The Forex Trading Course: A Self-Study Guide To Becoming a Successful Currency Trader

No Responses to “The Forex Trading Course: A Self-Study Guide To Becoming a Successful Currency Trader”

1. Andrew B
   November 23, 2009 at 4:55 pm

   This book fills the need for an entry level FX course, so if you’re just starting out, it is probably a good choice. I’ve got some experience in the securities industry, and I’m afraid I find it sloppy and shallow. If you’re taking a class taught by a knowledgeable professor, the book should work well to set you up for lectures. Personally I was hoping for more (I have a background in the securities industry), but I did learn from the book, and Mr. Cofnas does a pretty good job of pointing you to resources on the web.

   More description and more detail would have been nice in a lot of places. I’m about ½ way through the book now, but I still haven’t seen any indication that he is going to cover the differences between the different types of currency trades (spot, forward, etc…) that the major markets allow (most individual traders will be trading rolling spot, so this probably doesn’t matter as much for a beginner course).

   The writing is pretty sloppy. This is from page 3 – the first page of the first chapter! “In game of chance the key feature…” (subject-verb disagreement). “We begin in this chapter with an…” (certainly should lose the ‘in’ but “This chapter is…” would make Strunk and White happier).

   The technical explanations tend to be pretty confusing. In talking about the yield curve on page 23, he says “In normal times, people are willing to pay more for longer-term maturities and bonds.” First of all, by normal times he should mean when the yield curve is upward (when a 10 year CD is paying a higher interest rate than a 1 year CD) though I didn’t see any confirmation in the text (the yield curve has been upward more of the time for the last 100 years). So… does he mean the people issuing the bonds will pay more or the people buying them? Since companies typically issue bonds, let’s guess that by people he means investors purchasing bonds — BUT people will pay LESS for long maturities when the yield curve is “normal” (implying the securities have a higher yield which means that the purchaser needs to get paid more interest to lock up his/her money for a long time — a higher interest rate on a 10 year CD). To make what he says correct, it must be the bond-issuers (or the bank, if it is a CD) paying higher rates of interest for longer term securities. Very confusing! He never mentions the time-value of money (generally one expects that $1 now is worth more that getting $1 later — a bird in the hand is worth two in the bush). Further, he doesn’t talk at all about the various types of risk for longer terms (risk that the company will go under – favors a steeper yield curve, risk that you won’t be able to invest the money later at a good rate – flattens the yield curve). So he’s essentially saying that the yield curve is important. Granted, this is a confusing subject overall — it probably warrants more space in the book.
   
   His description of the influence of inflation on currency rates left me confused for a few reasons. Inflation was generally believed to be a good thing until about 1965 (if you owe people money, it decreases the real value of the amount you owe – those of us in debt probably wouldn’t mind a little inflation – provided we have adjusted our lifestyle to lower our costs). In fact, the recent rapid inflation in home prices was pretty positive for the economy (until it was unsustainable). So if you read any texts that are older (say, Keynes) you have to remember that they had a fundamentally different view of good and bad (generally the better economists try not to pass value judgements). Mr. Cofnas says that inflation is the enemy of central banks, so I’m immediately suspicious. Inflation is a term that describes the rate at which the currency changes value as measured against goods. A little inflation is believed to be good (particularly in a growing economy) because it stimulates spending. He seems to admit this later when he notes that most central banks have inflation targets, and they are not zero. The opposite of inflation is deflation, which can be very bad in a market economy, because it exerts pressure on people not to spend, therefore adding deflationary pressure creating a real problem for the economy (this is one of the things that probably contributed to the great depression in the 1930’s). Mr. Cofnas states that increases in inflation in a coutry are positive for the currency. However, I’m guessing that this is only true if the underlying strength of the currency remains somewhat stable (people are coming into the currency for higher rates). Otherwise, wouldn’t currency traders flock to one of the currencies that have %1,000+ inflation per year? Of course not, the currency is losing value compared to other currencies faster than investments that can be made in the currency are gaining value.
   
   Rating: 3 / 5
2. D. Michael Elkins
   November 23, 2009 at 5:16 pm

   At the outset, let me say that I am definitely at the beginner level with regard to the trading of currencies on forex, but I do feel that I learned a lot after reading this book.

   The most important lesson that I took away is that the novice trader needs to spend a heck of a lot of time trying different strategies risking very small amounts of money before before diving in and putting significant amounts at risk. Although there is nothing wrong with learning to trade with a practice account, the authors says that you shouldn’t begin with a practice account holding $50,000 or more and then trying to trade $100,000 lots using large amounts of leverage, even if you might be fortunate to have that much money with which to fund your initial real account.

   Prior to reading this book I would have assumed that I would always be trying to earn at least 50 or more pips a trade, however this author teaches that there is nothing wrong with simply trying to get a string of wins of only 10 pips at a time until you have a solid record of consistency that would justify going for larger returns. As a novice, I will certainly take his advice to heart and would recommend this book to anyone else who is not already a veteran currency trader.
   Rating: 5 / 5
3. Daniel Leon
   November 23, 2009 at 7:15 pm

   This is a great book. It filled in a lot of the missing info that new forex traders are missing in their everyday trading. This book has a nice mix of technical and the fundimentals that are missing in a lot of other author’s books. This book should be in every new trader’s library.
   Rating: 4 / 5
4. Mikael Tulloch-reid
   November 23, 2009 at 7:55 pm

   Definately for beginners – deals with some fundamentals, but not much more. The final chapter of the book directs the reader to the author’s website and promises that one can download the ” Learn4x Trading Pad ” which ” uniquely offers built-in analytics on trader performance, allowing the trader to track key performance results”. The link however doesn’t work and I was unable to find, much less download the Trading Pad at the author’s site. I did see several inducements to purchase his book. This was a real let down, as I think most beginners would find such a tool extremely useful in honing their skills.
   Rating: 2 / 5
5. Richard Reed Jr.
   November 23, 2009 at 8:10 pm

   This book is supposed to be for beginners in forex. But it is very poorly done. It mostly deals with fundamental analysis, but in a very unorganized and unstraight forward fashion. He shows bar charts and candlestick charts without bothering to explain how to read them. He even starts talking about pips without explaining what a pip is. Then he just gives the standard overview of technical analysis. Nothing truly in depth. He mentions using a practice account, but kind of pooh-poohs it. Then he challenges people to open $5,000 and $10,000 accounts and make 10-15 pip trades. This is not good in my opinion.

   A person should open a practice account an stick with it until they can make money consistantly. Then they should open a small account ($1,000-$2,000) and trade partial lots till they get the hang of it. And unless they like scalping (10-15 pip trades), they should aim for 100 pip trades. The only way I could ever make only 10 pips is to risk 30.

   Read Currency Trading for Dummies. It is a very well thought out, organized, and certainly more informative than the Forex Trading Course. The dummies book also has suggested reading at the end for further study. The Forex Trading course has a few books mentioned throughout, but considering how bad The Forex Trading Course is put together, I wouldn’t trust the books listed outright.
   Rating: 2 / 5