Books on Technical Analysis

Could anyone tell me of any easy to read/understand books on technical analysis?

There is so many books out there and I would like to purchase a couple to learn a bit but don't know which. I have been looking at the "Tech analysis for dummies" book online but don't know of its content, cant find it in stores at present.

Re: Q. on Tech Analysis

Nick Radges "Adaptive Analysis" is about as good as it gets on how to think about, and use, TA "profitably".

...and will add important context to anything else you read.

Cheers

(Haven't read Nick Radge's Adaptive Analysis yet, but have only heard good things about it and indeed have it in my pile of books to be read, probably next after I finish Van Tharp).

As a newbie technical book, I personally feel it is very hard to go past Louise Bedford's Trading Secrets book as it covers what you need to know to at least get started on the right foot. It also covers it in the right order for newbies (IMO) even though this is in fact the wrong order to cover the material - but you only work that out later in your trading career.

Louise's book, however, should only be the starting point. Chris Tate's Art of Trading is a worthy follow-up to Louise's book (and covers things in the correct order for traders - psychology first).

Eventually, Van Tharp's Trading Your Way To Financial Freedom is a must read, too.

will look into them. Thanks!

If you are just starting out i would suggest that you you first determine what type of trading you are going to do !

The shorter the term the greater amount of capital you are going to need to make a profit and with less room for mistakes

Probably the safest route is position/trend trading to kick off with --- here you are simply hicking a ride on a realitively safe stock for a while --- whilst you disipline yourself to impose "stop losses " etc --- then move onto position / breakout --- here you are planning to hop onto the move a lot earlier and ride it
as it changes into a trend trade

Stan Weinstan's book is an introduction to position trading followed by:
Guppy's "Share Trading " as a intro to WHAT trading actually is !
Guppy's "Trend Trading " excellent follow on -- read and uderstand this and you would probably be in a position to place your first trade

Then carry on with Leon Wilson's 3 books which carry through the whole process from beginning to end ---- the last is a bit heavy though

These 6 books all compliment each other and each carries on where the other left off .

Bedford's "candlsticks" is a good read But Candles are short term only.

If you do go ahead your probably better to kick off with CFDs -- IJ markets are not to bad but advoid CMC ----With CFDs there is no min parcel so whilst you are getting your act together you could just buy $100 worth (total NOT margin) --- pay the commision & int out your pocket ---- you won't LEARN untill you actually put CASH @ risk --- forget paper trading, its all about YOU
not the method you are using!

Cheers

Hello makeorbrake,



Welcome to the wonderful world of technical analysis!

Ok, now you’ve asked about texts on this subject, you’re going to get a deluge of suggestions on this thread, and you’re going to have to wade through all the materials to figure out what works for you, and hear conflicting points of view.

I’ll let you into a little secret; most of the works available on technical analysis are poor. Some are even worse than that, in my opinion. But if you want to start somewhere, figure out if you really want to read charts and interpret them, or if you want to punch numbers into a machine and for it to tell you when to enter and when to exit.

If you want to really become proficient at interpreting charts and have the time to do so, let me offer an alternative path – but please note that these are my personal experiences, and you may find what works for you is quite different to what works for me, so it’s up to you. There is some powerful material out there, but it’s not commonly known, and you probably really need to work the basics out first.

With all due respect to MichaelD and coyotte, I thought Bedford and Tate were kindergarten material, and actually not a good starting point. I do agree Van Tharp’s book is excellent as a starting book on dealing with trading, but it doesn’t go into technical analysis.

If you’re talking candlesticks, Stephen Bigalow’s book “Profitable Candlestick Trading” eats Bedford’s candlestick approach for breakfast.

If you’re talking nuts and bolts technical analysis concepts, Jack Schwager’s various books (try “Getting Started in Technical Analysis”) is not a bad place to start either (eats Tate for breakfast too). I’ve moved on way ahead from this now and discount a lot of the material, but it’s ok to get a feel for this area, just don’t take it as gospel, it certainly isn’t, but it’s streets ahead of the the other texts mentioned.

If you want concepts in Elliott wave, you can’t go past Prechter and Frost - this is an excellent work on wave structures (I haven’t read Nick Radge’s books, but apparently they have a good reputation in many professional trading circles).

Also, I didn’t think much of Guppy, I think he’s overrated, probably ok for a beginner; I do have his books on my shelf, but really disagree with many of his concepts now, which took me a while to unlearn some key concepts. He’s also allied with Dr Alexander Elder of “Come into my trading Room” and “Trading for a Living” fame – very overrated in my view – actually quite damaging in some cases – compare and contrast with Douglas for a start, let alone the poor T/A.

If you want the killer book on Psychology a must read is Mark Douglas’ book “Trading in the Zone” (also, Ari Kiev’s book of the same name is a reasonable read too, but after Douglas, and certain elements of it are a waste of time, but there are some good bits worth reading). These are however not technical analysis books, but ally quite well with the psychological aspects of trading.

Fully agree Stan Weinstein’s book “Secrets for profiting in bull and bear markets” is not a bad start to consider position trading, and has some good sectoral concepts that are useful, but I personally discount anything with a moving average or oscillator. I’ve never read Wilson’s books, so I can’t comment there.

Here’s another tip – go and look for materials in public libraries – you’d be surprised at what’s in there… also, you can be even more clever, and request they buy the things you are interested in if they don’t have it. This way you can figure out if you want to have the book on your shelf or not!

One more idea to consider – try reading “Soros on Soros” for an interestin perspective, and maybe “Masters of the Market” (Hughes Wilson & Kidman) for an entertaining read.


Hope this helps,


Magdoran
P.S. Sorry guys for trashing your books… just calling it the way I see it.

From the relatively few books I've read:

- Daryl Guppy's I found quite basic and rather repetitive. He concentrates heavily on his own indicators (MMAs and countback lines). I do however get his weekly newsletter, which while also rather repetitive, does go through up-to-date examples.

- Leon Wilson's first book "The Business of Share Trading" I thought was quite good. Gave good overall coverage of trading and indicators, and covers a lot in a single volume.

- Edwards & Magee's "The Technical Analysis of Stock Trends" is an excellent book for chart patterns, but rather dull reading (but then it was written back in the days when books of instruction weren't meant to be entertaining). It's quite a slog to get through it, but well worthwhile IMO.

- Jack Schwager's "A Complete Guide To The Futures Markets" was pretty good (I say "was" because I bought & read it about 20 years ago). I can't remember a lot of the details now, but while it's primarily about the futures markets, does cover general TA to some extent. Gotta read this one again myself sometime.

- Nick Radge's "Adaptive Analysis" is good too, although focuses quite a bit on Elliot Wave techniques.

And a good book not directly related to share trading, but more in line with Tech's recent thread on businesses, is Michael Gerber's "The E-Myth Revisited". It talks about the what, how, and who of starting up and running a successful small business. Perhaps useful for helping to focus on treating your trading as a business (even if you don't think it has anything to do with share trading, it's still a good read).

I've got Van Tharp's book waiting to be read, and have to get me a copy of that "Trading In The Zone" book too. Currently stuck on reading a book on software development called "Death March" - or how the norm in software development is for projects to be scheduled in half the time they really need, and with half the required resources - sounds just like one or two of ours at work!

Cheers,
GP

Magdoran:
your are absolulty correct, but "makeorbreak" apparently knows nothing about S/T -- hence like all of us, start at the kindy level --- those books i suggested if read in their order start off quite simple and end up with Wilson's "Breakthrough Trading" which is relatively complex.
Bedford's candlesticks is only a overview -- but again at the beginners level.
As you mentioned TRADING IN THE ZONE is a must read -- but not yet -- not untill "makeorbreak" realizes that the real problem lies with the TRADER not the trading method.

Cheeers

Hello coyotte,


Funny, I’ve always been in two minds about starting new traders on Douglas, but actually think this can help right from the start, and makes the transition to adopting the “probabilistic mindset” easier, and focuses the objective on consistency much like in an open emotionally rewarding music session for new musicians. You know, try to get a positive feedback loop going... seems to work well (most of the time).

I have kind of debated when to bring this in for quite a while now, and on average going straight into it seems to have had the best results (admittedly with only my limited and not very representative sample from a nationwide perspective).

Reading “makeorbreak’s” comments I got the feeling it might be of benefit, and would be a low probability to cause a problem, but I do take your point, and did initially hold that point of view like you for quite some time...

As for the other texts, why not go for succinct to the point comprehensive texts that actually address core technical analysis issues and not stuff around with outdated ideas... especially so it can take the individual through from beginner through to an intermediate level? The focus was on T/A... Just my point of view though, as stated, definitely not gospel...

Now there is something of interest here – Wilson. Hmmm something I know nothing about. Great, I like a new challenge. Do tell me that it doesn’t involve moving averages and oscillators, won’t you? Does it have concepts on time and price forecasting, counter trends, wave structure, time cycles, bar chart & Volume analysis? Would be interested if so...


Regards


Magdoran

Magdoran said:

...concepts on time and price forecasting, counter trends, wave structure, time cycles, bar chart & Volume analysis

Click to expand...

What books have you found useful for these concepts, Mag?

Cheers

Oh well, I'm kind of disappointed. Leon Wilson seems to be into lagging indicators like the tired old MACD, ATR, Parabolic, oscillator kind of “shadows on the walls” approach from the web pages I've found. Am I right in this impression?


Regards


Magdoran

Awwww Wayne,

You know the answer to that... but for everyone else’s benefit, the mask comes off, and that controversial name is - W.D. Gann (all his works), Prechter and Frost, R.N. Elliot, and a range of Gann revisionists (try Bryce T. Gilmore for example, I don’t fully subscribe to his ideas, but Geometry of the markets I & II are an interesting read).

But this stuff is way too heavy for a beginner – but if people really want to know more and show the inclination, hey, there’s about 3 years worth of study to step up to… but people who master Gann are the exception. It’s actually very challenging…

But you know this Wayne from the many online discussions over the years… Out of interest, what do you use these days?


Regards


Magdoran

P.S. Don’t you ever sleep over there in Geraldton? Hiding from the “Evil Empire” I presume – hanging from your bat pole! Hahaha…

Magdoran said:

Oh well, I'm kind of disappointed. Leon Wilson seems to be into lagging indicators like the tired old MACD, ATR, Parabolic, oscillator kind of “shadows on the walls” approach from the web pages I've found. Am I right in this impression?


Regards


Magdoran

Click to expand...

Well I'm shocked that you don't use MA's, particularly the most useful and accurate one... here in metastock code:

Mov(C,1,S)

Cheers

Now, now, Wayne,


You stirrer! You are a naughty boy! Now stop tugging my chain, you escaped Californian (bet you miss the idea of seeing Arnie as Governor!).

Now I must go to bed, unlike you Mr Night owl!



Yours in Amusement


Magdoran

Magdoran said:

Awwww Wayne,

You know the answer to that... but for everyone else’s benefit, the mask comes off, and that controversial name is - W.D. Gann (all his works), Prechter and Frost, R.N. Elliot, and a range of Gann revisionists (try Bryce T. Gilmore for example, I don’t fully subscribe to his ideas, but Geometry of the markets I & II are an interesting read).

But this stuff is way too heavy for a beginner – but if people really want to know more and show the inclination, hey, there’s about 3 years worth of study to step up to… but people who master Gann are the exception. It’s actually very challenging…

But you know this Wayne from the many online discussions over the years… Out of interest, what do you use these days?


Regards


Magdoran

P.S. Don’t you ever sleep over there in Geraldton? Hiding from the “Evil Empire” I presume – hanging from your bat pole! Hahaha…

Click to expand...

One finds the nocturnal habit hard to break on the weekends I don't return to my crypt till daylight

Yes, Mov(C,1,S) basically is what I use. Or if I'm looking for something faster, Mov(C,1,E)

Cheers

Leon Wilson's books probably would be of no use to you Magdoran ,as he is a ex Guppy student !
His method of Trading is :
1: Price Action eg : Patterns, Breakouts etc
2: Confirmirmed by Vol & Indicators (as with Guppy "No Time" or Waves)

I thought his run down on indicators was quite good --- simple, easy to understand, their pluses and minuses, when they where appliciable

Patterns are generally very basic stuff .

He does include three trading plans -- which can be a beginning if you don't have one --- most of the books i've read give you the tools but don't tell you how to put them together!

You're probably right about "trading in the zone " but i feel you have to go to Hell and Back to appreciate it --- often drag out my copy and revise it.

You mentioned Schwager's "Getting started in T/A" is this worth a read if you've been trading for a while or would one already know it?


Cheers

makeorbreak said:

Could anyone tell me of any easy to read/understand books on technical analysis?

There is so many books out there and I would like to purchase a couple to learn a bit but don't know which. I have been looking at the "Tech analysis for dummies" book online but don't know of its content, cant find it in stores at present.

Click to expand...

if you're new to shares trading like me, and would like to learn more about Technical Analysis to begin with, i think TA for Dummies is definitely a good start. i went searching for it for a while before i could finally find one and ended up buying it. certainly it wont be the last TA book that i will be reading.

Hello Wayne,


Hopefully you have arisen from your crypt now! Hope you had a great weekend!

Ok, you’ve awoken my curiosity, and since we’re in a “tell all” kind of mood…

You know, looking back, I don’t think I ever saw a detailed description of your T/A approach. I remember seeing some charts in your blog entries that seemed to have horizontal support and resistance lines and trend lines on them.

So, out of interest then, what T/A sources have you drawn from? I do remember you were looking at various Elliott Wave approaches a few years back, how do you view this now?

You used to day trade the US a lot a few years ago, are you still doing this, or with options have you moved more to position trading?

I sometimes wonder how you go looking for non directional trades, especially since I go looking for tradeable trends and swings a lot. I just find it difficult to locate sideways patterns with as much accuracy in terms of forecasting – I do see this, but can’t project sideways patterns with much accuracy (particularly in time). How do you approach this out of interest?

Hey, I was wondering if you use any of the techniques I mentioned by any chance?

Anyway, I’m sure your answers will be quite interesting!


Yours in anticipation


Magdoran

Hello Coyotte,


Actually, I visited a bookshop today and tracked down the Wilson books, and thumbed through them. You are right, I got the picture very quickly, and scanned enough to get the picture. I really don’t subscribe to RSI and ADX/DMI and all that “trading shadows on the wall” stuff.

I abandoned this kind of approach quite a while ago, and agree that it is appropriate for people who just don’t have the time to go into much depth in pure T/A terms.

It looked ok from that point of view, but I’d argue that this kind of training is akin to getting new musicians to rote learn pieces, and in the end, I suspect that it impairs the ability to “improvise” – same with T/A. That’s not to say that some people just want to play a piece and be done with it, and if that’s what someone actually wants, that’s fine.

The point I’m getting at is, like with music, if you want to create your own compositions, and use your imagination and perception to “see” the market, then things like moving averages and oscillators etc I believe actually obscure the market. You become reliant on all these gizmo’s, and they are actually for want of a better description “static” in a sense.

Sure you can change the days on a moving average, make it exponential if you like, add in a stochastic, or get a MACD configured, set up an RSI etc etc, but they are still locked conceptually into one dimension/paradigm of thinking, and are essentially limited – hence lagging. You are not looking at what’s going on directly, you’re looking essentially at “shadows on the wall”. Well, that’s my perspective for what it’s worth, but if you subscribe to this approach and it works for you, that’s fine by me.


Ok, in recommending anything for you, it really depends on several variables about you the person/trader:

Can you visualise charts in your mind away from any physical representation (i.e. close your eyes and just conceptualise the chart in your head)?

Do you/have you researched charts just looking at the way markets move (does this interest you)?

Are you addicted to MA’s and oscillators? If you switch off all the indicators other than bar/candle stick and volume, can you still discern the trend, and make accurate projections where and when the underlying will trend/counter trend (preferably in multiple time frames - daily, weekly, monthly etc)?

Can you identify what tops/bottoms tend to look like?

What patterns do you look for/see?

Do you want to improve your accuracy, and are you prepared to put many hours into doing so?

Are you willing to look at alternative approaches, and attempt to absorb new ideas, and actually change?

If you’re set in your ways when you read these questions (best to be honest with yourself), then there’s nothing much I can recommend that will be of much use. If however you are interested in looking at alternative ideas, give me some idea of what you do in your current analysis, and the way you think, and maybe I can point you to different materials for you to look at.

Completely up to you of course… and don’t forget, we’re all students of the market, and I’m just a trader like you who’s gone through his own journey… maybe you can glean one good idea from the experience…

The key thing is that all of us are individuals, and we need to find what works for us. I see this as an ongoing lifetime journey, where the learning never stops. Hence I’m always open to look at new ideas and perspectives, but get tired of the same old stuff… So it’s up to you coyotte.

Schwager’s not a bad start to pure pattern concepts and looking at bars etc, but I really see it as a kind of introduction and discount or have revised most of what is in it, but it was useful at one point – don’t know if that answers your question, but hope it makes enough sense!


Regards


Magdoran

Magdoran said:

Hello Wayne,


Hopefully you have arisen from your crypt now! Hope you had a great weekend!

Ok, you’ve awoken my curiosity, and since we’re in a “tell all” kind of mood…

You know, looking back, I don’t think I ever saw a detailed description of your T/A approach. I remember seeing some charts in your blog entries that seemed to have horizontal support and resistance lines and trend lines on them.

So, out of interest then, what T/A sources have you drawn from? I do remember you were looking at various Elliott Wave approaches a few years back, how do you view this now?

You used to day trade the US a lot a few years ago, are you still doing this, or with options have you moved more to position trading?

Click to expand...

Hi Mag

Weellllll... It's not something I like to talk about really. It's not that I have any secret method or esoteric knowledge. It's just that I consider my way of trading embarrasingly simple... and some folks like to pick away at discretionary technical approaches as well.

But briefly I have 3 separate "systems" if they qualify to be called that.

1/ Writing options over indecies. This may be any of the theta positive strategies, depending on where I see the index going, IV levels etc... always aiming to get delta neutral if the market allows.

2/ Swing/Position trading stocks and commodities. This encompasses using preferably options, but the underlying at times and basically riding wave structure (more on that in a tick) once again selecting strategies depending on IV etc... and morphing those strategies if necessary. Gamma trades when the planets line up properly.

3/ Day trading the liquid electronic futures... Indecies, Gold(ZG), oil(QM), sometimes bonds(ZN). These trades may turn into catagory 2/ trades if I like how its shaping up. The horizontal lines are simply floor traders pivots. Stunningly successful for periods, but completely ignored by the market at other times.

As far as what T/A sources I draw from? Years ago, the first approach that made any sense was from one Mr Nicholas Radge, and the basis of my trading still relies on those fundamantals learned from Nick.

I als did spend some time with Elliott Wave, and was even employed for a short time as a trader in an Elliott based firm. (prefered rowing my own boat though) So I have a pretty sound basis with EW.

However I don't conciously look for classic EW structure, but do definately look at "wave" structure without the Elliott on the front. (though subconciously I probably still do consider the classic EW)

Same with Fib levels. I don't plot them or conciously look for them, but the mind subconciously recognises the levels.

I think any pattern trader probably is at least subconciously aware of these.

But in reality, my trading library is not large.

Magdoran said:

I sometimes wonder how you go looking for non directional trades, especially since I go looking for tradeable trends and swings a lot. I just find it difficult to locate sideways patterns with as much accuracy in terms of forecasting – I do see this, but can’t project sideways patterns with much accuracy (particularly in time). How do you approach this out of interest?

Hey, I was wondering if you use any of the techniques I mentioned by any chance?

Anyway, I’m sure your answers will be quite interesting!

Click to expand...

Ok Non directional strategies. I love delta neutral theta negative strategies in indecies and am consistently in the market with these, which I've gone into above. The beauty here is the relatively continuous markets (making defence one helluva lot more possible) and chronically overvalued options.

I am not so keen on the same strategy on stocks. I much prefer to be gamma positive with stocks and will only go delta nuetral (gamma positive) under certain circumstances.

The reason for this is that distributions of returns are far more leptokurtic with stocks... fat tails abound and I'd prefer to be on the positive side of these.

Commodities I'm still feeling my way with as I haven't been trading them long enough. Playing the seasonal game (or rather, the non-seasonal as described by Johnston) with short options and direction trades are more likely to be futures except where liquidity in the options is significant.

That all sounds like I'm furiously trading like a one armed bricklayer in Bahgdad, but the choice of strategies has allowed me to become quite selective.

I trade less now than when I traded straight stocks (apart from daytrades)

Anyway thats enough... I'm waffling now

Cheers