Here’s a question from a relatively new forex trader named Craig which gives me a bit more to work with than some others, like the one I answered yesterday.
I’ve recently (since July) been trading forex. I find it to be quite exciting and really enjoyable, but am looking at anything you might be able to suggest that will help improve profitability. I’ve been using some systems by J. Welles Wilder (Swing Index System to be precise) and I’ve found some success (have had a week with 18% gains, and other times where I’ve pretty much given that all back). So what type of resources/advice/readings could you suggest that would help me become more astute at reading the charts, interpreting market direction, etc as my goal is to hopefully turn my trading hobby into a full time job at some point in the future (looking several years down the road at a minimum).
This may sound strange, but a book which I found to provide a good starting point for simple chart reading is How to Make Money in Stocks. Obviously, that’s not a book about forex trading, but chart analysis is chart analysis and not market dependent. I consider that book the one which launched me on the path toward being a technical analyst and trader.
Of course John Murphy’s book Technical Analysis of the Financial Markets is considered the best overview of technical analysis methods. It’s a great place for anyone interested in pursuing technical methods to start. There are a great many different ways to approach technicals and the Murphy book can help you identify the one or ones which make the most sense to you.
Having that fit is extremely important, by the way. There’s a vast array of indicators and techniques. A lot of folks will argue the most of them don’t work. More correctly, most of them won’t work for you. Some will, though. Those are the ones you need to identify.
I think another great read for anyone getting into trading is Markets In Profile, by James Dalton. This book will help you understand the real inner workings of the markets and how/why prices move. The charting methodology and analytic techniques are the basis for the Following the Quest for Value
course I developed.
And I cannot present a listing of good books and such without mentioning Market Wizards, Jack Schwager’s collection of interviews with top traders and money managers. I consider them a must read for all traders.
In terms of tools, I’m a big fan of MetaStock. I have used it for many years in my own trading and analysis and also use it at work for my stock market analyst job.
I’m always open to answering questions. The more you give me to go on, though, the better I can be of assistance.