Thirty Days of Forex Trading

10/01/2006 12:00 am EST

Focus:

Raghee Horner

Author, Forex Trading for Maximum Profit

The author of this book is well known on the seminar circuit, so I was interested in learning more about Raghee Horner's methods and reading her trading journal. In the first chapter of this book, her second, she discusses her methods and philosophy of trading. The majority of her trading is done in the six major forex markets, which all track the dollar in relationship to another currency. The dollar versus the Euro is one of the most widely watched markets, followed by the dollar versus the Yen, Australian dollar, Swiss franc, and Canadian dollar. Her philosophy of trading as stated is well thought out, as she trades because she enjoys it. As she tells the reader, If you are trading with the sole interest of making money, you will burn hot, burn up, and burn out. Basically, I would agree, because the pressure of having to trade well to make money has doomed many traders.

The central feature of her trading method is what she calls the Wave. This is made up of three, 34-period exponential moving averages (EMA); one of the high, one of the close, and one of the low. These moving averages act as what she calls dynamic support and resistance, and allow her to measure and identify market cycles. Then if these three EMA's are rising towards the region between 12 and three o'clock on a clock face, the market is trending higher. Conversely, if the EMA's are falling at a slope pointing to 4-6 o'clock on a clock face, the market is in a downtrend. As she notes, different strategies are used in trending and non-trending markets. Swing trading techniques are used in trending markets while momentum methods are used in non-trending periods. Approximately 80% of her trading is momentum based with the remainder being swing trading.

Throughout the book you will see hot zones mentioned; these are the periods leading up to and extending to one minute after releases of fundamental data. Unlike many forex traders that I know, who avoid these periods because the swings can be very wide and the risk hard to control, she favors trading during these periods. Raghee watches multiple time frames in her trading but does not use the signals from longer term data to confirm the signals from the short-term data. She says to remember two things: that a stop-loss represents the point at which a trade is no longer valid, and to scale out of your position as you reach your profit targets.

The bulk of the book is made up of her 30-day trading journal, which many students of the markets will find quite interesting. Some days that she covers are difficult to follow, even for an experienced trader, and the very short-term nature of some of her trades will not be suitable for many traders. Despite this, she does accurately portray the difficulties of short-term trading. The day-to-day details of her trading days demonstrate her enthusiasm and love of trading, which is helpful, if not essential, in a successful trading career.

She concludes her book with a brief description of the CCI or Commodity Channel Index. Her other favorite indicator is the MACD, which she uses to confirm her momentum trades. For someone who has experience in forex trading, there are quite a few nuggets of information that prove beneficial. These include a detailed description of the different types of orders she uses and why, as well as the most liquid times of the day to trade. Also included in the book is a CD that provides more detail on the trades that are executed in the book, with commentary by the author. Her charts are generally much easier to follow on the CD as is her application of Fibonacci projections. For the novice trader, I would suggest getting some trading experience before applying some of her short-term trading tactics to the markets.

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