The Little Forex Guide that Can Lead You to The Big Profits
If you are looking to learn how to make big profits in the world of forex, Trading Education recommends you The Little Book of Currency Trading by Kathy Lien - one of the best trading books available. Kathy Lien provides readers with the essential knowledge needed to turn the latest headlines into successful trading opportunities through carefully managed risks.
As one of the most experienced currency traders, Lien is able to create a logical guide to enable beginners to understand the seemingly complicated world of forex. The book aims to take a beginner through the basics of trading in less than two hours, through a well-devised alphabet concept with examples and explanations. The chapters follow a clear flow and will leave the reader feeling equipped with the knowledge required to start on a path towards becoming a successful trader.
As described by Leslie N. Masonson for Futures, the book helps readers decide which forex vehicle suits their investment plans through investing, trading or hedging by explaining the difference between futures, spot and ETF vehicles. Lien then begins to outline how the various economic, political and financial factors around the world can lead to market volatility and new opportunities to trade in the very liquid currencies. The book describes in detail how great opportunities can be found during times of crisis when the markets hit a volatile patch.
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The author then begins to explain why it is so important to decide upon a strategy which fits the readers' goals and personality, with a careful balance of technical and psychological analysis. As many traders rely on brokers for assistance, Lien outlines in detail the questions which readers should be asking prospective broker candidates to help them find the ideal broker to fit their trading goals.
The book describes a variety of useful technical indicators, such as the ADX which is published weekly with a 20-WMA, or Double Bollinger Bands set as 20-period moving averages with one set at two standard deviations and the other at one standard deviation. Although this may sound complicated to a novice, the book carefully explains the concepts with a variety of chart examples.
Kathy Lien recommends adopting a trading strategy which involves removing profits at various stages, by using the Bollinger Bands analysis to decide both entry and exit points. Within the world of trading, pinpointing the ideal exit point separates the traders who make a profit from those who continue to lose. The book aims to teach readers how to spot and capture a trend early on while minimising the risk. By teaching new traders to remove profits early in the process, it can help build confidence at an early stage.
When it comes to trading, mistakes can be very costly, so the chapter which outlines the top ten trading mistakes is very useful. The chapter takes readers through a variety of well-known errors such as failure to use stops, trading out of boredom, using too much leverage, paper trading and over-optimising the trading strategy. Most experienced and successful traders will already be aware of many of these points, but if you are new to trading or previous investments have been unsuccessful, it will help you avoid potentially costly mistakes. There is also a very useful chapter which teaches traders how to spot the signs of a forex scam, through an easy to understand ten-item checklist which will quickly assist readers.
In summary, if you are a beginner to forex trading this book is simple to understand and quick to read. Lien adopts a clear yet conversational tone, which keeps to the point. Although there is no bibliography to allow readers the option to study the content in more detail it is a great first step into the world of forex.
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