Forex on Five Hours a Week: How to Make Money Trading on Your Own Time

211 Pages·2010·6.51 MB·English

by  Raghee Horner

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Forex on
Five Hours
a Week
How to Make Money Trading
on Your Own Time
RAGHEE HORNER
Editedby
JEFFREY ALAN BRANDZEL
JohnWiley&Sons,Inc.
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Copyright(cid:1)C 2010bySuperiorManagement,LLC,d/b/aInTouchMarketing,andRaghee
Horner.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
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LibraryofCongressCataloginginPublicationData:
Horner,Raghee.
Forexonfivehoursaweek:howtomakemoneytradingonyourowntime/RagheeHorner.
p. cm.–(Wileytradingseries)
Includesindex.
ISBN978-0-470-43643-1(cloth)
1.Foreignexchangemarket. 2.Foreignexchangefutures. 3.Speculation. I.Title.
HG3851.H6682010
332.4(cid:2)5–dc22
2009044762
PrintedintheUnitedStatesofAmerica.
10 9 8 7 6 5 4 3 2 1
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Contents
Preface vii
Acknowledgments xi
CHAPTER 1 Making Money in Up and Down Markets 1
FillintheBlanks 2
ABullIsontheLoose! 3
Shorting 4
CHAPTER 2 Full-Time Trading = Full-Time Job 9
EmployeeMindset 11
ConfessionsofaChartJunkie 12
AnalyzingtheMarket 14
IdentifytheTrend 16
TimeFrames 16
CHAPTER 3 The Wave 19
Sinking,Soaring,orSideways? 23
MarketCycles 23
AWish 28
MarketMemory 28
TradewithPrice 31
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iv CONTENTS
CHAPTER 4 Objectivity 33
Indicators 34
OrderEntry 35
StopLoss 36
RiskManagement 38
Trendlines,Support,andResistance 41
StaticandDynamicLines 41
CHAPTER 5 The Magic of Lazy Days Lines 43
FibonacciAnalysis 44
LazyDaysLinesatWork 45
UsingLazyDaysLines 46
TheWaveinAction 48
Real-LifeLazyDaysLines 54
Comprehension+Confirmation=Confidence 55
CHAPTER 6 The Only Entries You Need 57
MomentumTrading 58
SwingTrading 63
ShortCycleSet-Ups 68
InsidetheRange 71
CHAPTER 7 Around the World 73
Who’sAwake? 74
FinancialCentersYouNeedto
Know 75
PrimeTime! 76
PipMovement 81
ADaywiththeEUR/USD 82
TimeOut! 85
ChoosingYourTradingTime 95
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Contents v
CHAPTER 8 Market Pulse 97
U.S.DollarIndexandUSD/CAD 104
U.S.DollarIndexandAUD/USD 110
CHAPTER 9 Trading Psychology 117
StayinBalance 119
TheRoleofExperience 120
TradingforReal 123
ThePsychologyofMarketCycles 125
ThePsychologyofNews 125
ThePsychologyofTime 127
ThePsychologyofNumbers,Entries,
andExits 128
CHAPTER 10 Psychological Numbers 131
UsingtheHerd 133
The200SMA 133
52-WeekHighsandLows 135
CHAPTER 11 Trading Edge 137
TheRightSideoftheChart 145
ConsumerConfidence 146
RiskAppetite 148
SelltheNews 148
CHAPTER 12 Is My Broker Friend or Foe? 153
The2PercentQuestion 155
StopLossPlacement 156
Triage 158
TradingTruths 158
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vi CONTENTS
CHAPTER 13 Embracing Automation 163
ChartingTools 166
ProfitTargets 166
Fifteen-MinuteSet-Ups 170
CHAPTER 14 Raghee Recommends 179
Final Thoughts 183
Index 187
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Preface
F
orex on Five Hours a Week is about having a life! But more than
that,it’saboutchallengingassumptions.Somewherealongtheline,
weweretaughtthatforsomethingtobeeffectivemeansitmustbe
time consuming. We’ve mistaken time spent for effectiveness. If we de-
cided to buck the trend, it’s dismissed as laziness, akin to looking for a
shortcut.Thisattitudecomesfromanemployeemindset.I’vebeenanem-
ployeeforatotalof22monthsofmyadultlife.Idon’tsaythistobrag.I’m
quite unemployable, as my luck would have it. Consequently, I was basi-
cally shoehorned into figuring out how to make a living without clocking
inandcollectingapaycheckeachweek.
I am not going to bore you with all the details as to how I discov-
ered I could make a living trading the markets. The bottom line is that
along the way, making every rookie mistake that could be made (twice),
I learned that the markets are just an extension of human behavior and
nothingnearlyassophisticatedorcomplicatedasWallStreetwouldhave
MainStreetbelieve.
I’ve been lucky enough to be able to share with you what I do each
day,andIdon’ttakethisprivilegeforgranted.AsIhavetraveledtheglobe
teachingandtalkingaboutthemarkets,itdawnedonmethatfartoomany
traders and would-be traders were addicted. They’re market junkies. I’ve
heard stories about traders who arise in the early hours of the morning
totrade;traderswhohavelaptopsintheirbathrooms;traderswhospend
upwardsof16hoursadayanalyzingchartsandcreatingsystems.I’mnot
goingtobelaborallthestoriesI’vebeentold,buttrustme,thelistgoeson
andon,and,frankly,theygetstrangerandstranger.Isthiswhattradingis,
anaddiction?
If more time spent trading and analyzing yielded better results, heck,
Iwoulddoit.Butitdoesn’t.Bottomlineisthatjustasmanytradersstink
todayastheydid20,30,50yearsago,andtherearemoretradersinthemar-
kets now than ever before. Present-day traders have sophisticated equip-
ment, unprecedented access to data, order flow, and transparent order
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viii PREFACE
entry.I’msmilingrightnowasIthinkbackwhenIbeganasahighschool
studentwithpaperchart,ruler,andpen.
Whileateenager,inmyinitialtradingstage,IrealizedIwasapart-time
trader. And in reality, so are most traders. If we wanted a job, I’m sure
there are easier ways to make a living and not put ourselves through the
meat grinder of being a trader. If you’re reading this because you think it
willbeeasy,kindlyclosethisbookandputitbackfromwhereyoufound
it.Butletmesay,itain’thard!
SowhatexactlyisForexonFiveHoursaWeek?It’saboutunderstand-
ing that more is not better. Better is better. Forex on Five Hours a Week
willshowyouhowtoanalyzethemarket,howtousevisualandobjective
tools,andthenformulizeaplantotradesuccessfully.Thisisnotdaytrad-
ing,whichIdon’tdo.Thisisnotinvesting,althoughmanyofthestrategies
inthisbookcouldhelpyouwiththatfacetofyourportfolio.Thisisabout
graspingafewconceptsthatifproperlyunderstoodandapplied,canyield
healthyandconsistentreturns.
The forex market offers the best order entry, leverage, and access of
anymarket.Thismarketisavailable24hoursadayandcanmostlikelyfit
yourschedule.Thisisnotaboutbeingafull-timetrader.Mygoalistoallow
you to fit trading into your current schedule. That means quick, accurate
analysisthatyoucanrepeatoverandoveragain.
This book is as much a written text as it is a complete course. I’ve
includedlinksandchartingexamples,whichallowmetowalkyouthrough
the concepts in this book. I’m especially happy about that because this
makes it easier for me to show you additional examples of the strategies
Iuse,suchasworkingacrossmultipletimeframesandpairs.Ialsoinvite
youtojoinmeatmyblogatragheehorner.comwhereIdiscussthemarkets
on a daily basis and share videos and color charts of set-ups and price
action that I am watching. It’s just another way of keeping in touch after
youcompletethisbook.
The Forex on Five Hours a Week approach isasmuchabout stream-
lining your market analysis as it is about challenging assumptions. There
are going to be ideas that I will share with you that challenge the norm
andperhapsare180degreesfromwhatyouhaveheardorevenhavebeen
doing!Thisdoesnotstemfromsomedesireofminetozigwheneveryone
elseiszagging.
I share and examine in this book the two types of thinking that you
must consider before making a trade: internal psychology and external
psychology. I will cover my C + C = C approach to psychology as well
asothertradingpsychology.ButIwantyoutokeepthisthoughtinmind:
Mosttradersfail,yetmosttradersdomoreorlessofthesamething.
They continue to seek out the most popular, most used, most known
tacticsandtools.Why?Istheresafetyinnumbers?Notinthiscase.Ifyou