MICHAEL DUANE ARCHER has been an active futures and FOREX trader for over thirty-five years. He has worked in various advisory capacities, notably as a commodity trading advisor, registered SEC investment advisor, and branch manager for Heinold of Hawaii. Archer currently trades and is involved in several technical analysis research projects. He hosts the FOREX website www.goodmanworks.com.

• Acknowledgments xixIntroductionAbout This Book xxiPart 1 The Foreign Exchange MarketsChapter 1 The World of FOREX 3Introduction—What is FOREX? 3What is a Spot Market? 4Which Currencies Are Traded? 4Who Trades on the Foreign Exchange? 5How Are Currency Prices Determined? 6When Do Currencies Trade? 8How is Money Made in FOREX? 8Why Trade Foreign Currencies? 9What Tools Do I Need to Trade Currencies? 13What Does It Cost to Trade Currencies? 13FOREX versus Equities 14FOREX versus Futures 14Summary 15Chapter 2 A Brief History of Currency Trading 17Introduction 17Ancient Times 17The Gold Standard, 1816 to 1933 18The Federal Reserve 18Securities and Exchange Commission, 1933 to 1934 20The Bretton Woods System, 1944 to 1973 21The End of Bretton Woods and the Advent of Floating Exchange Rates 21International Monetary Market 22Into the Millennium 22Arrival of the Euro 23The CFTC and the NFA 25Summary 25Chapter 3 Five FOREX Markets 27Introduction—Spot, Futures, Forwards, Options, Spread Betting 27Currency Futures 29Contract Specifications 29Currencies Trading Volume 30U.S. Dollar Index 30Volume and Open Interest 31Where to Trade Currency Futures 33FOREX Futures 33Summary 33Chapter 4 Regulation: Past, Present, and Future 35Introduction 35Regulation in the FOREX Market 35Regulation Past 36Regulation Present 39Regulation Future 43Summary 44Part 2 Getting StartedChapter 5 The Language of FOREX 47Introduction 47Currency Pairs 47Major and Minor Currencies 48Cross Currency 48Exotic Currency 48Base Currency 48Quote Currency 49Pips 49Ticks 49Margin 50Leverage 51Bid Price 52Ask Price 52Bid-Ask Spread 52Quote Convention 52Market Maker and ECN 53Transaction Cost 53Rollovers 54Correlation 54Summary 55Chapter 6 FOREX by the Numbers 57Introduction 57Pips 58Profit and Loss 59Margin 60Leverage 62The Bid-Ask Spread 62Profit Threshold 63For Futures Traders 66Summary 66Chapter 7 A Guide to FOREX Trading Platforms 69Introduction 69Trading Platform Features 71More Trading Platforms 79Professional FX Platforms 80Trading Platform Checklist 81A Kid in the Candy Store 82Summary 82Chapter 8 Selecting a FOREX Broker 83Introduction 83Broker-Dealer Due Diligence 84Demo Accounts 85Market Maker or ECN? 86Costs 87Liquidity Providers 89Customer Service 90Trading Pair Palette 91Financial Stability 91Complaint and Error Resolution 92Account Options 92Games Brokers Play 93Top Broker-Dealers 93Popular Broker-Dealers 99The Big Four Broker-Dealers 100For the Professional and Non-U.S. Trader 101Spread Betting 102Fraud, Scams, and Off-Exchange 103Broker-Dealer Checklist 103Summary 103Chapter 9 How to Open a FOREX Account 105Introduction 105The Demo Account 106The Live Account 107Redundancy 111Summary 113Chapter 10 Making the Trade 115Introduction 115Orders 115Market Orders 117Limit Orders 118Stop Orders 118Combination Orders 121Specialty Orders 121Order Placement 121Order Execution 122Order Confirmation 123Open Orders 123Open a Demo Account 124Summary 125Part 3 The Trader’s ArsenalChapter 11 The FOREX Marketplace 129Introduction 129Portals and Forums 130Broker-Dealer Reviews 133Educational Resources 133News and Calendars 135Management Tools 136System Development Tools 137Data Services 140Programming Services 142Advisory Services 142References, Periodicals, and Books 143Fun Stuff 145Summary 146Chapter 12 Technical Analysis 147Introduction 147Bar Charts 148Trendlines 151Support and Resistance 151Recognizing Chart Patterns 152Reversal Patterns 152Continuation Patterns 153Candlestick Charts 155Point and Figure Charts 157Charting Caveat—Prediction versus Description 160Indicators and Oscillators 161Relative Strength Indicator 161Momentum Analysis 163Moving Averages 164Bollinger Bands 165Indicator Caveat—Curve-Fit Data 167Wave and Swing Analysis 169Cycle Analysis 170Trading Systems 171The Technician’s Creed 171The Technician’s Caveat 171Summary 172Chapter 13 News Trading 173Introduction 173Fundamental Analysis 174Fundamental Problems 174Fundamental Factors 175A Fundamental Discussion 181FOREX News 186Key News Releases 186Reality versus Expectation 187News Trading 187Shockwave Analysis 189Strategy and Tactics of News Trading 189Summary 191Part 4 Winning is the Name of the GameChapter 14 Trading Spaces 195Introduction 195Charts, Bars, and Trading Spaces 196Trading Profiles 199Selecting a Trading Profile 201The Market as a Process 202Summary 203Chapter 15 Setting Up Shop 205Introduction 205The Plan Components 206The Trading Platform Plan 207Pre-Trade Plan 209Trading Session Plan 212Pulling the Trigger 213Post-Trade Plan 214Summary 216Chapter 16 A Simple System 217Introduction 217General Principles 218A KIS Toolbox 219A Simple System 220Not So Simple 227Pairs to Trade 228Summary 228Part 5 The Goodman Method of TradingChapter 17 Goodman Wave Theory 231Introduction 231The Basic Market Paradigm 232Goodman Wave Theory 234The Basic Goodman Setup 243Summary 244Chapter 18 The Propagation Trade Setup 245Introduction 245The PTS 245Summary 251Chapter 19 The Dagger, the Waltz, and the Line 253Introduction 253The Belgian Dentist 254Enter the Dagger 254Waltzing the Trade 257The Line! The Line! 264Summary 267Chapter 20 The Proactive Trader 269Introduction 269Laydowns 270Bathtub Analysis 271The Propagation Lens 272Looking Inward and Outward 273Multiple 3-C Counts 276Stations 276Ghost Trading 277Sitting On Your Hands 278Summary 279Chapter 21 The 30-Trade Campaign Program 281Introduction 281Capital Allocation 282The Tracks of Your Trades 286Pre-Trade Checklist 286Diagnostics 288Characteristics of Successful Traders 291Summary 293Chapter 22 Goodmanisms 295Goodmanisms 295Summary 298Part 6 Over the FOREX RainbowChapter 23 Tools for Traders 301Introduction 301Techniques 302Time Studies 315Fear and Greed, Greed and Fear 317Summary 318Chapter 24 Options and Exotics 321Introduction 321Options 322A Primer on Options 322Basic Options Terms 323Options: Pros and Cons 324The Four Basic Options Strategies 325Purchase or Write Options? 325Advanced Options Strategies 326The Greeks 326The Retail FOREX Options Landscape 327Options or Spot FOREX? 328Risk Management with Options 328Exotics 330Trading Exotics 332Summary 332Chapter 25 Managed FOREX 335Introduction 335Why Managed FOREX? 336Pros and Cons 336Types of Managers 337Types of Managed Accounts 338Trading Methods 340Performance Analysis 342Two Methods of Performance Analysis 345The Due Diligence Process 346Costs and Fees 350Spotlight on Managers 352Research and Resources 354Summary 355Chapter 26 Computer Trading 357Introduction 357Technical Analysis 357Expert Advisors 358Automated Trading, Agents, and BOTS 359Get on My Cloud 359High-Frequency and Ultra-High-Frequency Trading 360Into the Future of FOREX 362The Trend Machine 363Grid and Pac Man Programs 364Arbitrage 365Pros and Cons of Arbitrage 370Summary 371Appendix A: List of World Currencies and Symbols 373Appendix B: Time Zones and Global FX Trading Hours 379Appendix C: Central Banks and Regulatory Agencies 381Appendix D: Resources 385Glossary 389About the Author 403Index 405

MICHAEL DUANE ARCHER has been an active futures and FOREX trader for over thirty-five years. He has worked in various advisory capacities, notably as a commodity trading advisor, registered SEC investment advisor, and branch manager for Heinold of Hawaii. Archer currently trades and is involved in several technical analysis research projects. He hosts the FOREX website www.goodmanworks.com.

• Acknowledgments xixIntroductionAbout This Book xxiPart 1 The Foreign Exchange MarketsChapter 1 The World of FOREX 3Introduction—What is FOREX? 3What is a Spot Market? 4Which Currencies Are Traded? 4Who Trades on the Foreign Exchange? 5How Are Currency Prices Determined? 6When Do Currencies Trade? 8How is Money Made in FOREX? 8Why Trade Foreign Currencies? 9What Tools Do I Need to Trade Currencies? 13What Does It Cost to Trade Currencies? 13FOREX versus Equities 14FOREX versus Futures 14Summary 15Chapter 2 A Brief History of Currency Trading 17Introduction 17Ancient Times 17The Gold Standard, 1816 to 1933 18The Federal Reserve 18Securities and Exchange Commission, 1933 to 1934 20The Bretton Woods System, 1944 to 1973 21The End of Bretton Woods and the Advent of Floating Exchange Rates 21International Monetary Market 22Into the Millennium 22Arrival of the Euro 23The CFTC and the NFA 25Summary 25Chapter 3 Five FOREX Markets 27Introduction—Spot, Futures, Forwards, Options, Spread Betting 27Currency Futures 29Contract Specifications 29Currencies Trading Volume 30U.S. Dollar Index 30Volume and Open Interest 31Where to Trade Currency Futures 33FOREX Futures 33Summary 33Chapter 4 Regulation: Past, Present, and Future 35Introduction 35Regulation in the FOREX Market 35Regulation Past 36Regulation Present 39Regulation Future 43Summary 44Part 2 Getting StartedChapter 5 The Language of FOREX 47Introduction 47Currency Pairs 47Major and Minor Currencies 48Cross Currency 48Exotic Currency 48Base Currency 48Quote Currency 49Pips 49Ticks 49Margin 50Leverage 51Bid Price 52Ask Price 52Bid-Ask Spread 52Quote Convention 52Market Maker and ECN 53Transaction Cost 53Rollovers 54Correlation 54Summary 55Chapter 6 FOREX by the Numbers 57Introduction 57Pips 58Profit and Loss 59Margin 60Leverage 62The Bid-Ask Spread 62Profit Threshold 63For Futures Traders 66Summary 66Chapter 7 A Guide to FOREX Trading Platforms 69Introduction 69Trading Platform Features 71More Trading Platforms 79Professional FX Platforms 80Trading Platform Checklist 81A Kid in the Candy Store 82Summary 82Chapter 8 Selecting a FOREX Broker 83Introduction 83Broker-Dealer Due Diligence 84Demo Accounts 85Market Maker or ECN? 86Costs 87Liquidity Providers 89Customer Service 90Trading Pair Palette 91Financial Stability 91Complaint and Error Resolution 92Account Options 92Games Brokers Play 93Top Broker-Dealers 93Popular Broker-Dealers 99The Big Four Broker-Dealers 100For the Professional and Non-U.S. Trader 101Spread Betting 102Fraud, Scams, and Off-Exchange 103Broker-Dealer Checklist 103Summary 103Chapter 9 How to Open a FOREX Account 105Introduction 105The Demo Account 106The Live Account 107Redundancy 111Summary 113Chapter 10 Making the Trade 115Introduction 115Orders 115Market Orders 117Limit Orders 118Stop Orders 118Combination Orders 121Specialty Orders 121Order Placement 121Order Execution 122Order Confirmation 123Open Orders 123Open a Demo Account 124Summary 125Part 3 The Trader’s ArsenalChapter 11 The FOREX Marketplace 129Introduction 129Portals and Forums 130Broker-Dealer Reviews 133Educational Resources 133News and Calendars 135Management Tools 136System Development Tools 137Data Services 140Programming Services 142Advisory Services 142References, Periodicals, and Books 143Fun Stuff 145Summary 146Chapter 12 Technical Analysis 147Introduction 147Bar Charts 148Trendlines 151Support and Resistance 151Recognizing Chart Patterns 152Reversal Patterns 152Continuation Patterns 153Candlestick Charts 155Point and Figure Charts 157Charting Caveat—Prediction versus Description 160Indicators and Oscillators 161Relative Strength Indicator 161Momentum Analysis 163Moving Averages 164Bollinger Bands 165Indicator Caveat—Curve-Fit Data 167Wave and Swing Analysis 169Cycle Analysis 170Trading Systems 171The Technician’s Creed 171The Technician’s Caveat 171Summary 172Chapter 13 News Trading 173Introduction 173Fundamental Analysis 174Fundamental Problems 174Fundamental Factors 175A Fundamental Discussion 181FOREX News 186Key News Releases 186Reality versus Expectation 187News Trading 187Shockwave Analysis 189Strategy and Tactics of News Trading 189Summary 191Part 4 Winning is the Name of the GameChapter 14 Trading Spaces 195Introduction 195Charts, Bars, and Trading Spaces 196Trading Profiles 199Selecting a Trading Profile 201The Market as a Process 202Summary 203Chapter 15 Setting Up Shop 205Introduction 205The Plan Components 206The Trading Platform Plan 207Pre-Trade Plan 209Trading Session Plan 212Pulling the Trigger 213Post-Trade Plan 214Summary 216Chapter 16 A Simple System 217Introduction 217General Principles 218A KIS Toolbox 219A Simple System 220Not So Simple 227Pairs to Trade 228Summary 228Part 5 The Goodman Method of TradingChapter 17 Goodman Wave Theory 231Introduction 231The Basic Market Paradigm 232Goodman Wave Theory 234The Basic Goodman Setup 243Summary 244Chapter 18 The Propagation Trade Setup 245Introduction 245The PTS 245Summary 251Chapter 19 The Dagger, the Waltz, and the Line 253Introduction 253The Belgian Dentist 254Enter the Dagger 254Waltzing the Trade 257The Line! The Line! 264Summary 267Chapter 20 The Proactive Trader 269Introduction 269Laydowns 270Bathtub Analysis 271The Propagation Lens 272Looking Inward and Outward 273Multiple 3-C Counts 276Stations 276Ghost Trading 277Sitting On Your Hands 278Summary 279Chapter 21 The 30-Trade Campaign Program 281Introduction 281Capital Allocation 282The Tracks of Your Trades 286Pre-Trade Checklist 286Diagnostics 288Characteristics of Successful Traders 291Summary 293Chapter 22 Goodmanisms 295Goodmanisms 295Summary 298Part 6 Over the FOREX RainbowChapter 23 Tools for Traders 301Introduction 301Techniques 302Time Studies 315Fear and Greed, Greed and Fear 317Summary 318Chapter 24 Options and Exotics 321Introduction 321Options 322A Primer on Options 322Basic Options Terms 323Options: Pros and Cons 324The Four Basic Options Strategies 325Purchase or Write Options? 325Advanced Options Strategies 326The Greeks 326The Retail FOREX Options Landscape 327Options or Spot FOREX? 328Risk Management with Options 328Exotics 330Trading Exotics 332Summary 332Chapter 25 Managed FOREX 335Introduction 335Why Managed FOREX? 336Pros and Cons 336Types of Managers 337Types of Managed Accounts 338Trading Methods 340Performance Analysis 342Two Methods of Performance Analysis 345The Due Diligence Process 346Costs and Fees 350Spotlight on Managers 352Research and Resources 354Summary 355Chapter 26 Computer Trading 357Introduction 357Technical Analysis 357Expert Advisors 358Automated Trading, Agents, and BOTS 359Get on My Cloud 359High-Frequency and Ultra-High-Frequency Trading 360Into the Future of FOREX 362The Trend Machine 363Grid and Pac Man Programs 364Arbitrage 365Pros and Cons of Arbitrage 370Summary 371Appendix A: List of World Currencies and Symbols 373Appendix B: Time Zones and Global FX Trading Hours 379Appendix C: Central Banks and Regulatory Agencies 381Appendix D: Resources 385Glossary 389About the Author 403Index 405