Beat the Forex Dealer: An Insider's Look into Trading Today's Foreign Exchange Market (Wiley Trading)

The foreign-exchange market is often referred to as the Slaughterhouse where novice traders go to get ‘chopped up’. It is one of egos and money, where millions of dollars are won and lost every day and phones are routinely thrown across hectic trading desks. This palpable excitement has led to the explosion of the retail FX market, which has unfortunately spawned a new breed of authors and gurus more than happy to provide misleading and often downright fraudulent information by promising traders riches while making forex trading ‘easy’.

Well I’ll let you in on a little secret: there is nothing easy about trading currencies. If you don’t believe me then stop by Warren Buffet’s office and ask him how he could lose $850m betting on the dollar or ask George Soros why his short yen bets cost him $600m not once but twice in 1994. What’s wrong with these guys, don’t they read FX books?

In reality, the average client’s trading approach combined with the unscrupulous practices of some brokers make spot FX trading more akin to the games found on the Vegas strip than to anything seen on Wall Street. The FX market is littered with the remains of day traders and genius ‘systems,’ and to survive in the long-run traders have to realize that they are playing a game where the cards are clearly stacked against them.

Have you ever had your stop hit at a price that turned out to be the low/high for the day? Bad luck perhaps? Maybe. What if it happens more than once? Do you ever feel like the market is out to get you? Well guess what, in this Zero Sum game it absolutely is.

Covering the day-to-day mechanics of the FX market and the unsavoury dealings going on, Beat the Forex Dealer offers traders the market-proven trading techniques needed to side-step dealer traps and develop winning trading methods. Learn from an industry insider the truth behind dirty dealer practices including: stop-hunting, price shading, trading against clients and ‘no dealing desk’ realities.

Detailing the dealer-inspired trading techniques developed by MIGFX Inc, consistently ranked among the world’s leading currency trading firms, the book helps turn average traders into winning traders; and in a market with a 90% loss rate winning traders are in fact quite rare! More than just a simple manual, Beat the Forex Dealer brings to life the excitement of the FX market by delivering insights into some of the greatest trading triumphs and highlighting legendary disasters; all written in an easy to read style. By stripping away the theory and getting down to the core of trading, you too will find yourself on the way to beating the forex dealer!

To receive the latest news and updates please see the authors website www.beattheforexdealer.com

One of the pioneers in foreign-exchange trading, Agustin Silvani developed one of the first retail-oriented currency programs and currently leads the team of professionals at MIGFX Inc, consistently rated among the top-ten currency traders as ranked by Barron’s, Futures, and Currency Trader Magazine. Mr Silvani’s experience in FX ranges from the interbank to the retail sector, helping manage portfolios ranging from $1 million to more than $10 billion in size, and is a regular contributor to the financial press.

As you may have guessed, this book takes its name from Edward O. Thorp’s landmark work on blackjack, Beat the Dealer. In 1962, the M.I.T mathematics professor revealed to the public the gambling industry’s tricks and traps, while at the same time managing to teach a successful method for playing the game of twenty-one. Likewise, you will find this book roughly split into two parts: the first half is dedicated to revealing the foreign-exchange market’s unfair practices, and the second half is designed to help the retail FX trader implement an effective and winning game plan by providing trading tips and detailed examples.

The retail brokers that have sprung up recently would like you to believe that currency trading is a high form of financial speculation, but in reality the new breed of online FX brokers share too many of the traits employed by casinos to ensure that in the long-run the odds are stacked in their favor, including:

* The “house” always has the advantage (the spread)
* The “house” feeds off of the player’s greed and actively promotes it (by offering trading signals, excessive leverage , and fancy platforms resembling slot machines!)
* The “house” adopts various dubious risk management controls, which include cheating and cutting-off winning players

Thorp’s original Beat the Dealer was brilliant in that he focused his energy on a niche game (blackjack) which featured changing odds. In a game with fixed odds (such as the lottery) a player is virtually assured ruin, while a game with shifting odds allows the smart player to effectively control his risk while maximizing his gains. Although the long-run odds may not favor the player, a set of rules can be adopted that allow the gambler to “play” only when the odds are in his favor; thus greatly improving his chance for success. Playing in this way enables you to refrain from gambling (betting on luck) and concentrate on playing the probabilities instead. FX traders need to take a cue from their card-playing counterparts and learn to trade only when the odds are shifted in their favor. In this spirit, the last part of this book is dedicated to exposing high-probability trades commonly seen in the intra-day FX market, which can effectively be used to “double up” when they are seen.

Dealers make particularly tough opponents for traders because they act on better information. Although it’s hard to bluff when the other party knows your cards, you can however profit by betting on their actions, and a dealer’s actions are very predictable after all. You know what they want (your money), and you have a rough idea of how they will come after it (running stops, shading prices, fading moves, etc.); all that you now need is a way to exploit these actions. Throughout this book you will find information meant to help you identify and counteract typical dealer traps, which if implemented correctly can instantly improve your trading profits. Many of these are exactly the same techniques used by hedge funds and CTAs to exploit loopholes left by their dealers, which can also be used successfully by the retail trader to dramatically improve their daily P/L.