Chapter 19

Ten Great Resources

In This Chapter

Discovering more about technical analysis

Developing strategy and discipline

Understanding emotions and psychology

Getting inside economic data reports

This book gives you a solid foundation for understanding the ins and outs of currency trading, but it can’t cover all the subdisciplines of trading, such as technical analysis, market psychology, and strategy development. Those subjects are deep enough and rich enough to warrant further study on their own as you develop your own trading style and favorite techniques. We think you’ll find the following suggested additional resources very helpful in gaining a deeper understanding of the technical tools, economic data reports, and practical applications of strategy and psychology.

Technical Analysis of the Financial Markets

Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications, by John Murphy (New York Institute of Finance), is the encyclopedia of technical analysis, written by perhaps the most prominent technical practitioner in the market. Murphy covers all the tools and all the rules in depth, from both a theoretical and a practical standpoint. Murphy also lays out one of the most comprehensive reviews of chart patterns you’ll find anywhere. If you’re going to have only one book on technical analysis in your library, make it this one.

Japanese Candlestick Charting Techniques

We’re huge proponents of candlestick charting, and for our money, Japanese Candlestick Charting Techniques: A Contemporary Guide to the Ancient Investment Techniques of the Far East, 2nd Edition, by Steve Nison (Prentice Hall), is the best book on candlesticks out there. Nison takes you inside the linguistic and cultural meanings behind the myriad candle patterns, which leaves you with a more intuitive understanding of the patterns. With that greater understanding, you’re more likely to spot viable candlestick patterns and understand what they’re telling you. We keep this book handy and refer to it frequently in our own candlestick observations. (We look at several key candlestick patterns in Chapter 11.)

Elliott Wave Principle

Elliott Wave Principle: Key to Market Behavior, by A. J. Frost and Robert R. Prechter, Jr. (Wiley), is the go-to guide if you’re interested in learning more about the Elliott wave principle. Elliott wave patterns are an important part of currency price movements, especially if you’re intending to trade from a medium- to longer-term perspective. This book explains the philosophy behind Ralph Nelson Elliott’s theories of price patterns and provides practical examples of how to apply those theories to all financial markets.

Technical Analysis For Dummies

Technical Analysis For Dummies, 3rd Edition, by Barbara Rockefeller (Wiley), is an excellent introduction to the many and varied tools and methods of technical analysis, all delivered in the easy-to-read For Dummies style. Rockefeller takes you through all the important tools and approaches, and provides plenty of real-life do’s and don’ts that you can apply to your own trading.

The Book of Five Rings

The Book of Five Rings, by Miyamoto Musashi and translated by William Scott Wilson (Shambhala), is known as Go Rin No Sho in Japanese. This relatively short book (about 150 pages) is a fascinating exposition on the philosophy of strategy and rules of tactical warfare. Musashi was the greatest samurai ever to live, and this book is his end-of-life distillation of all the rules of strategy and swordsmanship gained in his lifetime.

Musashi’s exhortations on timing and staying calm in the midst of chaos are as applicable to successful trading today as they were to martial artists in the mid-17th century, when the book first appeared. This book is not for a single reading only. Pull it out and reread it often. Not only does it contain advice on strategy and mental discipline, but it also offers lessons on personal fulfillment and finding a spiritual, focused, and balanced existence.

Market Wizards: Interviews with Top Traders

In Market Wizards: Interviews with Top Traders (Wiley), Jack D. Schwager, a veteran trader himself, interviews the legends of the trading world for their insights and philosophies of trading. Wizards is not confined strictly to the forex market; it offers a wider-ranging discussion of stocks, futures, and currency trading. In it, you learn how the likes of Richard Dennis, Bruce Kovener, and Paul Tudor Jones, to name just a few, approach trading. These traders are living legends today, but they all started out relatively modestly and succeeded through discipline, strategy, and diligence while managing intense psychological pressures. If you’re in search of a trading style, these guys have plenty to offer.

Come into My Trading Room

Come into My Trading Room: A Complete Guide to Trading, by Dr. Alexander Elder (Wiley), was written by a practicing psychiatrist and trader. Elder’s observations on the personal psychology and emotions of trading are especially insightful if you’re new to the markets. His book is a well-rounded overview of all aspects of individual trading, from understanding emotions to managing money and risk to following the habits of an organized trader.

Zero Hedge

Zero Hedge (www.zerohedge.com) is a news website and content aggregator that reports on economics and the goings-on of Wall Street. This is one of the first websites we check each day due to its contrarian analysis. It often takes the opposite side of what the market thinks, which can be a refreshing, and much-needed, change in perspective. The blog also posts the most interesting and relevant research from some of the world’s most prominent analysts. The posts are signed under a pseudonym, Tyler Durden, a character from the film Fight Club. There is a lot of speculation over who Tyler Durden actually is; at the time of writing, it is still unconfirmed. Be sure to check our Zero Hedge on Twitter at @zerohedge.

BabyPips.com

BabyPips.com (www.babypips.com) says it’s a “beginner’s guide to forex trading,” but some of the posts are fairly sophisticated, so we recommend it for the beginner to intermediate trader who is trying to up his game. One of the best things about this site is that some of the contributors talk you through their trades. They go through the reason for their trades, the setup, and the execution. They often post after the trades are closed out to let you know what went well and what didn’t, and why. This site is a good place to learn market dynamics and market discipline.

Forex Factory

Forex Factory (www.forexfactory.com) may not be as pretty as some other site, but it’s an extremely useful resource. Here’s why:

• It has one of the most-trusted economic calendars out there, which is extremely useful if your broker doesn’t provide you with one.
• It includes market news and has a trade feed with its members’ latest positions; the feed is updated in real-time.
• Perhaps the most useful thing about Forex Factory is its trader forums. These forums have different threads of conversation that offer you the chance to join a community of retail traders and talk through your ideas, problems, and so on.
• It’s free!