I am an absolute beginner in FX trading. Is there any good references that explain the relations between a particular FX rate and other macro-economic factors? By the way, I am from math background and don't have much economic knowledge especially how FX rates are determined. Open to any suggestions.
I've looked for the same thing, I doubt you will find it on the internet. You might find it in some printed book over at amazon. If you do find the info you are looking for, let me know
The only book I ever paid for on amazon kindle (and you don't have to have kindle to get it as long as you have a computer) was a book by Rickards called "Currency Wars." You can read the first chapter for free, on amazon. otherwise, I have picked up a few thing on Bloomberg and CNBW (which is the non US overnight version CNBC), it's ok if you are non US and can stand the perverted English (I mean American) accents. otherwise, it is just a bunch of the usual jokers explaining why EUR should go up (or down) and AUD should also go up or down. My guess is, fundamentals should be easy to understand if you can operate a calculator, but very difficult to find explained. To put it in perspective, you have to imagine that Ben Bernanke really has the hots for your your girlfriend and invites you (and her) to his home late at night. And after drinking brandy by the fireplace, you ask him "Is the dollar going to go up or down?" My guess is if he is drunk enough will reply, "Beats the heck out of me." I like you would like to understand more about fundamentals, and am sure that would enhance my trading experience. But fundamentals are only a very small part of trading. If I had to give up one thing about trading, it would be fundamentals, because I don't understand them and they don't mean a damn anyway. otherwise, I would not want to get long or short the dollar until the election.
Download or buy "Currency Trading for Dummies". I am not joking, I know pretty much any book that covers cash fx and fx options valuations. The above one is a very well written text and covers a lot of basics without spending too much time on worthless technical analysis (that you can ask all the technical experts here at ET anyways ;-) The text covers the economic concepts, and I am willing to bet after you spent a few hours reading through it you know more than 95% self-proclaimed fx traders in the world. For example, ask most guys here at ET how the FOMC adjusts the supply of money in circulation and how it exactly influences the price of money (which is key to trading foreign exchange) people stare at you with wide open eyes. Or which other reports aside NFP the US Dept. of Labor releases and in which cycles. Or the relationship between ESM and EFSM and EFSF (ok this one is not mentioned in the book for obvious reasons ;-) If you understand the basics of economics and how the price of money is determined you are miles ahead others when trying to approach the buying and selling of money.
As amazingIdustry suggested, you could try "Currency Trading for Dummies". It has simple version which is free to download, and I read through and think it gets some points that I really want to know. Of course, it is helpful to people like me (beginner level) definitely, and I think it will be useful for those who already have experience at least to reinforce the knowledge.
thanks, Anson, I downloaded the book from amazon this weekend. I am about a third of the way through it. Many of the reviews on amazon complained because the book told you about forex but not about how to make money trading it. I've never found any book that tells you how to make money and if anybody thinks they have found one I doubt their survivability in the markets. But it does a very good job telling you what you are trading. I don't know if they still do this, but over on the CBOT about once a year somene would bring in a bushel of corn and they'd throw it up in the air on the floor. Supposedly, just so everybody would know what they are trading.
it was me who recommended the book for absolute beginners. But glad you read it and now hopefully understand triangular arbitrage now. By the way if you need a book about how to make money I can highly recommend "How to become filthy rich in 2 weeks trading fx at 500:1". Its a special recommendation only for you (and those who are too busy with Facebook, posting at ET all the time, and social platforms and cannot bother to put in the work for this challenging business). May it all work out for you. P.S.: Hope your head did not get hit by a cob of corn last time you needed a reminder what you are trading!!!
I thought I was on your ignore list. But thanks for the suggestion. Yes, it is a good one. if anybody asks how to get started again I will reccommend it. Wish I had taken the time to read it about a year ago before I started trading. I don't have a facebook account. ET is my only social network. The only work I put in is sitting in front of my computer watching fx every minute I am not sleeping, and I don't sleep that much anymore. But when the market is closed on the weekend I enjoy taking a little time off, so thanks again for the book, it kept me pleasantly occupied this weekend, and I am only a third of the way through it.
Sorry, buddy, it was my bad to forget to reply your post. But I did take your recommendation seriously, thank you so much for introducing this handful book to me. I haven't read through all of it yet, but what I found so far is that it explains the whole picture of FX trading very well, which is what I really want to grasp. I don't like to be digging into details without knowing the big picture, which is the way I think appropriate and most efficient to start the business. I am suddenly getting into FX because I am preparing Automated Trading Championship which is to trade FX. I could just do some scalping strategy ignoring the macro environment of the underlying, but I believe it is not best way to trade.