Forex Trading Tips: The FX Toolbox

The FX Toolbox

This week, after our live trading session was over (24 out of the last 25 months making money, pat, pat on my own back ) I was swamped with requests to put together an FX toolbox – web tools that I use every day to help me make sense of trading. So this week we’ll take a step back from our typical ruminations on trading and will focus on basics.

Short term trading is a combination of watching the news and watching the charts, so I have a lot of monitors in front of me. At the office I work with a 3 monitor set up, a laptop and a double screen Bloomberg terminal that K and I share. We also have 2 flat panel TV sets - one tuned to Bloomberg TV the other to CNBC.

At my home office where I do most of my short term trading my set up is a little different. I have four separate computers. Now before you gasp at the cost, let me say that these are the cheapest, most basic boxes that you can buy at TigerDirect.com or a million other computer dealers for less than $300 each. Why do I use so many computers? Because Windows sucks. I want my application to stay up for days (sometimes I will keep a computer running for a month). The only way to achieve that in Windows is to allocate one application per computer. So at home I have one computer that only runs news, one computer that runs my trading software, one computer that just shows me the 15 minute charts for euro, cable and yen (that one has a 32 inch screen) and one computer on which I do my day to day work. Overall I sit in front of 7 screens in an L shaped desk configuration.

--------------Top 5 Stories in FX This Week----------------
Race to the Bottom in G4
Nine Women can't have a Baby in a Single Month
Promising Wholesale Figures
Greek Debt Crisis Could Raise Problems for U.S.
Reaching, Once Again, For Yield

Meanwhile, just to give you some perspective K trades from her tiny Macbook laptop – but she does not scalp furiously every single day like I do.

What do I use for news? For $9.99 per month you can watch all three CNBC channels (Asia, Europe and US) online. I highly recommend it. There are plenty of critics of CNBC who think it is nothing but financial blather, I disagree. Occasionally there are some very interesting insights from the guests, especially on the London show which I watch every day. But opinion doesn’t matter. For trading purposes I watch CNBC for one reason only – to determine what is the Big Story of the day. For example when they reported that the Greek bond auction went off well, I instantly go long euros and the pair rallied 50 points over the next half hour. So when it comes to trading I watch CNBC for the headlines, not the opinions.

For a pure newsfeed I like nothing better than the Dow Jones newswire that comes free if you have a GFT account. I am not certain what other brokers provide it as well, but for my money nobody covers the currency market better than DJ. They will print the latest rumors from the dealing rooms, breaking eco numbers and a running analysis of price action 24 hours a day 5 days a week. I have a 22 inch screen devoted just to the DJ feed.

To see the latest eco data results I use the forexfactory calendar which has the simplest and cleanest interface and will usually post results within 5 seconds of the release. Dow Jones also publishes the eco data, but its scrolling interface can make it difficult to read in the heat of the battle.

Finally charts. I use no indicators on my charts, so almost any chart will do. However, I am partial to FXTrek by Intellicharts because they have a very easy to use interface that allows me to demarcate the chart both vertically and horizontally ( for time and price). However at $100/month that’s an expensive luxury if you don’t need its full array of functions.

That’s it despite all the hardware, my daily trading setup is relatively straightforward. Each day I attempt to ask and answer only two questions –What’s Happening? And How Will It Affect Price? Get that answer right and you’ll be on your way to being a successful short term trader.

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