Forex Conquered

03/01/2007 12:00 am EST

Focus:

John Person

Founder and President, John Person, Inc.

Having read John Person’s second book,Candlestick and Pivot Point Trading Triggers: Setups for Stock, Forex, and Futures Markets, last year, I have been looking forward to his views on one of my favorite markets, Foreign Exchange, or Forex (FX). His new book, aptly titled Forex Conquered, is due out this month, but I was lucky enough to get an advance copy.

In the early chapters of his book, John discusses the pros and cons of trading FX via the cash and futures markets. He also reviews open interest and COT data that are unique to the futures market but shows how they can provide valuable information whether you are trading the cash or futures. Several chapters are spent reviewing the trading tools that he feels are important. These methods include pivot point analysis, pivot point moving averages, Stochastics, MACD and most importantly, candlestick charting. All are applied to the Forex markets, with clearly labeled charts. One chapter is completely devoted to specific candle formations which John finds the most important. He also reveals how he uses moving averages of the pivot point values as a trading system. Though some of these concepts were covered in his second book, he repeatedly emphasizes the importance of a disciplined approach in his discussion of entries, exits and stops. If you have actually traded the cash FX markets, his advice rings true, since I’ve known these markets to get away from a trader so quickly it gives them vertigo.

There are also chapters on applying Elliott wave and Fibonacci analysis to the Forex markets. Pivot point analysis, Fibonacci projections and candle formations he finds work especially well in combination. For example, observing a reversal candle formation at Fibonacci and pivot point resistance or support gives the trader additional reasons to enter or exit a position.

In the latter part of the book, John brings everything together first by explaining how he tested three of the trading systems or methods he had discussed previously. Included is a brief but valuable review of the information and criteria one should consider when testing a trading system. If you are considering trading foreign exchange, these system tests will give you a head start in developing your own trading system.

The last three chapters I found most compelling, as they cover selecting the time frames you should follow (depending on what type of trader you are), stop placement, and risk management, concluding with a discussion of the psychology of trading. I especially liked his table in Chapter 11, entitled “Trader’s Negative Traits and the Remedies”. I could have used a table like this when I started trading (and later), as it definitely covers most of the pitfalls that traders must confront.

If you are considering trading the Forex market this book deals honestly with the realities of succeeding as an FX trader and will prove to be a good investment. The book includes a CD ROM and Pivot Point calculator that were not available at the time of the review. Having previously used the calculator and given the high quality of John’s past work, these bonus items just give one another good reason to buy this book.

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