The Foreign Exchange, also referred to as the "Forex" or "Spot FX" market, is
the largest financial market in the world, with over $1.2 trillion changing hands
every single day. If you compare that to the $25 billion a day volume that the
New York Stock Exchange trades, you see how giant the Foreign Exchange
really is.

Over the last decade I have met many of the top technical analysis "gurus" as well as shared experiences with thousands of newcomers. The common element I've discovered among investors who use technical analysis, regardless of their expertise, is the desire to learn more. No single book, nor any collection of books, can provide a complete explanation of technical analysis.

Stock prices go up and down. It would seem that it is simple to make a fast profit from day trading. You need to buy stocks after a price drop and sell them after some time with a profit. Unfortunately, this is a minus sum game. Bad stock selection can easily kill you. The faster you trade, the faster your losses become large. Every transaction has a cost: bid-ask spread and brokerage commissions. Very tiny profits will disappear in a long run when you take into account these transaction costs. Nevertheless, day traders still exist and many of them are very rich people. How did they do that? If you are a professional and trading on the floor of the exchange you can look for micro trends and catch the leaving train right on time.

Managing a portfolio is not easy. If someone tells you there is an easy formula to
successful investing it is not true. Especially if you want to manage all your money, not just play money. A portfolio requires time, study, and analysis. If you want to manage play money, find someone who gives you tips, and go gamble. In order to manage all your assets, you need an investment process. This book starts from where “Profiting in Bull or Bear Markets” concluded. Profiting in Bull or Bear Markets presented a detailed analysis of the relationships existing between financial markets and business cycles. In any economic system, business cycles impact financial markets and financial markets impact business cycles.

This book is the result of more than 20 years of studying the behavior of business and financial cycles and their impact on investment management. My viewpoint has been influenced by my graduate work at Case-Western Reserve in Cleveland, Ohio, where I received a Ph.D. Case was well known for its advanced studies and research in the field of management science, information systems, and artificial intelligence. For several years after graduation I reflected on the meaning and implications of what I learned. Finally I realized that the entire program was about “the engineering of thinking.” It was about the logical, structured thought process that is typical in the field of artificial intelligence. The main assumption of this branch of computer sciences is that
human thinking can be duplicated.

I went to work when I was just out of grammar school. I got a job as quotation-board boy in a stock-brokerage office. I was quick at figures. At school I did three years of arithmetic in one. I was particularly good at mental arithmetic. As quotation-board boy I posted the numbers on the big board in the customers' room. One of the customers usually sat by the ticker and called out the prices. They couldn't come too fast for me. I have always remembered figures. No trouble at all.

This book was made possible through the influences and inspiration of many people. It is hard to decide who to mention first due to the integral input of all during the process of writing this book. My first and foremost thanks goes to my mother June Bigalow who has always been there to support my endeavors. I am also blessed with a great and supportive brother and sister, along with their families. Their support through this effort has been greatly appreciated.

You've probably heard many opinions as to which option strategies are the best: Covered calls are best because they reduce the risk but still allow for a profit. Naked puts are the best because you're getting paid to buy stock. Straddles are the best because they allow you to make money whether the market is going up or down. If you've been trading options for a while, you no doubt have heard many others. But, when you hear comments such as these, all you're hearing are opinions of one trader's preference for a particular risk-reward profile.

You are standing in the airport terminal of Your Life, and the jet plane departing for the 21st century is about to take off.

You also goes to Dave Lowdon of Logical Systems Inc. for programming support and to Mark Wiemeler and Ken McGahan for the charts presented in the book. Thanks are also due to graduate assistants Daniel Snyder and V. Anand for their untiring efforts. Special thanks are due to John Oleson for introducing me to chart-based risk and reward estimation techniques.