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The Little Book of Currency Trading: How to Make Big Profits in the World of Forex
An accessible guide to trading the fast-moving foreign exchange market The foreign exchange market, or forex, was once dominated by global banks, hedge funds, and multinational corporations, but that has all changed with Internet technology and the advent of online forex brokers. Now, hundreds of thousands of traders and investors around the world can participate in this profitable field.Written by forex expert Kathy Lien, The Little Book of Currency Trading will show you how to effectively invest and trade in today's biggest market. Page by page, she describes the multitude of opportunities possible in the forex market, from short-term price swings to long-term trends, and details practical products that can help you achieve success, such as currency-based ETFs.Explains the forces that drive currencies and provides strategies to profit from them Reveals how you can use various currencies to reduce risk and take advantage of global trends Examines financial vehicles that can help you make money without having to monitor the market every day The Little Book of Currency Trading opens the world of currency trading and investing to anyone interested in entering this dynamic arena.
224 pages, Kindle Edition
First published January 1, 2010
74 people are currently reading
528 people want to read
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Displaying 1 - 22 of 22 reviews
August 22, 2018
This is partly an introduction to the foreign exchange (FX) market, partly a glance at a currency trader’s strategy. Kathy Lien, today Director of Currency Research at Global Forex Trading, has a long history in FX from DailyFX.com and JP Morgan Chase. My major learning from the book is that though trading in FX is similar to trading in equities – it still isn’t exactly the same.
Let’s start with the differences. Most traders only trade the really liquid currencies such as the USD, the Yen, GBP, Swiss Francs plus Australian and Canadian Dollars. The currency pairs that these currencies make up can be traded 24 hours a day, during the full week. Currencies are more trending than many other assets and especially so in times of economic distress and large interest rate changes, hence the majority of investors are momentum investors – further strengthening the trends. Even though the technical analysis of FX-markets is similar to that of the equity market, volume indicators cannot be used due to the fact that the trading is done OTC and on top of that the time horizons, on average, are shorter because of the amounts of leverage used.
Now for the similarities: To cut losses quickly and let winners ride is by now almost a cliché but it is even more relevant for FX-traders as the momentum effects are stronger. Risk management is the key for survival. According to Lien you shouldn’t risk more than 5 to 10 percent of your account on one trade (daring...). In terms of exit strategies stop-losses are almost universally used. In trading the concept of probabilities is crucial. Lien echoes the old trading advice to only put on trades with a 2-to-1 risk-reward-ratio, i.e. only do trades where you judge the upside to be twice as large as the potential downside. By this your hit- ratio doesn’t have to be spectacular. Lien advices FX-traders to keep a trading log noting the basics of the trades plus your own comments on what went right or wrong. She further advices to find a time each week to review those trades and the comments to try to spot how the process could be improved. However, only make changes in reaction to consistent, frequent mistakes.
Lien both day-trades on news and trades on medium term trends. I will leave the day-trading by, but the considerations she points to are fairly similar to trading on quarterly corporate earnings. The author’s favourite tool in analysing the trend is double Bollinger bands. The two intervals are created by first calculating the 20 week rolling average of price movements and then create the first band 1 and 2 standard deviations above the average and the other in parallel below the average. When a currency pair is trending strongly they will keep within one of the bands. Exits could be made when prices exit the bands, but Lien instead uses a two tiered strategy where she first locks in some profits and then lets the remaining position run with a trailing stop-loss. I might be in over my head here but it strikes me as a perfectly reasonable strategy.
Lien appears to be a very energetic person and she has written two previous books on trading in the FX-markets. My guess is that those two might be better. This “little book” is neither a very thorough introduction of the market nor a sufficiently deep account of Liens trading practice. I would choose to focus more on the later as the author does have a lot of god advice to give. Not least do I appreciate her commenting on the importance of having the ability to distinguish between range bound markets and trending markets and of having the patience and psychological maturity to stay out of the first.
What is good with many of the books in the Little Book-series is that they are not merely short introductions to subjects on the financial markets; they are – when the format is at its best - the distillation of very seasoned persons hard won experiences in the market. This one has too much of a beginner’s guide feel to it.
Let’s start with the differences. Most traders only trade the really liquid currencies such as the USD, the Yen, GBP, Swiss Francs plus Australian and Canadian Dollars. The currency pairs that these currencies make up can be traded 24 hours a day, during the full week. Currencies are more trending than many other assets and especially so in times of economic distress and large interest rate changes, hence the majority of investors are momentum investors – further strengthening the trends. Even though the technical analysis of FX-markets is similar to that of the equity market, volume indicators cannot be used due to the fact that the trading is done OTC and on top of that the time horizons, on average, are shorter because of the amounts of leverage used.
Now for the similarities: To cut losses quickly and let winners ride is by now almost a cliché but it is even more relevant for FX-traders as the momentum effects are stronger. Risk management is the key for survival. According to Lien you shouldn’t risk more than 5 to 10 percent of your account on one trade (daring...). In terms of exit strategies stop-losses are almost universally used. In trading the concept of probabilities is crucial. Lien echoes the old trading advice to only put on trades with a 2-to-1 risk-reward-ratio, i.e. only do trades where you judge the upside to be twice as large as the potential downside. By this your hit- ratio doesn’t have to be spectacular. Lien advices FX-traders to keep a trading log noting the basics of the trades plus your own comments on what went right or wrong. She further advices to find a time each week to review those trades and the comments to try to spot how the process could be improved. However, only make changes in reaction to consistent, frequent mistakes.
Lien both day-trades on news and trades on medium term trends. I will leave the day-trading by, but the considerations she points to are fairly similar to trading on quarterly corporate earnings. The author’s favourite tool in analysing the trend is double Bollinger bands. The two intervals are created by first calculating the 20 week rolling average of price movements and then create the first band 1 and 2 standard deviations above the average and the other in parallel below the average. When a currency pair is trending strongly they will keep within one of the bands. Exits could be made when prices exit the bands, but Lien instead uses a two tiered strategy where she first locks in some profits and then lets the remaining position run with a trailing stop-loss. I might be in over my head here but it strikes me as a perfectly reasonable strategy.
Lien appears to be a very energetic person and she has written two previous books on trading in the FX-markets. My guess is that those two might be better. This “little book” is neither a very thorough introduction of the market nor a sufficiently deep account of Liens trading practice. I would choose to focus more on the later as the author does have a lot of god advice to give. Not least do I appreciate her commenting on the importance of having the ability to distinguish between range bound markets and trending markets and of having the patience and psychological maturity to stay out of the first.
What is good with many of the books in the Little Book-series is that they are not merely short introductions to subjects on the financial markets; they are – when the format is at its best - the distillation of very seasoned persons hard won experiences in the market. This one has too much of a beginner’s guide feel to it.
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November 28, 2018
A great book for Forex in the 'The Little Book' series; I'm sure if the author were to expand more so it would've included plenty more TA coverage (sadly not as much as I'd have liked); a quick, exciting, inspiring, interesting, book all the same.
August 18, 2021
Great book for traders
Whilst the topics may seem elementary they nevertheless represents vital information required for anyone desirous of succeeding and staying profitable in the ever complex forex market. She has been magnanimous, in her usual manner, to reveal and pour out some of her trading strategies and methodology used in trading as a professional trader. She stressed the need for preparation as a sine qua non for success and developing a good understanding of the market before plunging into the ocean of forex trading. Of course, she highlighted the interconnectivity of financial markets and importance of certain key economic data to being a profitable trader. Kathy, further warned readers to be wary of EAs, algos making it clear that it's never a holy grail of trading. She also touched on doing proper due diligence before choosing a broker.
I enjoyed this book as I did in her other book on day and swing trading of currency market. A good and effortless writer she is using simple and clear words to communicate her ideas.
Well done Kathy.
Whilst the topics may seem elementary they nevertheless represents vital information required for anyone desirous of succeeding and staying profitable in the ever complex forex market. She has been magnanimous, in her usual manner, to reveal and pour out some of her trading strategies and methodology used in trading as a professional trader. She stressed the need for preparation as a sine qua non for success and developing a good understanding of the market before plunging into the ocean of forex trading. Of course, she highlighted the interconnectivity of financial markets and importance of certain key economic data to being a profitable trader. Kathy, further warned readers to be wary of EAs, algos making it clear that it's never a holy grail of trading. She also touched on doing proper due diligence before choosing a broker.
I enjoyed this book as I did in her other book on day and swing trading of currency market. A good and effortless writer she is using simple and clear words to communicate her ideas.
Well done Kathy.
July 16, 2018
The “little books” are like a more dressed up version of “Idiot’s” guides or “for Dummies” books. They give you a look at a topic in very broad brush strokes. Very broad. But not enough to really get involved in the subject matter. What I’ve found is that the author of one of these books usually has written other books that go deeper into the subject matter. Skip these introductory books and go for the deeper book.
September 16, 2018
"Aptallar için Forex" olarak da adlandırılabilecek, en temel bilgileri ve indikatörleri, en basit şekliyle anlatan güzel bir kitap. Gerçek para ile işleme geçmeden önce demo hesabın düzenli kullanımını teşvik etmesi ile gönülleri de kazanıyor.
August 29, 2022
This is a great introductory book into forex trading. The books is designed to be short and to the point and it delivered just that. Overall, good book for the new trader who isn’t just looking to learn the strategies but wants a broad picture of what a trader may go through in their day.
November 21, 2024
It’s a short and simple introduction to the topic but my conclusion is don’t. Too much opportunity to lose unless one does this professionally. It isn’t for the casual investor.
Two Goodread stars.
Two Goodread stars.
August 17, 2017
Even if you do not trade forex, this is useful reading
October 1, 2017
This is a great book for beginners. Easy to read and understand.
May 30, 2019
Interesting points, advise to have a notebook handy to jot down things. Would like to read her other works.
June 13, 2021
Not sure of the target audience. Very basic
May 16, 2022
Too simplistic
May 23, 2022
Only for beginners. Nothing much for intermediate and experience traders
February 9, 2024
"The Little Book of Currency Trading" by Kathy Lien is a concise and accessible guide to navigating the complex world of forex trading. Lien demystifies foreign exchange markets, offering practical insights and strategies for both novice and experienced traders. Her emphasis on risk management, technical analysis, and understanding market sentiment makes this book a valuable resource for those looking to make informed decisions in currency trading. Lien's straightforward approach and wealth of knowledge make this little book an essential companion for anyone seeking to profit in the dynamic realm of forex.
May 29, 2013
Meh... some good anecdotes, and some accurate market basics... but otherwise very lightweight on meat.
I had picked this book up on the expected value momentum after reading 'The Little Book of Trend Following" which was just outstanding... but alas, clearly the franchise publishers weren't able to reproduce the magic.
STILL... for a markets novice, this really isn't bad... in the same manner that for the starving, unseasoned kosher bologne 'isn't bad.' If you're even a biteful beyond starving, though, you don't want to pick it back up again.
I had picked this book up on the expected value momentum after reading 'The Little Book of Trend Following" which was just outstanding... but alas, clearly the franchise publishers weren't able to reproduce the magic.
STILL... for a markets novice, this really isn't bad... in the same manner that for the starving, unseasoned kosher bologne 'isn't bad.' If you're even a biteful beyond starving, though, you don't want to pick it back up again.
October 8, 2014
I am an experienced trader and picked up this book just to see what Kathy Lien had to say about forex trading. Actually I thought it was fairly good. She gives an overview of what forex is like and covers the important things new traders should pay attention to in order from blowing up their accounts like so many do. And they probably will anyway. The couple of methods she highlights are simple yet effective if conducted in the ways she lays it out. A good brief book on trading that gets to the point and a solid foundation for starting.
July 25, 2016
A bit wordy whilst getting to the point sometimes. Ultimately a basics guide plus a good idea in the double bollinger band system. I tried it but wasn't successful and have gone for something simpler which works better. A good intro book with a tradeable system at the end for those getting into the game.
November 18, 2016
This was an excellent summary of the forex industry.
I was looking for a starters guide that would tell the story of how the forex market started, explain the philosophy behind why the forex market exists, and also teach me about different trading methods.
If you don't know much about Forex, this is an excellent place to start.
I was looking for a starters guide that would tell the story of how the forex market started, explain the philosophy behind why the forex market exists, and also teach me about different trading methods.
If you don't know much about Forex, this is an excellent place to start.
June 14, 2013
excellent beginners book for currency trading
April 13, 2014
Good book to step into the forex world, it makes emphasis on the importance of information and preparation giving different anecdotes and analogies.
December 24, 2014
This should have been my first book to read about forex. Technical analysis is discussed on a lighter approach. The rest teaches the reader how forex works: effect of news, currency inflation etc.
June 8, 2016
Great book: easy to read book that put Forex in layman's language.
Displaying 1 - 22 of 22 reviews