Millionaire Tradersbasis. Foreign exchange in many ways contains the same type of
properties as options—highly directional, highly leveraged. Is that
what appealed to you?
A: Yeah. I mean it was that and it was also the fundamental
reasons of what a currency stands for when you look at a currency
pair—which led to my understanding of the currency markets
better than the options markets. Foreign exchange is definitely
similar to options in terms of leverage and the way it was very
technical. All those things made me want to trade it. I’m glad that I
went from equities to options to foreign exchange because I think
it was a natural progression. It seemed to work well for me.
Q: What specifically about the FX market made you realize that
it was different?
A: Well, say the pound/dollar or euro/yen or whatever you’re
looking at—there’s always going to be both sides to the price. You
compare that to equity, and equity has underlying value. You can
always buy it for a certain concrete amount. You would take the
number of shares and the stock price and you would know what
the company was worth. Currency is more of a conceptual idea of
prices, and currencies never, in a sense, go to zero. Sure, it can
devalue in a huge manner or the price can appreciate greatly. But
the fact that value was conceptual appealed to me. Plus the fact that
currencies trade so technically and trend well all really appealed
to me.
Q: You were saying that the FX market is a bounded market,
meaning that it doesn’t go to zero and it doesn’t go to a million
like the stock market could. Can you give us an idea how FX lends
itself to technical analysis?
A: Well, basically I think if you have a certain fundamental
understanding of the markets and you understand what direc-
tion the market is moving in, then you choose an area based on