Attacking Currency Trends: How to anticipate and trade big moves in the forex market
By Greg Michalowski
Wiley Trading, 2011
$60.00, 287 pages
For Greg Michalowski, the familiar acronym “KISS” does not stand for “Keep it simple, stupid,” but rather “Keep it simple for success.” And success is precisely what Michalowski aims to deliver to readers. “Attacking Currency Trends” is a readable and straightforward text for any trader regardless of market preference. The subtitle hints at the forex focus of the book, but the author’s ideas and trading philosophies apply to any tradable vehicle.
As the chief currency and trading analyst for FXDD, Michalowski brings significant practical experience to the concepts addressed in the book. He begins by noting several common pitfalls that traders of all types experience at one time or another in their careers. While his observations are not entirely original, they do serve as an integral reminder that trading is more than just an objective undertaking. Michalowski concisely explores several behavioral shortcomings that encumber many traders. Among these are the fear of losing, and making, money, and trading with insufficient or incorrect information.
Complementing this list is his “Six attributes of a successful currency trader.” Again, these attributes are not applicable just for currency traders, but rather for all traders. They include: Having the right skills, practicing (i.e., paper trading), risk control, sticking to a plan, controlling fear and being greedy. All of these are explored in detail and mostly are self-explanatory. The “greed” attribute, however, may strike some people as counter-intuitive because we have all heard the investing axiom “bulls and bears get rich, but pigs get slaughtered.” Michalowski encourages traders to be greedy only in the sense that they should stick with their plan and ride out a trend once it has been properly identified.
The remainder of the book delves deeper into the author’s specific trading approach. Michalowski’s method for trading basically boils down to the use of three simple, time-tested indicators: Moving averages, trend lines and Fibonacci retracement levels. Each of the three indicators are defined in detail and used in examples throughout dozens of charts. It is helpful that Michalowski uses the EUR/USD trade as the basis for nearly every chart in the book. This provides consistency and assists the reader in following along with the intricacies of each indicator. In addition to technical tools, many fundamental approaches are covered. The inclusion of fundamentals provides a nice counterbalance to the many chart-based tools in the book. Too many investment books seem to focus on one approach or the other, not conceding that perhaps a judicious combination of the two may yield optimal benefits to the trader.
“Attacking Currency Trends” is a unique trading book in that it not only deftly combines technical, quantitative and fundamental analyses, but it also marries specific trading rules with more general trading philosophies. Michalowski is able to convey the efficacy of his indicators and provide meaningful, objective background as to why and how these indicators have worked in the past (and hopefully, going forward). As previously mentioned, one does not have to be a forex trader to benefit from the insights provided in the book. Experienced traders who seek to fine-tune their analytical approaches to trading will find the text rewarding as will beginners who will benefit from the early chapters that lay the groundwork for what it takes (mentally and otherwise) to become successful in the trading arena.
Bruce C. Greig, CFA, CAIA, CMT, is the Portfolio Manager for Altin Holdings, LLC. Greig has bachelor’s degrees in statistics and mathematics, and a master’s degree in finance all from the University of Michigan.