Ed Ponsi – Forex Patterns & Probabilities.pdf – Trading Software

PART I The World’s Most Dynamic Trading Market 1 CHAPTER 1 Getting Started in Forex 3 From Stocks to Forex 4 Getting to Wall Street 4 Welcome to the Jungle 5 Football and Forex 5 Stock Market Headaches 6 Welcome to Forex 9 A New Beginning 10 CHAPTER 2 All About Forex 11 The Canadian Dollar and the U.S. Dollar 11 The Euro and the U.S. Dollar 12 Trading Terminology 13 An Easy Way to Understand the Exchange Rate 23 CHAPTER 3 Questions and Answers 25 Why Does the Big Money Trade Forex? 25 Why Is Forex Suddenly So Popular? 26 vii viii CONTENTS How Do Traders Make Money in the Forex Market? 26 Why Do Currencies Trade in Pairs? 27 How Can I Trade Two Currencies at One Time? 28 How Is 24-Hour-per-Day Trading Possible? 28 How Is the Trading Day Structured? 29 Greenwich Mean Time 30 CHAPTER 4 Technical Analysis and the Forex Market 33 The Theory behind Technical Analysis 33 Statistical Survey 34 Fear of the Unknown 34 Trading Patterns and Technical Indicators 35 The Psychology behind the Market 36 Moving Beyond Technical Analysis 38 Trends 39 Proper Order 39 Fibonacci Techniques 41 CHAPTER 5 Things You Need to Know Before Trading Forex 43 The “Triple Threat” Trader 43 Gaining Experience 44 Which Pair to Trade? 45 Commodity Currencies 46 Don’t Limit Yourself 47 Trading and Karma 49 Schadenfreude PART II Trading Strategies for Trending Markets 51 CHAPTER 6 Understanding Trends and Tendencies 53 Trading Conditions 53 The Importance of Maintaining Objectivity 55 Begin with a Tendency 57 Putting the Trend to Work 59 50 Contents ix Self-Fulfilling Prophecy 59 Take Me to the River 60 How to Determine If the Market is Trending 61 CHAPTER 7 The Anatomy of a Trend 63 Why Trends Form 63 Don’t Fight the Trend 66 CHAPTER 8 Forex Multiple Time Frame Strategy 69 Why Does It Work? 70 Combining Fibonacci and Trend 71 Overbought Does Not Equal “Sell” 73 Picking Tops and Bottoms 75 The Entry Signal 76 Placing the Stop 76 Getting Out 77 Welcome to the Real World 79 Tweaking the Exits 79 Executing the Plan 81 Second-Guessing 82 Bringing It Home 83 The Devil’s Advocate 83 When to Stay Out 84 Reloading the Trade 85 Fantasy versus Reality 87 Phantom Signal 89 Temporary Success and Failure 89 The Stop Run 91 CHAPTER 9 The FX-Ed Trend Technique 99 Trends Are Self-Sustaining 99 Difference of Opinion 100 Big Money at Work 100 The Common Denominator 100 Long or Short 101 x CONTENTS Identifying the Trend 103 Filtering the Trend 104 The Catalyst 107 Placing the Stop 107 Volatility Stop 108 Comparing Apples to Apples 109 ATR Calculation 110 The Entry 110 The Stop 112 The Trade 112 Don’t Fish for Minnows 117 Back to the Trade 118 Denouement 120 The News versus the Trend 120 Appearances Can Be Deceiving 121 More Than One Chance 124 Partial Exit Exercise 125 Discretionary and Strategic Exits 126 Faulty Wiring 126 Partial Exit Technique 127 Reloading 128 Important Points to Consider 129 Final Thoughts 130 PART III Nontrending Trading Techniques 131 CHAPTER 10 The Ultimate Indicator 133 The Price Is the Key 133 Why Support Becomes Resistance 137 The Pleasure Principle and Trading 137 Price Action 139 Don’t Stand in Front of a Freight Train 140 CHAPTER 11 Keys to Intraday Breakouts 145 Ascending and Descending Triangles 145 Trend Filter 147 Contents xi Time-of-Day Filter 148 Summary CHAPTER 12 Pennants Flags Filtering Entries 164 Summary 168 CHAPTER 13 The Squeeze Play 169 The Cycle of Volatility 169 Perception Moves the Market 170 Volatility Breakout Strategy 176 CHAPTER 14 The Round Trip 181 Why Round Numbers Capture Our Attention 181 Why Round Numbers Are Effective 182 Round Numbers and Forex 182 The First Bounce Is the Best Bounce 183 Using the Moving Average 184 The Strategy in Action 186 CHAPTER 15 The Interest Rate Edge 193 Think Like the Big Boys 193 Interest Rate Differentials 194 Here’s How It Works 194 Changing Differentials 195 What’s the Big Deal? 196 Collecting Interest 196 U.S. Dollar/Japanese Yen 197 Long-Term Play 198 Looking Ahead 199 152 Flags and Pennants 153 154 162 xii CONTENTS CHAPTER 16 The Boomerang 201 Fading False Breakouts 201 The Strategy 202 Setting the Parameters 202 Entering the Trade 203 Simple but Effective 205 PART IV Take Control of Your Trading Destiny 207 CHAPTER 17 How to Achieve Spectacular Gains 209 Keep Your Eyes on the Road 210 Proper Goal Setting 210 Breaking Down Your Goals 212 Consistency Is the Key 213 What Happens When I Reach My Goal? 214 CHAPTER 18 The Forex Playing Field 215 Evening the Odds 215 The House Has the Edge 216 Make the Playing Field Bigger 216 But the Other Trading Instructor Said . . . 217 Let’s Do the Math 217 Changing the Equation 218 Why Doesn’t Everyone Do It? 219 Huge Gains with Minimal Effort! 220 What We Can Learn from the “Smart Money” 221 Now Get Out There and Win 221 CHAPTER 19 Trading Lessons from Life 223 Panic at the Beach 223 The Endless Tournament 224 Summary 225 Contents CHAPTER 20 xiii What You Don’t Know Can Hurt You 227 Sarcasm Alert! Know When to Retreat 228 The “95 Percent Winners Strategy” 229 Beware the Back Tester 230 Hypothetically Speaking 230 CHAPTER 21 A Tale of Two Traders 233 Individuals versus Institutions 233 The Difference Between Amateurs and Professionals 234 CHAPTER 22 Some Final Thoughts 237 A Good Trade Is Not the Same Thing as a Winning Trade 237 Proper Execution Is Critical 238 Take Responsibility for Your Actions 238 Keep It Simple 239 Physical versus Mental 239 In Closing 240 Glossary 241 Index 247

Ed-Ponsi-Forex-Patterns-Probabilities