Friday, January 1, 2021

Best forex books

Best Forex books

Ensured by Luckghin fx

The benefits of a good book for traders are endless – new knowledge, experience of battle seasoned colleagues, and innovative ideas. The best trading books by itself can’t make you rich and successful, it contributes to determination of the way to your further learning and self-improvement. Reading best books on Forex trading should be approached comprehensively, it is recommended to makes notes of appropriate points, calculation formulas, factors that cause fluctuation of exchange rates and everything that might be useful for future work.

The entire complex of top literature sources on the Forex market can be divided into two groups: literature, forming a general idea about trading on the Forex market, written in encyclopedic manner, and popular books on specific issues. Further classification involves an impressive range of applicable criteria, such as day trading books or books on fundamental analysis or books on technical analysis or some other kinds. Let us specify some of them.

First, specificity of the analyzed markets (stock market, Forex, options).
Second, methodology (methods of technical or fundamental analysis, intraday trading or long term investing, wave analysis, or point and figure charting, etc.).
Third, depth of detalization (description of general trade principles or a particular trading method or description of the specific trading strategies with comprehensive explanation of the rules of entry, exit, lot amount, etc.).

Some popular books are written as the description of the author’s trading strategy, specific software packages. The last type of best trading books for Forex traders is captivating in its specifics, but it should be borne in mind that without knowledge of the general principles and other methods you will not be able to develop and modernize the system under changing market conditions.

Selection of literature for new and experienced traders differs significantly. The relevant Forex books for beginners are of vital necessity, as they have to learn the basics of Forex before proceeding to real trading. For an experienced trader with extensive theoretical and practical knowledge it will also be useful to track down information, appearing in new editions. Such branch of knowledge, as Forex market trading, is characterized by high dynamics of development: new strategies, techniques, analysis, trading platform, expert advisors and indicators.

While reading best forex trading books you need to be constantly aware of innovations, to improve skills in order to trade more efficiently. If we are speaking about Forex trading books for beginners, they, first of all, should be easy-to-follow. Of course, you will not be able to work effectively in the Forex market without the knowledge of many specific terms and concepts (for example, lot, spread, leverage) and best trading books will help you to get all the necessary knowledge.

So, let us specify those top 10 forex books, which, in our opinion, can serve as a good start on Forex or clarify some theoretical or practical aspects of the trading mechanism. A description of the literary source is given according to the following pattern: author, title, summary, strengths/weaknesses, recommendations for the training level of the intended audience.

1. E. L. Neiman “Small encyclopedia of trader” This popular book is one of the best trading books and forex books for beginners. It may be attributed to the series “little bit of everything”. Describes the basics of fundamental and technical analysis. Contains useful information on trading psychology. Due attention is given to risk management. To use this book effectively you should have basic knowledge about the market.

Fundamental analysis lets you predict price movement, having regard to macroeconomic statistics, economic and political news of the countries which currency is traded on the Forex market. The books, covering fundamental analysis, familiarizing currency traders with the financial markets mechanism, that they can’t see just analyzing graphs of exchange rates on the screens of the terminals. Fundamental analysis establishes the relationship of exchange rates with the economic situation and competitive position of the trading countries, explains the objectives and instruments of monetary policy of Central banks, shows the relationship between various financial markets, the reasons of their ups and downs. Among the most famous and popular best books on forex trading on fundamental analysis, we can note the following works: A. Damodaran “Investment fables – exposing the myths of win-win exchange strategies”, D. Greenblatt “The Little Book That Beats the Market”, S. Cottle, R. Murray, F. Block “Securities Analysis by Graham and Dodd”, L. Levy, J. Linden “Backstage Wall Street”, Frank Knight “Risk, uncertainty and profit”, Richard J. Teweles “Stock market” and others.

Technical analysis is the method of price forecasting and market movement based on price history with construction of charts. It’s statistical-mathematical analysis, which assumes that prices are characterized by directional movement, history repeats itself, and the market movement considers everything. There are many tools and techniques used to conduct technical analysis of the market. In addition to above mentioned work of E. L. Neimann, here we shall note the following books on technical analysis: D. Schwager “Technical analysis. Full course”, A. Ehrlich “Technical analysis of commodity and financial markets”, J.J. Murphy “The Visual Investor”, R. Bensignor “New thinking in technical analysis”, Cornelius Luca “Technical Analysis Applications in the Global Currency Markets”, Michael Kahn “Technical analysis”, T.R. DeMark “The New Science of Technical Analysis”, C. LeBeau and D. Lucas ” Technical Traders Guide to Computer Analysis of the Futures Markets” and others. These are the books that describe all the intricacies of technical analysis, analysis tools and their use.

2. S. B. Achelis “Technical Analysis from A to Z”. This book is written by the author, who is the development engineer of the famous program Metastock, which on its own speaks a lot. There is nothing superfluous in this book. The scheme of presentation is the follwoing: the indicator, definition, interpretation, example, calculation (formula).

3. J. J. Murphy’s “Technical analysis of the futures markets: theory and practice”. You should pay special attention to this book, as many authors are using it for writing their own works, and it is considered to be one of the best books for traders. It is no exaggeration to say that this is the first and one of the most complete books on technical analysis. A huge plus is the simplicity of presentation.

4. B. Williams “New Trading Dimensions: How to Profit from Chaos in Stocks, Bonds, and Commodities”. Very original and interesting book. It will just suffice to mention one statement: “Technical analysis doesn’t work”. It contains very detailed description of trading on the basis of fractals and the “Alligator”. The book provides clear and complete algorithm for making financial decisions. A large amount of theoretical material (chaos theory, information theory) may be attributed to disadvantages.

5. R. Fisher “Fibonacci Applications And Strategies For Traders”. If You are familiar with the Elliott wave theory and would like to explore it in more details, then this book is for you. Operation with 5 wave pattern, corrections and many other issues.

6. Yuri Zhvakolyuk “Intraday trading in the Forex market”. The title of the book speaks for itself. The main attention is paid to the technical analysis and Japanese candles in particular. There is no a word about the fundamental analysis. Of course, intraday trading is not based on fundamental analysis, but it is worth to mention its impact on the prices movement within a trading day (for example, decisions on interest rates). The book will be useful to the traders who know the basics of trading. I do not recommend this book for beginners.

Among the most popular day trading books that describe the specifics and strategy of day trading in the foreign exchange market we can name the following works: Larry Williams “Long-term secrets to short term trading”, Kathy Lien “Day Trading the Currency Market”, Van K. Tharp’s “Financial Freedom Through Electronic Day Trading”, Wolff K. “Momentum Investing”, L.B. Raschke “Swing Trading: Rules and Philosophy”, Farrell, K.A. “Day Trade online”, Friedfertig M., West J. “E- intraday trading”.

7. V. N. Lihovidov “Fundamental analysis of global currency markets: methods of forecasting and decision making”. In the book the main indicators of economic activity and the degree of their influence on the market are described. A large number of examples is provided.

8. A. Elder “Stocks basics”. The book describes one of the famous trading strategies – the “three screens”. Much attention is given to technical analysis, but of most interest are the chapters on the psychology of trading. The author is not only trading on the stock exchange, but is a practicing physician. The book will be interesting for any trader regardless of level of knowledge.

9. S. Nison “Japanese Candlestick Charting Techniques: graphical analysis of financial markets”. The book contains detailed explanation of rules of the Japanese method of technical analysis application. Today this method is widely spread. This is one of the best forex books on “candles”.

10. Alex Nekritin and Walter Peters “Naked Forex: High-Probability Techniques for Trading Without Indicators”. The book contains description of trading methods based on the analysis of price charts without the use of complex mathematical or graphical models. All is very simple and understandable.

In this article the author has made an attempt to represent the general overview of best books on forex trading, focusing on such fundamental aspects as the technical analysis and fundamental analysis, day trading, and of course on training for beginners in the Forex market. Studying this work will allow the trader to form an idea about the foreign exchange market and to use the information obtained in practice, when managing his account.

We wish you success in trading!

Notes; The sequence in which the literature sources are described, is random and limited. All evaluations, qualifications, conclusions and recommendations given in this article about best books for traders do not claim to be scientific or absolutely objective and are formed on the basis of professional experience, knowledge and skills of the author. This material reflects solely the author’s point of view on the covered issues and cannot be considered as the paid expert opinion.

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Importants to know about support and resistance

How To Trade Based on Support and Resistance Levels

How to Use Support and Resistance to Make Better Trading Decisions

Simply put, an area of support is where the price of an asset tends to stop falling, and an area of resistance is where the price tends to stop rising. But traders really need more information about support and resistance beyond those simple definitions before they attempt to make trading decisions based on those areas in a chart.

To use support and resistance effectively, you first need to understand how asset prices typically move, so you can then interpret support and resistance from that framework. You also need to be aware that there are different types of support and resistance, such as minor and major/strong. Minor levels are expected to be broken, while strong levels are more likely to hold and cause the price to move in the other direction.

Using Trendlines

Support and resistance levels for trend and chart patterns — EURUSD 1-Minute Chart with Various Types of Support and Resistance. MT4

Support and resistance are highlighted with horizontal or angled lines, called trendlines. If the price stalls and reverses in the same price area on two different occasions in succession, then a horizontal line is drawn to show that the market is struggling to move past that area.

In an uptrend, the price makes higher highs and higher lows. In a downtrend, the price makes lower lows and lower highs. Connect the highs and lows during a trend. Then extend that line out to the right to see where the price may potentially find support or resistance in the future.1

These simple lines highlight trends, ranges, and other chart patterns. They provide traders with a visual of how the market is currently moving and what it could do in the future.

Major and Minor Support and Resistance Levels

minor and major support and resistance on 1-minute chart — Gold futures 1-minute chart with minor and major support and resistance. MT4

Minor support and resistance levels don't hold up. For example, if the price is trending lower, it will make a low, then bounce, and then start to drop again. That low can be marked as a minor support area since the price did stall out and bounce off that level. But since the trend is down, the price is likely to eventually fall through that minor support level without much problem.

Areas of minor support or resistance provide analytical insight and potential trading opportunities. In the example above, if the price does drop below the minor support level, then we know the downtrend is still intact. But if the price stalls and bounces at or near the former low, then a range could be developing. If the price stalls and bounces above the prior low, then we have a higher low and that is an indication of a possible trend change.

Major support and resistance areas are price levels that have recently caused a trend reversal. If the price was trending higher and then reversed into a downtrend, the price where the reversal took place is a strong resistance level. Where a downtrend ends and an uptrend begins is a strong support level.

When the price comes back to a major support or resistance area, it will often struggle to break through it and move back in the other direction. For example, if the price falls to a strong support level, it will often bounce upward off it. The price may eventually break through it, but typically the price retreats from the level a number of times before doing so.2

Trading Based on Support and Resistance

trading based off support and resistance — Gold futures 1-minute chart with potential trades based on trend and support and resistance. MT4

The basic trading method for using support and resistance is to buy near support in uptrends or the parts of ranges or chart patterns where prices are moving up and to sell/sell short near resistance in downtrends or the parts of ranges and chart patterns where prices are moving down.

It helps to isolate a longer-term trend, even when trading a range or chart pattern. The trend provides guidance on the direction to trade in. For example, if the trend is down but then a range develops, preference should be given to short-selling at range resistance instead of buying at range support. The downtrend lets us know that going short has a better probability of producing a profit than buying. If the trend is up and then a triangle pattern develops, favor buying near support of the triangle pattern.3

Buying near support or selling near resistance can pay off, but there is no assurance that the support or resistance will hold. Therefore, consider waiting for some confirmation that the market is still respecting that area.

If buying near support, wait for a consolidation in the support area and then buy when the price breaks above the high of that small consolidation area. When the price makes a move like that, it lets us know the price is still respecting the support area and also that the price is starting to move higher off of support. The same concept applies to selling at resistance. Wait for a consolidation near the resistance area, then enter a short trade when the price drops below the low of the small consolidation.

When buying, place a stop loss several cents (or ticks or pips) below support, and when shorting, place a stop loss several cents, ticks, or pips above resistance.

If you're waiting for a consolidation, place a stop loss a couple cents, ticks, or pips below the consolidation when buying. When selling, the stop loss goes a couple cents, ticks, or pips above the consolidation.

When entering a trade, have a target price in mind for a profitable exit. If buying near support, consider exiting just before the price reaches a strong resistance level. If shorting at resistance, exit just before the price reaches strong support. You can also exit at minor support and resistance levels. For example, if you're buying at support in a rising trend channel, consider selling at the top of the channel.

In some cases, you may be able to extract more profit if you let a breakout occur, instead of selling at minor support/resistance. For example, if you're buying near triangle support within a larger uptrend, you may wish to hold the trade until it breaks through triangle resistance and continues with the uptrend.

There is also a concept that old support can become new resistance or vice versa. This isn't always the case but does tend to work well in very specific conditions, such as a second chance breakout.

False Breakouts

Asset prices will often move slightly further than we expect them to. This doesn't happen all the time, but when it does it is called a false breakout. If our analysis shows that there is support at $10, it is quite possible that the price could drop through $10, to $9.97 or $9.95 for example, and then start to rally again. Support and resistance are areas, not an exact price. Expect some variability in how the price acts around support and resistance. It is unlikely to stop at the exact same price as before.

False breakouts are excellent trading opportunities. One strategy is to actually wait for a false breakout, and enter the market only after it occurs. For example, if the trend is up, and the price is pulling back to support, let the price break below support and then buy when the price starts to rally back above support.4

Similarly, if the trend is down, and the price is pulling back to resistance, let the price break above resistance and then short-sell when the price starts to drop below resistance.

The downside to this approach is that a false breakout won't always occur. Waiting for one means good trading opportunities could be missed. Therefore, it is typically best to take trading opportunities as they come. If you happen to catch the odd false breakout trade, that's a bonus.

Because false breakouts occur on occasion, the stop loss should be placed a bit of distance away from support or resistance, so that the false breakout isn't likely to hit your stop loss position before moving in your anticipated direction.

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