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
- 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-followingstrategy 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
- 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
- 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.
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