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Trading Book Reviews

Book Review: Currency Trading in the Forex and Futures Markets

[easyazon-link asin=”0132931370″][/easyazon-link]I’ve just finished going through [easyazon-link asin=”0132931370″]Currency Trading in the Forex and Futures Markets[/easyazon-link] by Carley Garner. This is the second of Carley’s books I have read following A Trader’s First Book on Commodities. That book, and her regular article writing, motivated me to include Carley as a contributor to my Trading FAQs book and to do an interview with her in support of that. As you will soon find out, this existing relationship has little bearing on my objectivity where this new book is concerned.

On the plus side, this book does a pretty good job of outlining the different ways one can trade the currency market (spot, futures, options, ETFs). There are good explanations of the mechanics of forex trading in its different forms, as well as the primary methods used in the analysis of the market. This includes an in-depth discussion of the Commitment of Traders (COT) report as well as a limited section on forex seasonals.

My major issue with the book is the author’s bias. She is a futures broker, which puts a major lean in her perspective. This is not unexpected, but the blatantly manipulative fashion in which she casts retail spot trading in a negative light is something I find distasteful. She does it repeatedly in the early parts of the book by presenting some of the often-discussed concerns that have come up in the spot arena over the years (mainly related to forms of potential dealing-desk broker manipulations) with full commentary about how and why this could be a risk for someone getting into the market. Then, at the very end, after ratcheting up the reader’s fear level, she finishes with a line something like, “But that almost never happens.” This is the sort of thing I come to expect from politicians, not from book authors.

The casting of spot forex in a negative light, either directly or specifically relative to futures, happens throughout the conversation. I don’t mind that she has a preference, but I’d like to see a more objective discussion with less of an outright attempt to influence the reader. (I personally have traded forex through all the markets she discusses and continue to do so in different ways based on what I’m trying to do in the markets)

There’s also something of an error of omission in the comparison of spot and futures in terms of interest rates. The author rightly comments on the whole roll-over, interest carry mechanism that takes place in the spot market at the end of each trading day. She fails (as far as I saw) to note that the interest rate differential is also a factor in the futures market as it is priced in.

For me the negatives outweigh the positives, so I’m not inclined to recommend this book, though I did like her previous one.

Make sure to check out all my trading book reviews.

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Reader Questions Answered

VectorVest and Trading Forex in IRAs

Back in action after nearly a week off leading up to my 40th birthday!

It’s nice to see that the markets didn’t really do very much while I was away, which actually makes what I wrote about in my last post, Watching for a Market Explosion or Implosion, even more so. Now I’m stressing about getting my holiday shopping taken care of ASAP (don’t for get the The Trader’s Wish List). 🙁

I got a couple of quick questions while I was on break (along with several happy birthdays). The first was this:

Are you familiar with the market timing and analysis “system” used in/by VectorVest? If so, what are your thoughts about it as a research source?

I personally haven’t ever looked at VectorVest (coincidentally, one of the commercials was just running on CNBC). I encourage any reader of this post to share their views if they are or have used the service, however.

The other quick question was this:

Can you trade currency with a Roth IRA acct?

While you can certainly trade currency ETFs in an Individual Retirement Account (Roth or otherwise), actually trading spot forex, or even futures, is a harder thing because of their highly speculative nature. If you have your IRA account set up with a traditional broker or other financial institution then the answer is very likely to be negative. There are ways, however, to open IRA accounts which are less constrained (can invest in real estate, etc.). I forget the exact term for those accounts (self-directed IRA, or something like that).