The Little Book of Currency Trading: How to Make Big Profits in the World of Forex (Little Books. Big Profits)
The Little Book of Currency Trading: How to Make Big Profits in the World of Forex (Little Books. Big Profits) – An accessible guide to trading the fast-moving foreign exchange market
The foreign exchange market, or forex, was once dominated by global banks, hedge funds, and multinational corporations, but that has all changed with Internet technology and the advent of online forex brokers. Now, hundreds of thousands of traders and investors around the world can participate in this profitable field.
Written by forex expert Kathy Lien, The Little Book of Currency Trading will show you how to effectively invest and trade in today's biggest market. Page by page, she describes the multitude of opportunities possible in the forex market, from short-term price swings to long-term trends, and details practical products that can help you achieve success, such as currency-based ETFs. Explains the forces that drive currencies and provides strategies to profit from them Reveals how you can use various currencies to reduce risk and take advantage of global trends Examines financial vehicles that can help you make money without having to monitor the market every day
The Little Book of Currency Trading opens the world of currency trading and investing to anyone interested in entering this dynamic arena.
Q&A with Author Kathy Lien
Author Kathy Lien What is the most effective way for investors to make money in the currency market?
The best way to make money in the currency market is to think of it as an investment. When most people see advertisements by forex brokers, their eyes start to widen on the offers of high leverage and the possibility of tremendous returns. It is attractive and almost irresistible. However, even though currencies can provide attractive returns, leverage is a sharp double-edged sword. High returns come with high risks, which can be suitable for some but not all investors. Currencies are a great asset class for people looking to diversify their portfolios. And throughout the year, currency values can increase or decrease anywhere between 5 to 25 percent. With U.S. Treasuries yielding next to nothing and our bank accounts earning only a few cents on the dollar, most of us would be satisfied with 5 percent, let alone 25 percent return. There is no need to use excessive leverage – taking it slow and easy increases the chance of seeing your account grow.
Over the past 10 years, the forex market has evolved significantly and competition has brought many benefits to new forex traders. Most forex brokers will offer free education and practice accounts, and new traders should take advantage of them because the most effective way of making money in the currency market is learning how the market works and to practice, practice, practice before dumping significant capital into a live account.
From a more practical perspective, there is no need for monogamy when it comes to trading currencies. Take the best of both worlds and combine both fundamental and technical analysis. The Little Book of Currency Trading will teach you how to identify the big stories affecting currencies and how to pinpoint places to enter and exit your trades. You may know more about currencies than you actually think. If you have ever traveled to another country or if you love to read about political or economic developments abroad, then you have already gotten a taste of what moves currencies. Start by trading what you know, and at the onset, bank your profits when you have them to build your confidence and your knowledge of how the currency market moves.
What indicators or economic data should investors monitor to identify a potential profit opportunity in the currency market?
News moves the markets and economic data is a consistent event risk that can provide daily trading opportunities by driving meaningful moves in a currency. However not all economic releases are equally important, and it is essential to be able to delineate between what will and will not move the currency. As a rule of thumb, put yourself into the shoes of a central bank — whatever the central bank watches is typically what can move the currency because it can help determine whether the central bank will raise or lower interest rates. This includes employment, retail sales and inflation reports. The best trades are the ones that are also aligned with the current prevailing trend and sentiment in the foreign exchange, something that the Little Book will teach you how to do.
What is the learning process for an individual investor — who already has experience trading stocks — in the currency market?
Trade what you know. If you trade stocks using technical analysis, you can do the same in the currency market. In fact, technical analysis is one of the most popular ways to analyze currencies. It will be important to learn about the unique characteristics of the market, including round the clock trading and general trading mechanics. But after that, you can use Fibonacci retracements the same way you do in equities in currencies. For traders who love to follow developments in Europe or Asia — once again, trade what you know. If you travel to London often and have a good idea of how the U.K. economy is doing, your outlook can be translated into a currency trade. The same is true for traders who have an opinion on whether the Eurozone will go bust due to their debt crisis. Currencies just offer another vehicle to express the views that as stock traders, you may already have.
Historically, the currency market often produces long-term trends that provide a great opportunity for profit. Do you think that will continue in the years ahead?
Currencies have been around for hundreds of years in one form or another and are little confidence measures of a country. If you believe that business cycles repeat themselves — with expansion followed by contraction and contraction followed by expansion — then the long term trends of currencies will continue to be evident because the optimism or pessimism of investors usually follows the business cycles of each country. The reason why currencies have had such strong trends in the past few decades is because in general, the outlook for a country gets progressively better or worse, and this dynamic is reflected in the value of the currency. Using a unique easy to understand tool, the Little Book will show you unique ways to join the trend and minimize the risk of chasing a move that quickly fades.
Product Details
- Hardcover: 224 pages
- Publisher: Wiley; 1 edition (December 28, 2010)
- Language: English
- ISBN-10: 047077035X
- ISBN-13: 978-0470770351
- Product Dimensions: 7.3 x 5.3 x 0.8 inches
- Shipping Weight: 9.1 ounces
Customer Reviews
The section on Bollinger Bands is wort h the price of the book
I’ve read everything Kathy’s ever written, and I’m better for it – and this book is no different. Short and to the point: Kathy’s section on the buy and sell zones for the Bollinger Bands is worth the price of the book many times over. Those bands have saved me from taking some terrible trades, and helped me quickly identify market conditions that are favorable for longs or shorts. It’s easily the best section of the book, in my opinion. Last of all, Kathy has the public track record to back up what she writes.
Trading is risky, of course, and no one strategy is perfect for everyone. But in a world of overpriced trading books, this book is absolutely worth buying.
Practical and Handy
Lien does a really good job of explaining the basics of the forex market and some topics that are usually avoided in other books such as the biggest scams in the market and the top 10 mistakes (which I have been guilty of at one point or another!). For those of you that are a bit more advanced like yours truly, the Bollinger Bands were an interesting and practical tool. I actually backtested it with some relatively good results.
Excellent advice for all traders
I found this book to be an invaluable guide to trading the forex markets. Although short, the author manages to pack in helpful advide and strategies for both short and medium term traders. Trading the news and technical analysis are covered along with setting profit targets and stop losses. Highly recommended
A well written book on a complicated topic
I am a newbie when it comes to currency trading and I found “The Little Book of Currency Trading” a great read. I read a previous book that Ms. Lien co-penned called “Millionaire Trades” which I really liked so when I was on vacation and had some hours to kill when I was stranded at the airport I decided to download it. Like Millionaire, “Currency Trading” comes from a more colloquial point-of-view which is beneficial when you don’t know anything about the topic. Currency trading is described though analogy and little idioms that help grasp more complicated topics as well as help remember suggested strategies. Personally I prefer this approach, especially in an industry full of boring, self-involved titles that lack the warmth that Ms. Lien has presented. If I want a book of definitions I’ll buy a text book, if I really want to understand the industry and become a better trader I would prefer this book.
A Wonderful and Informative Book!
Kathy Lien’s Little Book of Currency Trading is a very well written, easy to read book that covers all the bases. It was a pleasure to read, and it even includes a trading strategy that is simple but very efficient. Kathy is a decorated veteran of the currency markets and her little book demonstrates this as she tells much of what we need to know and be aware of as traders. Reading Kathy’s book is a great refresher if you have been trading for a while, and if you are new at trading, Kathy’s book will point out many of the pitfalls you will encounter so that you can be better prepared to avoid them. I enjoyed Kathy’s Little Book of Currency Trading and am glad I purchased a copy. It’s a great addition to my library.
Worthy book on Forex Trading
Kathy Lien’s “The Little Book of Currency Trading: How to Make Big Profits in the World of Forex” is a good primer on the subject. Unlike so many Forex websites and some books that make sales pitches and then overwhelm with information, Lien starts with the basics, building as she goes along, weaving interesting sidebars, bits of information and examples as she traverses her subject.
The beauty of this book is that it is ‘up to date’. It was published Dec. 28, 2010 and brings the reader through the events up to and including the financial crisis as well as the beginning of the sovereign debt problem in the Eurozone. Many other Forex books were written before the financial crisis, thereby are somewhat obsolete.
She states: “The subprime and the sovereign debt crisis showed us how we cannot focus solely on what is happening in our own little part of the world because, as we have seen, the problems in one country like the United states could destroy the economies of other countries.”
In light of the recent financial crisis, she offers her investing philosophy, that of a well researched opportunist. She states: “Financial crises are becoming increasingly common… In time of crisis, currency trading is a way to turn headlines into opportunities.”
After the introduction Lien delves into first, the basics, then the complexities of Forex trading.
Chapters include:
Chapter 1: When Lightening Strikes
Chapter 2: Rubles and Bahts and Euros – Oh, My! Forex is not as foreign as you think.
Chapter 3: The A to Zs of Forex: Basic Knowledge You Need to Have. In this chapter Lien examines 25 Forex definitions and terms needed to start trading.
Chapter 4: Step Right Up: Getting Started in Forex.
Chapter 5: Shakers and Movers: What causes Currencies to Go Up or Down?
Lien discuses everything that effects currencies, including headlines, political and economic news and releases, yet her most poignant piece of information in this chapter is “Listen to central bank officials.. What they say can impact currencies”
Chapter 6: The Investor Versus the Trader
Chapter 7: What All Winners Do
Chapter 8 So You’re an Investor?
Chapter 9: So You’re a Trader?
Chapter 10: Risky Business
Chapter 11: The Top 10 Mistakes
Chapter 12: Greetings from Nigeria, Please Help!
Chapter 13; Getting Down to Business
Chapter 14: Crash, Burn, And Learn
Chapter 15: Start Smart
Other highlights of this book include:
The biggest scams in the Forex market and the top 10 mistakes that currency traders/investors make. Also, her discussion on using Bollinger Bands (technical analysis) is straight forward, easy to understand and practical.
In summary, “The Little Book of Currency Trading” is a great first book to those new to currency trading and a great refresher course for those of us who are seasoned veterans.
well written
Loved the way the author walks you through their process of the trade. Not like other books that throw a bunch of charts at you and expect you to understand it. Author is very clear in her presentation of each trade.
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February 15th, 2012 at 1:54 pm
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[...]The Little Book of Currency Trading[...]…