Forex Chartist Companion: A Visual Approach to Technical Analysis / Edition 1

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The foreign exchange (Forex) market has quickly become the market of choice for traders looking to increase their profit potential. The combination of high liquidity and low transaction costs-as well as twenty-four-hour accessibility-has attracted the attention of both new and veteran traders.

In The Forex Chartist Companion, authors and active Forex traders Michael Archer and James Bickford provide a visual window into the behavior of the Forex market along with detailed information on the mechanics of day trading, market entry timing, and much more. With this book as your guide, you'll not only become familiar with innovative software and charting systems that provide a graphical interpretation of the markets, but you'll also discover how to instantly see patterns throughout those markets.

Divided into six comprehensive parts, The Forex Chartist Companion:

  • Details Forex-specific charting techniques
  • Illustrates the use of point and figure charting in conjunction with Forex trading
  • Explores Forex swing charting
  • Outlines a variety of Western and Japanese reversal charts-from pivot charts to Kagi charts
  • Examines the actual trading system of veteran futures guru Charles Goodman

Filled with numerous charts-annotated with Archer's insight into the material-and in-depth information regarding charting theory, The Forex Chartist Companion will help serious traders use technical indicators to enter this market with confidence and exit with profits.

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Product Details

  • ISBN-13: 9780470073933
  • Publisher: Wiley
  • Publication date: 1/29/2007
  • Series: Wiley Trading Series , #297
  • Edition number: 1
  • Pages: 384
  • Sales rank: 1,022,041
  • Product dimensions: 7.09 (w) x 9.98 (h) x 0.98 (d)

Meet the Author

MICHAEL DUANE ARCHER has been an active commodity futures and Forex trader for over thirty years. He has worked in various advisory capacities, notably as a commodity trading advisor and a SEC-registered investment advisor. Archer operates and is a professional Forex money manager. He is also the author of Getting Started in Currency Trading, which is also published by Wiley.

JAMES LAUREN BICKFORD began trading in commodity futures in the early 1980s. Since 2001, he has focused his investment efforts solely on trading spot currency pairs via online Forex dealers. Bickford's academic background is in computer science, mathematics, and statistics. By profession, he has been a software engineer for nearly three decades.

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Table of Contents

Acknowledgments     xv
Introduction     xvii
Forex-Specific Charting Techniques     1
Streaming Data     3
Overview     3
Tick Chart     3
Spread Chart     4
Conclusion     5
Activity     6
Overview     6
Activity Bar Chart     6
Composite Activity     8
Time of Day Activity Chart     8
Day of Week Activity Chart     9
Equi-Activity Chart     10
Activity Mercury Chart     10
Uptick-Downtick Mercury Chart     12
Conclusion     13
Direction     14
Overview     14
Direction Chart     14
Direction Mercury Chart     16
Activity-Direction Mercury Chart     17
Conclusion     18
Forex versus Futures     19
Overview     19
Pip Differential Chart     19
Activity versus Volume and Open Interest     22
Conclusion     22
Arbitrage     23
Overview     23
Transitivity     23
Triangular Arbitrage Chart     24
Equilibrium     25
Major Currencies     28
Observation     28
The Mundo     29
Overview     29
Forex Beta     29
Mundo Line Chart     31
Weighting     32
Mundo Bar Chart     33
Observation     33
Range Charts     34
Overview     34
Range Bar Chart     34
Composite Range Charts     35
Time of Day Range Chart     35
Day of Week Range Chart     37
Average Interval Range Chart     37
Observations     38
Absolute Momentum     39
Overview     39
Absolute Momentum     39
Time of Day Momentum Chart     40
Day of Week Momentum Chart     41
Conclusion     42
Two-Dimensional Momentum     43
Overview     43
Two-Dimensional Momentum Chart     43
Islands     45
Smoothing     47
Observation     47
Moving Trend Analysis     49
Overview     49
Linear Regression     49
Ordinary Least Squares Method     50
Coefficient of Correlation     51
Trend Oscillators     51
Moving Slope Oscillator     52
Moving Correlation Oscillator     52
Moving Trend Index     52
Observations     54
Point and Figure Charting     55
History of Point and Figure Charting     57
Overview     57
History     58
The Point and Figure Algorithm     59
Overview     59
P&F Anatomy     59
Box Size     59
Reversal Amount     60
Unraveling Bar Quote Data     61
P&F Algorithm     61
Time Representation     62
Trend Lines     63
Support and Resistance     63
Trend Lines     63
Buy Signals     65
Sell Signals     65
Double Tops and Bottoms     67
Overview     67
Double Top Pattern     67
Double Bottom Pattern     68
Double Top Signals     68
Double Bottom Signals     70
False Signals     72
Signal Percentages     72
Observations      74
Triple Tops and Bottoms     75
Overview     75
Triple Top Pattern     75
Triple Bottom Pattern     76
Triple Top Signals     76
Triple Bottom Signals     78
False Signals     79
Signal Percentages     79
Observations     81
Triangles     82
Overview     82
Ascending Triangles     82
Descending Triangles     83
Symmetrical Triangles     83
Triangle Signals     84
Ascending and Descending Frequencies     84
Symmetrical Frequencies     87
Observation     87
Pattern Frequencies     89
Overview     89
Box Size = One Pip     90
Box Size = Two Pips     92
Box Size = Three Pips     93
Inverse Patterns     94
Usage     94
Breakout Analysis     96
Overview     96
Preceding Columns     97
Succeeding Columns     100
Observations     102
Count Methods     104
Overview     104
Horizontal Count (Buy)      104
Horizontal Count (Sell)     106
Vertical Count (Buy)     107
Vertical Count (Sell)     108
Observations     109
Plotting Point and Figure Charts in Real Time     110
Overview     110
Tools of the Trade     110
Trading Platform     110
Trading Goals     111
Starting the Process     111
Real-Time Example     111
Performance Evaluation     114
Forex Swing Charting     115
Fibonacci Primer     117
Overview     117
Fibonacci the Man     117
Fibonacci the Series     118
Fibonacci the Ratios     119
Fibonacci the Equations     120
Binet's Formula     122
Interpretation     122
Resources     124
Swing Charts     125
Overview     125
Definitions     125
Box Size     126
Reversal Amount     126
Swing Reversal Algorithm     127
Time Alignment     128
Practical Examples     129
Composite Swing Charts     132
Usage      132
The Measured Move     134
Overview     134
Testing Approach     135
Cluster Charts     135
Average Retracement     137
Decile Divisions     139
Practical Examples     141
Conclusion     146
The Fifty Percent Principle     147
Overview     147
Testing Approach     147
Initial Results     148
Increasing Tolerance     150
Improving The Third Wave Forecast     152
Overview     152
Methodology     153
Multiple Regression     154
Quartiles     154
Practical Examples     157
Fifty Percent Principle     160
Fifty Percent Examples     160
Forecasting The Fourth Wave     162
Overview     162
Testing Approach     162
Practical Examples     164
Improving the Forecast     164
Three-Wave Trending Cycles     165
Trending Example     166
Three-Wave Nontrending Cycles     166
Nontrending Example     167
Extending the Forecast     167
Estimate Charts     168
Live Usage     170
Cycle Frequencies     171
Overview     171
Two-Wave Cycles     171
Three-Wave Cycles     173
Four-Wave Bull Cycles     175
Four-Wave Bear Cycles     177
Usage     178
Bull Cycles     180
Overview     180
Ideal Bull Cycle     180
Objective     181
Initial Results     182
Praxis     183
Caveat     185
Further Studies     185
Bear Cycles     186
Overview     186
Ideal Bear Cycle     186
Objective     187
Initial Results     187
Praxis     188
Caveat     190
Swing Properties     191
Overview     191
Wave Anatomy     131
Simple Ratios     192
Swing Averages     192
Swing Data Preliminaries     194
Bivariate Data     195
Swing Volatility     197
Swing Velocity     199
Swing Summary     200
Overview      200
Selecting Swing Parameters     200
Composite Average Estimates     202
Caveat     207
Other Reversal Charts     209
Western Reversal Charts     211
Overview     211
Geometric Chart     211
Trend Outline Chart     213
Pivot Chart     215
Observation     216
Japanese Reversal Charts     217
Overview     217
Renko Chart     217
Kagi Chart     220
Three-Line Break Chart     224
Goodman Swing Count System     227
History     229
Charles B. Goodman     229
The Right Brackets     230
Later Developments     230
Ordinal Principles     233
Ordinal versus Cardinal     233
The Measured Move     233
Congestion Phase     234
Equilibrium of Buyers and Sellers     235
Cardinal Principles     238
Overview     238
Price Surge     238
Multilevel Matrices     239
Compensation     241
Carryover     241
Cancellation      242
Intersections     244
Five Points of a Goodman Wave     245
Double and Triple Intersections     246
Goodman versus Elliott     247
Overview     247
Propagation     248
The Return     249
Charting Study     251
Overview     251
Notation     251
Matrix     251
Propagation     253
Simple/Complex     254
Fat/Thin     255
Goodman and Computers     255
World Currencies     259
Exchange Rates     264
Euro Currency     267
Global Banking Hours     269
Monthly OHLC and Activity Charts     271
Daily OHLC and Activity Charts     282
Time of Day Charts (Activity)     293
Time of Day Charts (Range)     297
Time of Day Charts (Momentum)     301
Day of Week Charts (Activity)     305
Day of Week Charts (Range)     311
Day of Week Charts (Momentum)     317
Comparative Statistics     323
Unraveling Bar Quotes     325
Visual Basic Source Code (Point and Figure)      331
Visual Basic Source Code (Swing)     338
Resources     341
Index     349
About the Authors     361
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