Forex Patterns & Probabilities: Trading Strategies for Trending and Range-Bound Markets

September 30, 2009 07:00 PM

Forex Patterns & Probabilities: Trading Strategies for Trending and Range-Bound Markets
By Ed Ponsi
John Wiley & Sons, 2007
$85.00, 250 pages

Trading volume of approximately $1.9 trillion per day, the forex market is by far the largest and most liquid trading market in the world. Open for trading 24 hours per day, this huge market offers tremendous opportunity. Ed Ponsi opens the door to this market in his book, which is an excellent primer for the beginning forex trader and a source of trading strategies for both novice and experienced traders.

Ponsi is the president of and he demonstrates his knowledge as he “cuts up” the technical world of forex into easily digestible chunks. His writing clarity, organization, and in-depth knowledge make the book a good read for anyone interested in trading the forex market.

In four parts, Ponsi defines forex trading and breaks down its complexity. He explains forex trading in a way that both entertains and educates. Ponsi also lays out specific strategies for trading trending markets, techniques for trading non-trending markets, and a well-thought-out program for taking control of a trader’s destiny.

The book focuses on the fundamentals of successful trading, including spotting specific market conditions such as trending, range-bound and consolidating. It also discusses market tendencies associated with these conditions, such as the tendency for a strong breakout to occur immediately following a tight consolidation. Ponsi explains these forex phenomena (and many others) with brilliant clarity, and he shows how to turn each to the trader’s advantage. He primarily approaches these topics from a technical perspective, but his writing style makes easy reading of difficult material.

This book is filled with solid information. For example, one important difference between trading stocks and trading forex is the forex market is so large that even institutions or governments cannot dramatically influence market movement on any given day, which gives the retail trader more opportunity for success. Another is that traders need not choose between technical or fundamental analysis. Forex trading success is found using both in tandem. One reason is that economies tend to change more slowly and predictably over time as opposed to companies that can fundamentally change on short notice. This difference makes fundamental analysis critical. A second reason is the Fibonacci ratios are part of the forex “culture” as banks, institutions, hedge funds, and currency traders rely on them to forecast trends; thus, these ratios become a “self-fulfilling prophecy,” which makes technical analysis important as well.

Ponsi’s informative book is helpful to anyone interested in trading forex and suggests trading the forex market is a sensible option in today’s trading world.

Brandon Jones is a writer/editor for

About the Author