Book Review: Technical Analysis of the Currency Market (Boris Schlossberg)

One could call Technical Analysis of the Currency Market by Boris Schlossberg a pure technical analysis book, but it wouldn't be a completely correct definition. The book also talks about the psychology of trading and risk management; an introduction to the Forex market (FX 101 chapter) is also made for very new traders. Our overall feelings after reading this book are rather mixed — of course, it gives a lot of insights regarding technical analysis and entry/exit strategies that can be used by Forex traders, but it is also quite biased and suggests very dangerous (in terms of risk/reward) systems.

It is a medium-length book with a lot of chart examples and some support tables. Although the amount of continuous text may seem overwhelming at times (for a trading book), it is not that difficult to read. The book states the following theses:

• Forex is an excellent market for a technical trader.
• Despite what it seems, charts aren't completely random; they are based on human behavior and thus are affected by certain patterns.
• Prices can either range or trend — your trading behavior should depend on what type fits your personality better.
• It is not a good idea to trade trend-following strategy in ranging markets.
• Candlestick charts offer the most informative representation of the market situation.
• Fibonacci levels aren't "magic numbers" but can help in trading.
• Bollinger Bands indicator is one of the best for trend trading.
• "Cut your losses short and let your profits run" isn't for everyone.
• Knowing yourself is very important to determine your risk/reward strategy.

It is difficult to really enjoy reading Technical Analysis of the Currency Market. It has a lot of things that it is hard to agree with and also lists a lot of data (strategies mostly), which is barely interesting to anyone at all. In spite of these facts, you can rest assured that it is not a bad trading book and had the following advantages:

• Several interesting indicator-based strategies.
• No difficult calculations — the book will be easy to understand even by the newbies.
• Good notion about different personalities fitting different approaches to the market.
• Promotes organized approach to trading.

Yes, Boris Schlossberg does a great job with this book, but you probably won't gain a lot from this book if you are already past your newbie stage. Even disregarding the fact that you will know almost 90% of information covered there, it still has some disadvantages:

• Some factual mistakes (margin calculation, status of NZD, etc.)
• Promotion of rather dangerous risk/reward strategies.
• Mixing risk management with position sizing.
• Shown price pattern examples are very far-fetched.
• No good examples of trade positions gone wrong.

To conclude the review, it must be said that Technical Analysis of the Currency Market is a great introduction to the technical analysis and can be a good book for the Forex trader's education, but you shouldn't limit your study to this book — it is almost useless (and even somewhat dangerous) if being relied upon as the only book. Some other books on trading would be really helpful after or before reading this one.

If you have any questions, comments, or opinion regarding Technical Analysis of the Currency Market by Boris Schlossberg, please feel free to join for a discussion on our Forex forum.

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