Essentials of Foreign Exchange Trading by James Chen, CTA, CMT

Reviewed by Mike Carr, CMT

Foreign exchange trading is largely driven by technical analysis, and in this short book Chen offers insights into the markets, trading strategies, and details on the mechanics of forex trading.

The book is very well suited to the novice trader. The primer on technical analysis offers a great review for CMT candidates. It also highlights the importance of Elliott Wave and Fibonacci numbers in forex trading.

More experienced traders in stocks, bonds, or commodities will benefit from the book’s comprehensive explanation of the mechanics of the market. As traders know, each market has its unique personality and forex is no exception. It is very important to understand the subtleties and drivers of the markets. This is especially true in highly leveraged markets where losses can mount quickly.

In explaining the markets, Chen offers valuable insights into the fundamental factors that lead to moves in a currency. While technicians often ignore fundamental data in the stock market, it is impossible to do so in forex. Fundamentals include interest rates and economic data. In a leveraged market, news releases, whether expected or unexpected, can lead to dramatic price shocks.

Overall, Chen presents an authoritative source for those new to technical analysis or experienced technicians wanting to explore a new trading option. Forex is a growing market and offers too many opportunities for the technical trader to ignore.

James Chen, CTA, CMT, is Chief technical Strategist at FX Solutions. James writes daily currency analysis, leads forex trading seminars, and has authored numerous articles on currency trading strategy and technical analysis for major financial publications, including Forbes.com, Futures magazine, Technical Analysis of Stocks and Commodities, and SFO.