The Forex Trading Course, Second Edition + Website
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 a novice trader, professional, or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future. For more on this series, visit our website at www.WileyTrading.com.
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Copyright © 2015 by Abe Cofnas. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
The First Edition of this book was published by Wiley in 2008.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data
Cofnas, Abe, 1950-
The Forex trading course: a self-study guide to becoming a successful currency trader /
Abe Cofnas. – Second edition.
pages cm. – (The Wiley trading series)
Includes index.
ISBN 978-1-118-99865-6 (pbk.) – ISBN 978-1-118-99867-0 (epdf) – ISBN 978-1-118-99868-7 (epub)
1. Foreign exchange futures. 2. Foreign exchange market. 3. Speculation. I. Title.
HG3853.C64 2015
332.4′5–dc23
2015013790
Cover Design: Wiley
Cover Image: ©iStock.com/alexaldo
Preface
This edition is more than an update on the first edition. Since the first edition was released in 2008, the world of forex trading has significantly changed. The challenges facing the forex trader are new and greater than ever. The financial collapse of 2008 ushered in a rebalancing of the world economy, with monetary policy and currencies as key instruments. The era of quantitative easing began, and with it, central bank intervention became and remains since a prime mover of currencies. Forex trading became subject to greater spikes and disruptions and, more than ever, sensitive to market emotions. Expectations regarding global growth and inflation have significantly influenced currency movement. These changes underscore the need for a refocus on fundamentals for forex trading.
The significant advances in the Internet since 2007 have also transformed forex trading and its technological environment. The forex trader today has the opportunity to access more information, more quickly than ever before. Also, a popular phenomenon called social media trading has emerged where the forex trader can “copy” the trades of other traders. The Internet wraps information flow with rumors and hyperbole, creating herding behavior and swarming patterns.
Since 2008, an entirely new instrument for trading currency directions and market emotions – binary options – has emerged. It is one of the fastest-growing markets in the world. Forex firms are increasingly offering binaries to their customers.
This edition shows how to use binaries in combination with forex trades to strengthen skills in choosing direction, targets, and stops. Most recently, the emergence of crypocurrencies as a potentially hybrid currency/commodity has special significance for the forex trading, because ultimately owners all need to sell their currencies and exchange them into local currency. This edition also provides insight into bitcoin as an alternative currency.
About the Author
Abe Cofnas continues to be a leading-edge trainer and analyst on forex markets. He has pioneered new methods of detecting market emotions and sentiment for improving forex trading. His newsletter, formerly the Fear and Greed Trader and now BinaryDimensions (www.binarydimensions.com), provides weekly alerts on market direction in currencies, gold, and indices. In addition to founding learn4x.com and being the Forex Trader columnist for Futures magazine since 2001, Cofnas has founded Quicksilver Concepts Inc. (www.quicksilveralgos.com), a financial gamification technology firm that designs “smart” financial gamification platforms that generate real-time skills in trading currencies, gold, and indices.
Part I
What Drives the Forex Market?
Part I of this book offers a look at the “big picture” in foreign exchange (forex) trading, that is, what forces influence currency price movements. These forces are accepted by economists and traders around the world as responsible catalysts for changes in the value of currencies. Readers learning to trade forex or trying to improve their trading will benefit from a gain of knowledge of these fundamentals. In fact, as you will see, fundamental forces act as leading indicators of currency movement future direction.
US and global interest rates, economic growth, and market sentiment toward the dollar are the key ingredients that shape trading opportunities. Part I provides basic knowledge on how these factors impact forex prices and how they can be used in selecting trading opportunities.
In