Customer Reviews: Forex Patterns and Probabilities: Trading Strategies for Trending and Range-Bound Markets
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on September 1, 2007
This is mostly for beginners. There are only good advices, so it is a good choice for beginners or those who need to be put back on tracks.

The number of strategies is in fact quite limited and not really new. I was expecting much more from the description. Ed just uses levels for entry and stops that could be slightly different than in some other books.
2 strategies about trending markets (FX-Ed and classic 2 time frame system), 1 for pennant/flags, a volatility breakout strategy, which is in fact a triangle strategy (for the entry). playing the round numbers, a range trading in the low volume opening, and a word about the carry trade.

The so-called FX-Ed trending strategy is based on moving averages. I have backtested it (it is easy, no place for interpretation for the version without partial exits and reload)and of course it works on strongly trending markets such EURUSD recently, but wait, any trending strategy worked!! The same strategy with pairs such as USDJPY generates a loss or a small gain between 1997 and 2005 and it was in fact quite good at buying tops and shorting bottoms, resulting in huge volatility of the equity curve.

Update: Backtest of the "round trip" (playing the round numbers). Only difference with the text is that the second target is a multiple of the first one instead of based on a previous R/S level. From Sept 2003 to Sept 2006, it does not work and looses for most pairs (including those preferred by the author). Even if we take only the first bounce, it looses.

Update2: Backtest of the "Boomerang", a range trading in the low volume opening. EURUSD only as suggested by Ed. Tested from Sept 2001 to Nov 2006. There is a profit growing steadily (though there are drawdowns) from Sept 2001 to May 2004. After that, it is flat. There are still trades, but they do not produce any profit, just breakeven. Has it stopped working after too much advertisement for it?

Page 217 is quite interesting. The author explains why it is not recommended to systematically take small profits such as 10 pips. I am wondering if the "strategy 10" advertised by one of the praisers of this book is compatible with this view. Anyway, Ed also says that those who recommend such thing may just want to profit from people by the "introducing broker" system, and so we must be careful.

The book progresses slowly, explaining every single detail. There are a few repeats in the first half of the book. For most charts, the horizontal labels are not displayed.

The book is 245 pages but the content is quite small because there are so many charts! The number of useless charts is amazing. He uses charts to illustrate any single information in the book. For example, a pair trending up (a chart), a pair trending down (a chart), a congestion (a chart), breakout from congestion (a chart), a strong trend (a chart), a moving average (a chart), a second moving average (a chart), a RSI (a chart), a fib retracement level (a chart). For a "strategy", an entry point (a chart), placement of the stop to be put after the entry (a chart), placing first target (a chart), second target (a chart), third target (a chart), tweaking the exit levels (1 chart per exit level!), Entry triggered (a chart), first target reached (a chart), the pair continues (a chart), it pulls back (a chart), it reaches the second target (a chart), and the third (a chart), etc... Well, don't you think that a few charts with gathering a few things on each of them would have been enough? It looks as if the book was the written version of a seminar. In fact, it probably is!
Page 204: Two times the same chart! The first chart was supposed to show only the entry (as usual), and the second the exit later on, but the first one already shows the exit! Good Ed, you are improving by putting both entry and exit on the same chart (you could save some trees by concentrating more information!!), but only one chart is necessary in this case!
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on August 12, 2007
Ed provides the basics of trading strategies that handle most of the forex market conditions. While many of these strategies have appeared eleswhere the explanations of why they work and why they should be followed is something that comes from years of trading experience. For example: why does forex often fail to breakout of support and resistance areas on the first or second attempt? How do the institutions maneuver the price during slow volume hours and how you can use this to advantage. Also the section on his trend following system is clearly thought out and easy to follow.

This is a book that I could really could have used 6 months ago and skipped most of the other stuff about trading. About the only thing missing is backtested results to show how well the systems work in real trading. But there are clear examples of each strategy.
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on July 7, 2008
A very good from-scratch discussion of the market and trading mechanics, nice overview of the fundemental reports, some actionable strategies laid out and well explained and a few genuine veteran insights thrown in to boot. Worth owning, especially if you're beginner to intermediate.

However, he's just too conservative. His setups are very good but you'll grow old waiting to see them. Example: calling for 4 (5, 20, 50, and 200 if I remember right) moving averages to fan out in proper order, on a daily chart, in order to qualify a trend. Yeah, it's definitely a trend, but by the time you get there, the trend's almost over. And you'll never get in on a retracement or a resumption that way. You'll control losses by never placing any trades. Nix at least one moving average, maybe even 2.

His focus is daily charts in general. Nothing wrong with that, but nowhere's near the money to made or lost as in the intraday charts. But he doesn't tell you that. He offers a flawed argument why his way is best, goes something like this: Using one of his ideal trendfollowing setups, he pulls of a trade that earns him something like 3000 in 4 months. Then he goes on to compare it to a 10 pip per trade goal and says even if you made your 10 pips per day, everyday, in that same period, with the same pair, you'd only score about 1700 pips instead of his 3000. Fair logic, but who says you'd only get 10 pips and quit? His 3000 pip rise is punctuated with enough ups and downs to score twice or 3 times that trading intraday. With less risk, given that his stops on a daily were as high as 155 pips, still pretty tight for a daily chart, yet that same 155 pips is an enormous stop on an hourly. Not to mention all the days that you won't be trading while you wait for 4 MA's to line up.

I'm not bashing the guy - he wrote a good book, better than alot of them out there, but know that his way is safe at the expense of returns. The one advantage is that his trades are not labor intensive, you can visit your broker site once a day to manage them. But only once. Not for active traders unless you adapt them somehow.

On the other hand, if you have a job and a family and a house to take care of and are happy just to beat the return on a T-bill then Ponsi's your man. You just can't make a living with his methods.
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on December 1, 2007
Any book that gives a good overview of proven patterns and strategies for trading Forex I would consider to be useful. While some of the readers critcize that there is nothing new here, that is what gives it credibility in my opinion. What makes so many Forex traders think that they should look for something new when trading has been around for so many decades and continues to produce the same patterns over and over? In the world of Forex so much material is packaged with hype for the newbie who has no reference regarding what to spend money on in Forex education. Many Forex trading courses which sell for thousands of dollars actually contain very little useful information that is not in a basic text book on technical analysis. There is a constant wave of new customers entering the world of Forex all trying the same things that traders have been doing for decades and many traders believe that there should be some kind of hot new Forex trading strategy that they will find on a forum or in an ebook for cheap or for free. Why do people have such unrealistic expectations in the Forex trading business compared with other businesses? It is because they do not appreciate the incredible potential this business has and the relative ease and low cost of getting started compared with other businesses. It would be a good idea for anyone aspiring to get started in Forex to have at least a two year plan with start up costs and expenses factored in just like any other business. And one good investment would be this book.
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on August 8, 2008
Many of the other reviews have described the 'meat' of this book. I will not waste time repeating it.

Simply put -
Mr. Ponsi provides excellent information. However, they are very big moves and definitely not for beginners. True, you could use micro lots so the risk/reward is on a level you could digest...but you will be wasting days and/or weeks of time waiting for this 'perfection' to actually happen...and in ANY kind of trading...nothing (even when everything is perfect) is guaranteed!

Ed is trying to create the highest probability trades that could go in your favor. Definitely a smart thing to do! In my opinion, and by the opinions of MANY other leading traders/authors, time and resources are being wasted.

Let's work with a real world example and real world numbers.
Posit - with Ed's system you might get 4-6 trades a month.
Consequence - Out of those trades zero to all of them could fail.
Result - You risk sitting for a whole month only to gain nothing or risk large loses.
Conclusion - Time and resources are being wasted.

A HUGE NO! NO! among pro traders and myself included. I can easily have done numerous high probability trades within the time that were low risk and high reward. I do that every day from Monday to Thursday.

Again, I think Ed's material is an excellent read for knowledge and to learn...but definitely not for a solid trading system. Just wait till you hit days or weeks of ranging/box markets and see what happens!
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on November 4, 2015
Ed Ponsi was my forex instructor for a summer 2015 class with Online Trading Academy. He was an enjoyable classroom teacher, and only on the last day of class did he modestly mention in passing that he had written a book on forex strategies. It was not until a few months later, frustrated with stop losses in my demo account, that I bought his book and began to implement suggested strategies. What Ed didn't tell our class is that he is a master chartist who frequently appears on CNBC, Mad Money, and other investment shows. His book has taught me how to use the ADX and EMAs to identify genuine trends; Fibonacci retracements to enter trending price moves and set targets/stops/exits (alone worth the price of the book); flags and pennants to set and enter trades; as well as many other strategies. He offers a nifty scalping strategy for the EURUSD (between close of the US market and open of the Asian market) that potentially can yield frequent profits, although lately that currency pair has been so range-bound that his suggested targets and stops need to be modified. In short, his book has turned my trading around, resulting in daily profitability and at least 30% fewer stop losses. Several older reviews complain about his conservatism and the fact that many of these strategies may not be new. In my mind, using tested strategies in a responsible way is precisely the main selling point of the book for the beginning trader. Successful trading is first about preventing losses and containing risk, and only second about making money. Profitability follows good risk management, and Ed understands this equation perfectly. His book can give any open-minded trader better understanding of risk and the technical tools and mindset to achieve profitability in forex trading.
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on January 17, 2009
I have been following Ed Ponsi for a while and the book has really helped me put the methods into practice. The book is well written and a pretty quick read.
The trading plans make it easier to create a discipline to follow. Although I must still battle my occasional desire to input some of my emotional guesses into a trade, which rarely work. Like Ed points out in the book you are not going to win every trade, you may even have a string of losses, but with risk management your losses are small and easier to absorb. Subsequently, the winners do run very well and absorb those nagging little losses. That has been my biggest improvement is the risk management!!! It has allowed me to win, by placing trades confidently and no sweating every little move. CONFIDENT and CLEAR THINKING!
Jose H, South Florida
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on April 11, 2009
Ed Ponsi said at the begining of his book that he had read dozens of trading books and each had a kernel of truth surrounded by filler. He also said that if he wrote a book, it wouldn't be like that. Unfortunately he goofed. He wrote a book exactly like that. There are a few steller nuggets of wisdom, but they aren't worth the price of the book.

Currency Trading for Dummies is a far superior introduction to forex than Ed Ponsi's book. Ed Ponsi focuses on technical analysis (just barely) while the dummy book actually introduces you to both fundamental and technical analysys as well as money management. A much better start at becoming what Ed Ponsi calls a "triple threat trader".

Plus the dummy book has suggested reading at the end for further study, while Ed Ponsi only mentions one other book in the middle of one chapter. Suggested reading, bibliographies, and end notes are very important indicators on how serious the author is about his or her subject.

Ed Ponsi sounds like a nice guy, and a knowledgable guy at that. I think that is why there are so many positive reviews. But Ed Ponsi's book just doesn't cut the mustard.
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on February 8, 2009
FOREX trading, like all trading, is no cake-walk, as any experienced trader well knows! As any serious student soon finds out! Success only comes with serious study, practice and perseverance. In the business of FOREX trading that means; taking courses (more than two or three), burning up a truckload of the "demo" accounts and reading a number books on the subject of FOREX trading, as well as trading in general, including the classics; Livermore, LeFevre, Malkiel, etc.

Ed Ponsi's book may well become one of the gospels on trading! It should be required reading by anyone just starting, or wanting to improve his or her skills at FOREX trading.

Read FOREX Patterns and Probabilities by Ed Ponsi and then go back and read it again! Study this book, if you're serious about FOREX trading.

His very clear writing and easy to understand examples should make this book a classic among practical trading books. The beginner as well as the advanced student or experienced trader will benefit from reading "FOREX Patterns and Probabilites", by Ed Ponsi. Thanks.
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on November 27, 2011
I found this one of the easier to read books on the topic that would sufficiently take a beginner through what they need to know to get started on the trade while also reinforces trading rules and mentalities for discouraged day traders suffering a losing streak (ah-hem... not anymore).

Having finished it for over a year now I find myself referring back to the various strategies in the book in many occasions when trying to figure my own trading system; I thoroughly enjoyed Ponsi's strategies and I believe fellow traders would also find them very applicable.

If you are after a heavy duty forex book that covers complicated economics and dwells heavily into indicators this is not for you. Within the same genre, I would rate this book higher than Lien's Day Trading the Currency Market.
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