Technical Analysis of the Currency Market By Boris Schlossberg is worth reading if you want to understand how to make technical analysis work. Boris Schlossberg is the Senior Currency Strategist at FXCM. The first thing that Boris Schlossberg wants to make clear in his book is that technical analysis will not make you rich overnight. It wont turn $1,000 into $1 million in a matter of just a few weeks. Technical analysis is just a tool that can sharpen your trading but it alone cannot make you into a successful trader. For success, you need persistence, dedication, effort and a never ending desire to excel. That can only come if you keep on educating yourself with the new techniques.
What is critical for you is to understand is how the currency market works and what drives it. This knowledge is must if you want to become a successful trader. You will often hear academics disparaging technical analysis as a waste of time. According to most of the finance professors markets are random and there is no pattern in price charts. What these academics miss is that these chart patterns are just a reflection of the market sentiment. These chart patterns just reflect reactions of fear and greed in the market. What this means is that mimicking price patterns with random functions doesn’t make them random. But technical analysis can only provide you with a degree of expectancy and cannot guarantee 100% that a particular trade analysis will be correct.
So, you need to master technical analysis but always make sure that you understand the limitations of each type of technical analysis that you may employ. So, in chapter 1, Boris Schlossberg discusses FX 101, the basics. Chapter 2 discusses the above question is it all just random. Chapter 3 discusses the secret of trading.
Chapter 4 discusses the different charts patterns. I found the Chapter 7 on Fibonacci Trading useful as it explains why these fib levels work so well in the forex market. There are many explanations. But the explanation provided by Boris makes sense as he tries to explain how the currency market dynamics makes the one third and the two third of any market move important support and resistance levels. He also explains in depth how you can use these fib levels to scale into a trade or scale out of a trade whether trading retracements or breakouts. Scaling is very important. Most pro traders use scaling when they enter into a trade. You need to master this concept.
Chapter 10 on setups is very important. It shows how to use Bollinger Bands (BB) in trend trading, how to use a volatility stop, scalping to trend, the MACD turn and how to combine RSI with BB in detecting high probability trade setups. Whatever, Technical Analysis of the Currency Market: Classic Techniques for Profiting from Market Swings and Trader Sentiment (Wiley Trading)