outside theUnited States at (317) 572-3993 or fax (317) 572-4002.Wiley also publishes its books in a variety of electronic formats. Some content that appearsin print may not be available in electronic books. For more information about Wiley products,visit our Web site at www.wiley.com.Library of Congress Cataloging-in-Publication Data:Smith, Courtney, 1952–How to make a living trading foreign exchange : a guaranteed income for life /Courtney D. Smith.p. cm. — (Wiley trading series)Includes index.ISBN 978-0-470-44229-6 (cloth)1. Foreign exchange market. 2. Foreign exchange futures. 3. Investment analysis.4. Risk management. I. Title.HG3851.S59 2010332.45–dc222009031709Printed in the United States of America10987654321iv P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeTo my parents and my foxhole buddyv P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comevi P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeContentsPreface xiCHAPTER 1 The Basics of Foreign ExchangeTrading1Sell a Yard of Cable 2Don’t Want to Trade! 4Transaction Costs 7It Never Stops 8My Biggest Losing Trade 8The Bottom Line 11CHAPTER 2 Trend Analysis13What Is a Trend? 14How to Profitably Trade Bull and Bear Markets 18How to Trade the Trend 21Megaphones and Pennants 25Average Directional Index 27The Bishop 28The Bottom Line 30CHAPTER 3 Channel Breakouts31The Beginnings of Channel Breakouts 31What Is a Channel Breakout? 32Better Channel Breakouts 35The Pros and Cons of Channel Breakouts 39vii P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeviiiCONTENTSThe Bishop 40ADX Filter 43The Principle of Instant Gratification 46Rejection Rule 46The Last Bar Technique 51Tactics 52Taking Profits 52The Bottom Line 53CHAPTER 4 The Conqueror55The Beginnings of the Conqueror 55What Is True Range? 56Enhancing the Conquistador 57Adjusting the Stop 63The Bottom Line 65CHAPTER 5 Stochastics67What Are Stochastics? 67How to Use Stochastics as an Overbought andOversold Indicator 69Trading Signals from Crossovers 71Profitability of Stochastics 74Warnings 75The Best Way to Make Money Using Stochastics 76Go with the Trend 81How I Use Stochastics 81Interview with George Lane 82The Bottom Line 89CHAPTER 6 Pattern Recognition91Inside Days 91Double Whammy 94Multiunit Tactic 95Reversal Days 97 P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comeContentsixRiding the Rejection Rule 101The Bottom Line 103CHAPTER 7 Risk Management105Stopping Bad Risk Management 105HowtoMakeSureWeAreNeverWipedOut 108Good Risk Management: Fixed Fractional 108How Many Contracts Should I Put On? 109Highly Correlated Positions 109Kelly Formula 110Trade Your Equity Curve 114TakeaTimeOut 115Turning Poor Systems into Good Systems 115How Big a Position Should I Take? 116The Bottom Line: Diversify through Time 117CHAPTER 8 Slingshot119The Importance of Minimizing Losses 120Beware of Taking Profits Too Early 121Psychological Profits 122Confirmations 123Maximum Excursion Analysis 124Using the Slingshot for Profits 125The Mini-Slingshot 128The Bottom Line 130CHAPTER 9 The Psychology of SuccessfulTrading131Why Do You Trade? 132The Pressures of Trading 136Why Do You Lose? 137Addressing a Lack of Knowledge 138Addressing a Lack of Capital 140Addressing a Lack of Self-Discipline 141 P1: JYSfm JWBT195-Smith November 27, 2009 20:51 Printer: Yet to comexCONTENTSAn Example of Overcoming the Bizarre Twists andTurns of the Mind 143Treat Trading as Education 144Stress-Free Trading 147Be the Casino 148Developing Your Trading Plan 149Filling Out the Plan 150The Importance of a Postmortem 153The Bottom Line 155CHAPTER 10 Putting It All Together157Diversifying to Reduce Risk 157Use a Mental Checklist 158How to Trade Only One Method 159The Bottom Line 160Epilogue: Key Insights for Maximizing YourTrading Profits 161Appendix: Suggested Reading 177Acknowledgments 179About the Author 181Index 183 [...]... a concrete and comprehensive approach to making money trading forex You will have a toolbox full of profitable techniques You will understand how to manage your risk You will understand how to have a stress-free psychology of trading Good luck! How to Make a Living Trading Foreign Exchange CHAPTER 1 The Basics of Foreign Exchange Trading oreign exchange is the most traded instrument in the world Roughly... forex trading begins Sunday morning in Tel Aviv and goes to Friday afternoon in New York However, the Tel Aviv session is so small that it is usually ignored and trading starts on Monday morning in Wellington, New Zealand Traditionally, the trading day begins in Wellington because it is the first trading center that opens However, Wellington is a small trading center so there is little trading Trading... moves His ideal trading year was if he caught only those trades He felt the ideal year would only have eight to twelve trades Every other trade was not worth the risk I 13 14 HOW TO MAKE A LIVING TRADING FOREIGN EXCHANGE That might be an extreme view but there is some truth to his concept So I decided to strip my trading down to the bare essentials I wanted to really get to the heart of trading No BS,... price at all This is called front running and is legal in forex and bond trading but illegal in stock trading I told each trader to call a different bank and get a price for 100 million Pounds In the interbank world, you ask for a price from the other bank The other bank must offer you a two-sided market The Basics of Foreign Exchange Trading 3 This means that they must give you a quoted price for both... has a standard contract worth $100,000 of whatever is being traded So trading the euro would mean that you would be trading $100,000 worth of euros Of course, the number of euros that you would be trading would change based on the current price 6 HOW TO MAKE A LIVING TRADING FOREIGN EXCHANGE of the euro There are now mini-contracts in the online forex world where each contract is worth $10,000 of the...Preface rading foreign exchange (forex) is one of the most exciting and potentially lucrative activities in the world Yet about 90 percent of traders lose money This book is designed to create profitable traders Can you make a living trading forex? Yes! And no Let me explain It is common wisdom that about 90 percent of traders lose money trading forex, about 5 percent break even,... from our customers so we were expected to take the other side of his trade No way We weren’t big enough to take on such a large position All foreign exchange trading, except for a small amount on the International Monetary Market, is over the counter There is no exchange All transactions are done over the phone, with a broker, or via some electronic means between two entities Entities are usually financial... sitting on a losing trade right away The more important problem with limit orders is that they break one of the basic tenets of profitable forex trading: Don’t fight the market Buying using a limit order is buying when 10 HOW TO MAKE A LIVING TRADING FOREIGN EXCHANGE the market is dropping You don’t want to buy when the market is dropping The market is telling you that the situation is bearish because... another $300,000 It seemed like the longest walk in my life as I trudged through the trading room to report my loss to my boss, the treasurer of the bank In this case, the price jumped over the stop order leaving me with a fill 100 pips beyond the stop order That can happen with stop orders That The Basics of Foreign Exchange Trading 11 was a rare circumstance, but it can happen It is fairly common to have... outlines the basic information you need to get started in trading forex Perhaps you’ve traded stocks or mutual funds or even futures But I assume that you know nothing about trading forex I’ve also included a number of real stories of my trading, to give some flavor of the life of a professional institutional trader Even if you have some experience trading forex, this chapter is worth reading for the examples . Courtney, 1952–How to make a living trading foreign exchange : a guaranteed income for life /Courtney D. Smith.p. cm. — (Wiley trading series)Includes index.ISBN. trading series)Includes index.ISBN 978-0-470-44229-6 (cloth)1. Foreign exchange market. 2. Foreign exchange futures. 3. Investment analysis.4. Risk management.