8 Key Forex Trading Terms To Familiarise Yourself With
There are lots of ways to learn about forex trading, from online learning courses to podcasts. However, sometimes you can’t beat the power of a good old fashioned book. Reading can enable us to get to grips with some of the more complex elements of trading at our own pace, allowing us to drill down into the details until everything really makes sense.
The more widely you read about forex trading, the more confident and knowledgeable you will feel when you begin to make live trades. Some of the best traders developed their ‘edge’ by having useful pockets of information stored away that they could draw on at crucial moments.
From refining your strategy to learning more about the history and psychology of forex trading, there’s a wealth of material to draw on. Furthermore, you will be able to understand how all these different elements intersect with each other and this will help you to become a well-rounded and well informed trader. Here are some suggestions for your forex library.
Forex for Ambitious Beginners: A guide To Successful Currency Trading by Jelle Peters
This book is excellent for those just starting out on their forex journey who are impatient for success. It does not make unrealistic promises about how you can become a profitable trader within a few months, or try to sell the idea that forex is a quick and easy way to make a buck.
Instead, it is honest and upfront about the pitfalls that can await the unwary trader, and shows you how best to avoid them. It covers all the basic background information such as which factors influence the value of different currencies, how to determine your risk tolerance, and how to create your own trading strategy.
The book also covers the basics of technical analysis and explains how to read line charts and candlestick charts. It reinforces the fundamental concept that successful forex trading is all about carefully managed risk and spotting opportunities to maximise potential profits.
Forex Trading: The Basics Explained in Simple Terms by Jim Brown
This is one of those books that basically does what it says on the tin. It is an ideal starting place for newbies who are feeling just a little bit overwhelmed by the whole prospect. It is written in clear language but doesn’t talk down to the reader or assume any prior knowledge of the forex markets.
It starts off with a bite sized definition of what the forex markets are and what the purpose of forex trading is. It then covers the basics of forex pairs and how to develop entry and exit strategies. Brown introduces the concepts of trading psychology and offers tips for how to choose the right broker.
Brown also discusses his own trading strategies that the reader can use for guidance or inspiration.
Trading in the Zone: Master the Market with Confidence, Discipline, and a Winning Attitude by Mark Douglas
This book emphasises the importance of the trader’s state of mind when making decisions and tackles the common thought biases that can sabotage good practice.
It focuses on the game of probabilities that is involved in any act of trading, and spells out that the trader’s goal should always be to aim for consistent profits over time, rather than to become emotionally involved with the outcome of every single trade.
The book’s central thesis is that no matter how much technical or fundamental analysis has been carried out on the movements of the market, it is impossible to predict the outcome of a trade. Therefore what matters for making a profit in forex trading is developing a strategy with an edge that will lead to a higher probability of success over a series of trades.
As you might have realised, this is not the book for people who want to delve deep into the technical elements of forex trading. It’s very much about developing the right trading mindset, which can be just as important to success as more concrete skills such as knowing how to use Bollinger bands.
A Complete Guide to Technical Trading Tactics: How to Profit Using Pivot Points, Candlesticks & Other Indicators, by John L. Person
It’s good to balance out the abstract theory of forex with up to date technical tactics. This guide is written by a professional forex trader who explains how to use some popular technical tools such as candlestick charts. It provides plenty of examples with diagrams and charts so that the reader has a clear practical introduction to the topics.
The author shares his own experiences of using the various methodologies and introduces the reader to the futures and options market as well. It’s a good read for those who want to approach technical analysis tools with more confidence and discernment.
It will allow you to work out which ones work best for you, and which ones you might want to refer to in the future. By broadening your knowledge of technical trading tactics, you can become a more competitive trader.
Day Trading and Swing Trading Currency Market: Technical and Fundamental Strategies to Profit from Market Moves by Kathy Lien
This is a useful book for new traders who want to focus on making short term trades. This strategy often works well for those who are fitting trading in around a full time job or other commitment, because it allows you to dip in and out of trading at different times of the day.
Kathy Lien is a respected figure in the financial industry. She is a leading currency analyst and often makes guest appearances on financial news programmes. This is the third edition of her popular book that combines the theories of both technical and fundamental analysis to introduce readers to day trading and swing trading strategies.
Lien discusses the factors both long and short term that affect the value and movement of currency pairs and the technical trading strategies used by professional traders. Throughout the book, she demonstrates how to put theory into practice in a clear and concise manner.
Currency Trading for Dummies by Brian Dolan and Kathleen Brooks
The For Dummies series are a bit like Marmite: you either love them or loathe them. Whatever your view, there’s no doubt that the formula of concise and to the point prose with plenty of recaps and examples works well for many people.
The user-friendly approach will be appreciated by many new forex traders who want a clear and comprehensive overview of the forex markets. It discusses the major factors that drive the forex markets, different trading strategies and styles, and the importance of researching and devising your own strategy before you begin trading.
It also offers advice on risk management and discusses some of the most common pitfalls that can catch out new traders. The authors also take a look at the factors that they consider to be the most important traits of successful traders. This book is useful for beginners, and for those who want a refresher course in forex.
Market Wizards: Interviews with Top Traders by Jack D. Schwager
This book is a classic bestseller and is a fascinating insight into the personal stories behind the world’s most successful traders. The inspiring interviews with famous traders include Bruce Kovner, Richard Dennis, Paul Tudor Jones, Michel Steinhardt, Ed Seykota, Marty Schwartz, and Tom Baldwin.
The book dispels the myth once and for all that forex trading is an easy way to make money, or that it boils down to luck. The common thread to emerge from the interviews is a picture of solid trading strategies combined with mental and emotional discipline.
The author provides a series of takeaways for the reader that they can use to shape their own approach to trading.
America’s Bank by Roger Lowenstein
This book focuses on a key episode of history that led to the shaping of the world’s largest economy. You will not learn about any techniques and strategies that you can specifically apply to forex trading, but it is worthwhile devoting some time to understanding the background forces that built the current forex markets.
The events in America’s Bank relate to the aftermath of the financial crash of 1907, which wiped 50% of the value off the New York Stock Exchange. Prior to this crisis, many influential figures in American society were against the idea of a central bank.
However, the financial landscape was to be permanently changed by the event, and the author tells the dramatic story of how the Federal Reserve was created. Before the forming of a Central Bank, the American banking system was provincial and disorganised, and resistance to reform was strong.
Roger Lowensstein is a skilled financial journalist and weaves together a gripping narrative featuring the four men who were key to the founding of the Federal Reserve. It’s a fascinating tale of politics and power struggles that will seem all too familiar to modern day readers.
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