Book Review – “Currency Trading For Dummies” by Brian Dolan and Mark Galant

A simple search on this title over any search engine will show you the true power of the concept – there are 118,000 results only on Google. I don’t know if this because of the “Dummies” franchise or because of the number of traders willing to learn the ropes of the field. Certainly there is an incredibly high demand for this title and the reasons are simple – the demand for online currency trading is surging.

What is the book about?

The currency trading workbook focuses on the main topics which every trader (experienced or not) is most likely to look for:

1. The description of the financial markets
Why the forex markets are the largest ones in the world
2. Forces behind the currency rates movements
Major currency pairs and forces driving them around
3. Developing a trading plan
How to create a successful forex trading battle plan
4. Executing the trading plan
And avoiding the major pitfalls which most traders do not avoid
4. The tens part
Ten successful habits, ten rules for trading etc…

Pros and Cons

Whether you are an experienced or a rookie trader, you might need this book. There are many things that you know already and these might make “Currency Trading For Dummies” a bit redundant. But even the most advanced trader needs this sort of a reference book in his library – either in order to check the behavior of a pair of currencies or in order to check whether he or she behaved in the right manner in the heat of the trades. In other words, it might be worth having this book in your library, even if you consult it once in a year.

What I liked mostly was the chapter on the major and the second tier currency pairs. The chapters are full of empirical evidences of the characteristics of those markets. Even more interesting were the comments on the minor currency pairs, such as the USD/CAD or the NZD/USD. For example, the comment that these pairs are deemed to be in a commodity relationship was striking me at first. And then it made sense – the ex-Commonwealth countries are very dependant on commodities exports on the global markets, therefore their currencies are strongly linked to the dynamics of their exports. Yet, the relationship among those currencies is not exclusive and the authors are carefully reviewing the major pitfalls your thinking might fall into.

However, the book becomes a bit general, especially in the final chapters. Having discipline and placing stop losses for your orders are such an old wisdom that it is even not very worth mentioning. Yet most of the advanced traders argue that these rules are sometimes counter-productive, to the extent that they can make your trading go into red very quickly. So use these rules with caution and read some other books. After all, “Currency Trading For Dummies” is an introductory course. And as any introductory course, there is a long way to becoming a pro.

And this way does not exclude learning your own lessons – the hard way…