Forex Made Simple: A Beginner’s Guide to Foreign Exchange Success

Table of Contents Chapter 1: History of foreign exchange Introduction of the gold standard Major influences on foreign exchange since World War II The Bretton Woods Accord The Nixon Shock The Smithsonian Agreement Free-floating currencies Currency reserves The European Community and the introduction of the euro Recent growth of foreign exchange markets Interest rate volatility International business operations Increased international trade and the use of currency hedging Automated dealing systems The internet and retail traders Chapter summary Chapter 2: Major currencies, economies and central banks Major world currencies The United States dollar The euro The Japanese yen The British pound The Australian dollar The Swiss franc The Canadian dollar Central banks Monetary policy Interest rates Open market operations Reserve requirements Central banks and the foreign exchange market Repurchase agreements Foreign exchange intervention The rise of central banks US Federal Reserve System European Central Bank Bank of Japan Bank of England Reserve Bank of Australia Swiss National Bank Bank of Canada Chapter summary Chapter 3: The foreign exchange markets and major participants Forex market participants The inter-bank market Companies and businesses Hedge funds Investment management firms Retail foreign exchange brokers and traders Various currency markets The forwards and swap market Swaps Currency futures The spot market Chapter summary Chapter 4: Retail forex dealers and market makers Forex market structure Retail forex dealers Market makers or dealing desks Retail forex dealers or non-dealing desks Choosing a retail forex dealer that suits you Are they regulated? If so, in which country? What is their capitalisation? How user-friendly and reliable is their trading platform? What customer support do they provide? What types of accounts do they offer? What leverage is offered and what is their margin call policy? Chapter summary Chapter 5: The mechanics of trading forex Trading forex is trading money The mechanics of forex trading Base and quote (or counter) currencies Currency pairs Long or short? Understanding pips Lot sizes Example 1 Example 2 Example 3 The bid/offer spread How the trader and the dealer can both make a profit Fractional pips Margin and leverage When to trade forex Chapter summary Chapter 6: How to place a forex trade Placing a trade Opening a trade at market Using stop and limit orders to enter a trade Rollover The carry trade Chapter summary Chapter 7: Currency futures The mechanics of trading currency futures Long or short? Novation Standardised contracts and specifications Delivery (or maturity) date Settlement Contract size Understanding tick values E-micro currency futures Bid/ask spread Margin and leverage Spot forex and currency futures compared OTC versus regulated exchange Lot sizes and specifications Pips and ticks Brokers, dealers and market makers Liquidity and transparency Leverage and margin It’s all about choice Chapter summary Chapter 8: Macro economics and how it affects forex Economic theory Purchasing power parity theory Balance of payments theory Real interest rate differential theory Economic data and indicators that affect foreign exchange values Economic indicators Gross domestic product Balance of trade Industrial production Durable goods orders Construction indicators Retail sales Consumer confidence index Institute for Supply Management Index Conference Board Leading Economic Index® Inflation indicators Consumer price index Producer price index Commodity Research Bureau Futures Index Employment indicators Non-farm payrolls Employment Cost Index Important economic indicators for the major global economies Important economic indicators for the Eurozone Important economic indicators for Japan Important economic indicators for the United Kingdom Important economic indicators for Australia Important economic indicators for Switzerland Important economic indicators for Canada Chapter summary Chapter 9: Money management for forex Swinging for the fences Defining losses Setting stop-loss levels How much capital can you afford to lose? Using leverage and position sizing Leverage and small accounts Chapter summary