The FX Bootcamp Guide to Strategic and Tactical Forex Trading

A straightforward guide to trading today's dynamic Forex market

Written by Wayne McDonell, the Chief Currency Coach at FX Bootcamp, this book shows readers how to successfully trade the Forex market on their own. FX Bootcamp's Guide to Strategic and Tactical Forex Trading skillfully explains how to combine popular technical indicators to formulate a comprehensive market strategy. Readers will then learn how to focus on using this information to create a tactical trading plan--one that will help them pull the trigger to get in and out of a trade. Along the way, McDonell takes the time to discuss the various challenges a Forex trader faces, such as greed, fear, loss, and isolation. As a Forex trader and educator of traders, Wayne McDonell knows what it takes to make it in the competitive world of Forex. And with FX Bootcamp's Guide to Strategic and Tactical Forex Trading he shows readers how.

Preface xi

Introduction 1

Which Do You Do? 2

Part One Basic Training 5

Chapter 1 Lagging Indicators 7

Moving Averages 7

Moving Average Convergence Divergence (MACD) 9

Bollinger Bands 14

Standard Deviation 19

Summary 19

Chapter 2 Leading Indicators 21

Price Support and Resistance 21

Fibonacci Retracements 24

Fibonacci Extensions 29

Summary 33

Part One Summary 34

Part Two Strategic Analysis 37

Chapter 3 How to Gather Market Intelligence to Formulate a Trading Strategy 39

Spy Plane View 39

Inflation Sensation 40

Central Banking 42

Inflation Targeting 42

Cost of Money 42

Money Magnets 43

Interested in Valuation 44

Foreign Exchange 45

Demanding Consequences 45

House of Cards 46

Not Interested 46

Summary 49

Chapter 4 The Carry Trade 51

Free House 53

Scary Carry 54

Power Yen 55

Summary 56

Chapter 5 Forex and the Fed 57

Forex Economics 57

The Federal Reserve System 69

Summary 73

Chapter 6 Commodity Correlations 75

Commodity Correlation: Oil 75

Commodity Correlation: Gold 77

Commodity Correlation: Equities 78

Trading Commodities 81

Summary 81

Chapter 7 Greenback Guru: Why You Should Specialize in Trading U.S. Dollars 83

What’s Your USD Bias? 84

Currency Correlation Coefficient 85

Trading Currency Correlation 86

Trading a Basket of Currencies 88

Petrodollars 89

Yet another Reason 90

Summary 90

Part Two Summary 91

Part Three Rules of Engagement 93

What’s the Time? 94

Chapter 8 Market Analysis 95

Speed of the Market 95

Momentum of Price 101

Summary 104

Chapter 9 Fundamental Analysis 105

Economic Announcements 105

Global Money Flow 106

Interest Rates and Currency Values 106

Market Bias 107

Announcement Calendar 108

Summary 110

Chapter 10 Technical Analysis 111

Self-Fulfilling Prophecy 111

Range Analysis 112

Trend Analysis 121

Pivot Analysis 126

Summary 132

Chapter 11 Risk Analysis 133

Fear of Loss 133

Fear of Profit 134

Limits 134

FX Bootcamper Credo 135

Limits for Loss 136

Limits for Profit 138

More Tactics for Trade Entry and Exits 139

Your Mind’s Eye 140

Do Nothing 141

Do You Have the Guts? 142

Second Chances in Forex 143

Summary 145

Part Three: Summary 146

Part Four Tactical Planning 149

Chapter 12 Candlestick Patterns 151

Reversal Patterns 152

Reverse and Continuation Patterns 158

Trending Only 161

Summary 162

Chapter 13 Range Trading 163

Get in the Ring 163

Floors and Ceilings 164

Over and Out 165

Summary 169

Chapter 14 Trading the News 171

Conservative News Trades 174

Summary 182

Part Four Summary 183

Part Five Psychological Warfare 185

Chapter 15 How to Cope with Pre- and Post-Trading Stress Disorders 187

Going Mental 188

Common Thread 189

Understand Yourself, Understand Your Trades 191

Summary 193

Chapter 16 Trade Journals 195

3X the 4X 201

Summary 202

Chapter 17 Target Practice 203

Summary 205

Chapter 18 Three-Year Plan 213

FX Business Planner 213

Risk Management 216

Summary 222

Part Five Summary 223

Chapter 19 Closing Notes 225

The Genesis of FX Bootcamp 225

Lead by Example 227

Additional Support 228

Index 231

WAYNE McDONELL is the Chief Currency Coach of FX Bootcamp (www.fxbootcamp.com), a live Forex training organization. He is a professional Forex trader, a member of the National Futures Association, and a registered Commodities Trading Advisor. Respected in the Forex industry as a successful trainer, McDonell is a regular speaker at major investing conferences and expos in Asia, Europe, and America. His videos are syndicated around the world on outlets including Forex Television, FXstreet.com, MoneyShow.com, and MSN. His live trading Webinars have attracted up to 1,000 traders each. McDonell has written "how-to" articles for investing magazines, such as Your Trading Edge and the FOREX Journal magazine. He has also received notoriety in the National Post, TechWeek, Interactive Week, and Inc. magazine to name a few. In The Art of War, renowned military strategist Sun Tzu states, "The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand." While this observation comes from one of the oldest military treatises in the world, it's an important piece of advice for traders looking to win in today's dynamic Forex market.

As the Chief Currency Coach at FX Bootcamp, author Wayne McDonell helps clients around the world excel in the Forex field by training them to develop and execute a trading plan with military precision. Why does this approach work so well? The answer is simpleâ??trading Forex is similar to war in that they are both zero-sum games, and in Forex trading, this means that one trader's gain can only come from another's equivalent loss. So, outthinking your opponent is essential to victory in both of these arenas.

Divided into five comprehensive parts, The FX Bootcamp's Guide to Strategic and Tactical Forex Trading puts this competitive market in perspective and shows you how to achieve success within it. This reliable resource opens with a detailed look at the technical indicators you'll need to use in your trading endeavors. From here, you'll discover how to combine these popular indicators to formulate a comprehensive strategy and learn how to use this information to create a tactical trading planâ??one that will help you pull the trigger to get in and out of trades.

Besides introducing you to a proven Forex trading methodology and showing you how to improve performance by running your trading operations like a business, this book also addresses some the most important psychological aspects of tradingâ??including greed, fear, loss, and isolationâ??and discusses what you must do to overcome such obstacles.

In Forex trading, patience and discipline are just as important as technical and fundamental analysis. With The FX Bootcamp's Guide to Strategic and Tactical Forex Trading, you'll discover how developing positive trading habits and the right trading skills will put you in a better position to profit over the long haul.

Praise for The FX Bootcamp's GUIDE TO Strategic and Tactical Forex Trading

"Wayne McDonell is the most popular Forex speaker on our Web site. His live training and educational events draw large crowds of traders because he can explain complex Forex trading concepts in a common language that anyone can understand. This book does the same. I highly recommend it."
—Francesc Riverola, CEO of FXstreet.com

"If you're looking for specific strategies and methods for making money with currency trading, you need to start reading this book today. Wayne knows from experience what it takes to succeed in the Forex markets. He provides step-by-step instructions and explains in common language what to look for in charts and in the news to find profitable trades immediately. Don't make a single Forex trade until you've read this book!"
—Tim Bourquin, founder of The Forex Trading Expo

With The FX Bootcamp's Guide to Strategic and Tactical Forex Trading, McDonell shares his invaluable experience as a Forex trader and commodities trading advisor with you. Filled with in-depth insights and practical advice, this straightforward guide will teach you how to think for yourself and trade successfully—relying on your own technical, fundamental, and even psychological analysis. First, you'll become familiar with the indicators—from moving averages to price support and resistance—that form the foundation of the trading methodologies discussed in the book. Then, you'll discover how to put together a trading plan, and trade that plan for maximum profits. Along the way, McDonell also takes the time to discuss the various challenges you may face while trading Forex and explains how treating your trading operations like a business can improve overall performance.

If you want to be a successful Forex trader, you must have a firm understanding of how the global market works and how to trade it. With The FX Bootcamp's Guide to Strategic and Tactical Forex Trading, you'll quickly learn how to gather intelligence, formulate a strategy, and confidently pull the trading trigger.