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The contents of this blog do not constitute investment advice. Trading CFDs and Forex can be very risky and you can lose much more than your initial deposit. Seek professional advice before making any trades.

James Sharpe ‘Foreign Exchange: The Complete Deal’ interview

James Sharpe has written a new book “Foreign Exchange: The Complete Deal,
A comprehensive guide to the theory and practice of the Forex market”. He talks to Trading Diary about the book and forex trading.

1. Who are you?

Foreign Exchange: The Complete Deal by James SharpeI have been involved in the financial markets since the late 1970s and since this time I have worked for five institutions that have spanned the globe. I have worked in the US and the Middle East where I was responsible for the region and Interbank/Central bank relationships. I have combined the positions of trader and foreign exchange sales but it is in the latter area that I have focused and where I have run a number of desks. I have dealt with practically every corporate sector, including central banks, multinationals and funds and most recently high net worth individuals.

2. What is your new book ‘Foreign Exchange: The Complete Deal’ about?

The book is about providing a clear and thorough explanation of the world of foreign exchange from a practical and theoretical point of view. I have also addressed the policy implications for governments as the management of exchange rates has become integral to economic performance and to the political landscape.

3. Why did you write this book?

I wrote this book on foreign exchange to shed light on a topic which is often sidelined and misunderstood and which also has a profound influence on our lives. I also wished to show that managing foreign exchange exposures is relatively simple once the associated jargon has been overcome. After reading this book the reader will have a good idea what moves the FX market and how to manage FX exposures.

I also wished to show to the general reader that the choice of exchange rate system is extremely important as it determines the process and impact of any economic adjustment. This point has become starkly in focus over the past year.

4. What are some of the pieces of advice that you offer in this book?

If you are thinking of trading make an honest assessment of yourself. Do you have the emotional inclination and resolve to trade? It is important to recognise that the subject matter is not simple; a great deal of expertise is required and it is mentally wearing and time consuming. Not many people actually make money.

For companies and fund managers currency exposure needs to be identified and managed.

5. You have 30 years of FX experience. Have the skill and techniques needed to be successful changed much over the years?

There have been enormous changes in the industry over the past 30 years. I joined with a degree in Economics and a Master of Finance, very rare at the time. Technology has made a huge impact as has the reduction in number of banks actually trading. The quality of traders has gradually improved although a lot of trading now is actually computer driven. That being said I believe the skills and techniques which I outline in the book are still as valid then as now.

6. Many people are reluctant to try FX due to its high volatility. Should they be worried about this?

Volatility is what makes FX so attractive for trading. You cannot trade door numbers.

7. What mistakes cause most people to lose money when trying FX?

It is not always a case of simple lack of ability. A great deal of trading can be learnt and in the book I devote some time on this in a ‘blueprint for trading’. There is though no guarantee for success. The major weakness of poor traders is lack of discipline, an inclination to wishful thinking and for private clients in particular, not devoting enough time to the task at hand.

8. Which currency pairs would you recommend for beginners?

I think beginners should choose liquid currencies and if possible those that they have some connection to. For UK clients GBP/USD, GBP/EUR and EUR/USD would be good starting points.

9. What other authors do you admire?

I admire J K Galbraith for the way he brings economics alive and Sir Roy Harrod and F Hayek for their quiet brilliance.



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