Good TA books: Any suggestions?

[dutchie]

G'day Magdoran

That has been my experience too.

You have also touched on a very important factor - that of a mentor.

A mentor may be able to let you take shortcuts, as you mentioned, especially if he knows you and what your aims are. A personal one that you respect is ideal.

Belonging to a Forum like this is also beneficial as substitute mentor - all a member has to do is ask.

Cheers

Dutchie

 

[Magdoran]

Reading lots of TA books and getting a huge amount of information can be a two-edged sword.

On the one hand, by trying out numerous ideas, concepts, strategies, indicators etc, you eventually learn what works and what doesn't, and just as importantly, what sort of trading style/system suits your personality and fits in with your lifestyle.

On the other hand I've seen traders who had so much knowledge and information that they didn't know if they were Arthur or Martha.
Too many indicators, too many strategies, too much information, too many conflicting signals...the long and short of it was that that they had difficulty making rational trading decisions.

I've always maintained that the simpler your system the better you'll trade.
But I've found that a huge amount of knowledge and information is not conductive to formulating and implementing a simple system.
Sure it can be done.....I myself trade just a couple of very simple setups. But having read more than fifty books on Technical Analysis and tried out just about all the strategies and indicators they taught me about, I can tell you it was a struggle to sort the wheat from the chaff and toss out much of the information in my head, and trim it all down to just a couple of setups that repeat over and over again.
It would have been a far easier journey for me if at the outset I'd found someone who said...... 'Look - here's a simple strategy I've traded profitably for years.....just trade this one strategy, forget about learning anything else, forget about reading all those TA books, trade only this strategy, control your losses, and you'll do very well over time."

Regrettably, such a person didn't appear at the start of my trading career, so what I did instead was read all those books and buy a couple of courses and put in the hard yards until I found out what worked and what didn't, and what suited my lifestyle.

Bunyip

Hello Bunyip,


I’ve read a lot of your posts in the past, and certainly found myself in agreement with some of your comments. You have raised some interesting points which I'd like to address.

I note for instance that you found Stan Weinstein valuable at one stage in your development, and combined this with Watkins (no I haven’t read this, so would be interested in knowing as much as you can summarise about 'Exploding the Myths' by Frank Watkins).

(From: Which one do you use? Technical or fundamental analysis – Post 310.

... I suggest you start with Weinstein's book which does an excellent job of explaining in clear language how to apply the concept of relative strength to find the outperforming sectors and the outperforming stocks in those sectors.

Then you could read Frank Watkins book - he's another educator with the ability to explain simple, effective concepts and setups and show you how to incorporate them in your trading.

After that, you could spend a few quid and buy yourself some decent technical analysis software that can scan for the setups outlined by Weinstein and Watkins.

Then you can spend the next 18 months looking at thousands of charts of stocks, futures and currencies going back 15 or 20 years, or preferably longer, and learning how to reconnise (sic) the setups, just like I did. Then you can spend another 6 to 12 months paper trading to see if you can make these concepts work for you.

Now, bunyip, tell me, does this not in one sense contradict your assertion of simplicity since you actually had to seek these books out, then study them, and then implement them, which must have used some trial and error? Also, how many other works did you have to trawl through to find these works which you didn’t find of value? Also, when you did find Weinstein didn’t it have a positive effect on your trading since the core concept actually improved your results? Doesn’t this actually support what dutchie and I are saying? A lot depends on the semantics really, doesn’t it?

Your comment quoted above was in response to a debate with BSD. BSD at the time was arguing (albeit not very diplomatically, and somewhat aggressively) that continuing to expand your knowledge was important to developing an effective long term understanding of the market. I think he missed your point too, that if you can develop an effective approach that works consistently for a tradeable period of time and that simplicity in the approach is of value. Both are true in my view – but your point is only true while the approach works in a particular market climate.

Where you might come unstuck though (which was something I think BSD was asserting) is when the market conditions change, and your approach no longer works as effectively, or may no longer work at all. For example, I have been reading some works recently which touch on the history of structured financial instruments through the 80’s and beyond when people like Krieger, Wheat and others plumbed the markets for substantial amounts of capital by selling various hedging approaches to major market players and corporations.

What happened was interesting. As new derivative approaches were developed there was a time when arbitrage could be utilised to make huge profits, but these opportunities had a limited time of application since the market became increasingly competitive as competitors worked out the opportunities too. Then the investment banks had to invent new approaches to find new sources of profits as the market changed.

I would argue the same is true for the past and the present, and is likely to be true for the future, that certain approaches have application in specific conditions. This is why the traders who are successful in the long term are not stagnant.

I certainly take your point about knowledge overload being a problem. It is certainly true that people become confused if they are overwhelmed with a deluge of information (isn’t the net a bit like this these days?). The problem is not the information itself, but the individual’s capacity to absorb and process the information meaningfully. Then the next step is to apply the knowledge effectively. Part of the problem is figuring out which approach works best, and how well suited the individual is in utilising one method or another.

When someone starts out they have in effect a very small amount of direct experience to draw on. But they can access the information that is broadly available in the world. The problem is for the newer individual to develop the capacity to understand the concepts, and then meaningfully evaluate the different approaches. Also, individuals are not static, they learn often in a dynamic and unique way. So this is why I suggest people should study a lot, paper trade or trade small position for a long time, and examine everything they can, and recognise that this is a complex process. The key is for the individual to find what works for them, isn’t it?

Isn’t this exactly what you have done, gone on a journey of exploration and discovery, and come back with your version of “gold”? Do you really think you could have just gone straight to where you are now without having gained the experience you have now when you were starting out? It is precisely this experience that forms the bedrock of your approach, isn’t it? How else could you appraise the effectiveness of your current style if you hadn’t searched and developed? The answer is you probably wouldn’t recognise what you are doing right (or wrong) without having done this. Does that make sense?

Further, when market conditions change, and your approach starts to fail or not return as well, you may find that you have to adapt as the market changes. You may even find much more profitable approaches and adopt/pioneer these as you grow, if you allow yourself the time and effort to do so, and perhaps more importantly the will and drive to adapt and develop.

Why not revisit this in a few years time, and see what your perspective is like then. How does that sound? At least consider that others may work differently to you, and this kind of approach may benefit them even if you remain static.


Regards



Magdoran

 

[Magdoran]

G'day Magdoran

That has been my experience too.

You have also touched on a very important factor - that of a mentor.

A mentor may be able to let you take shortcuts, as you mentioned, especially if he knows you and what your aims are. A personal one that you respect is ideal.

Belonging to a Forum like this is also beneficial as substitute mentor - all a member has to do is ask.

Cheers

Dutchie

Hello Dutchie,

Very true, having a good mentor makes a huge difference, and I suppose to some extent ASF may link people to potential mentors, but I can’t guarantee the quality… The quality of the posts and posters vary about as much as the current market! Hahahaha!

It’s a bit like the current online dating craze, and a bit like Forrest Gump “life’s a box of chocolates – you never know what you’re going to get!”.


Your’s in mirth


Magdoran

 

[MichaelD]

The other problem was with the ability to create their own music, either they couldn’t develop the ability to conceive of pieces in their head, or they were rendered unable to improvise because they needed the music in front of them to play because of the early way that they were taught, and just couldn’t compose.

Maybe it's simply because they were simply not ever going to be any good at it - not all people are a Miles Davis or a Beethoven.

To turn this analogy back to trading it would seem to imply that you consider that everyone has it in them to succeed at trading using one approach or another, and I don't believe this is true at all.

But it is the pattern recognition, and the ability to imagine future events that is a key ability I would argue for using T/A.

Van Tharp quotes work by Le Beau (from memory) which points out that after 5 periods, any given entry pattern is no better than a random coin toss in terms of overall expectancy.

There are many profitable traders, all using different entry and analysis strategies. What do they have in common?

And that at the end of the day is the bottom line for me. WILL THE APPLICATION OF ANY ONE SCHOOL OF THOUGHT MAKE ME **MORE** PROFITABLE THAN I CURRENTLY AM?

Until I can prove to my own satisfaction that it can, then I'm sticking with simple stuff that works for my real money.

I advocate that they either paper trade for at least 12 months if not much more (maybe even 2-3 years)

How many newbie traders will be willing to do this - after all, they might miss out on all those profits on the one way stock market elevator?

Where I think we differ is that I believe this is one of the hardest games in town.

Not at all. We agree here. Trading profitably is simplicity itself...but it is NOT EASY. It is extraordinarily HARD, but not for the reasons that novices think when they start. ("If I just change the MA from 30 to 28 days then I'll make twice as much money...")

 

[Magdoran]

Maybe it's simply because they were simply not ever going to be any good at it - not all people are a Miles Davis or a Beethoven.

To turn this analogy back to trading it would seem to imply that you consider that everyone has it in them to succeed at trading using one approach or another, and I don't believe this is true at all.

Hello Michael,


You know, you have picked a point that I’m really divided on interestingly, and that is the eternal question about wether everyone has the capacity to achieve anything they put their mind to.

Simple answer from me is I just don’t know. I don’t know because there are so many variables in the world, and people continue to surprise me.

On one hand you would think that genetics and upbringing would determine a lot (and they do), but occasionally someone does something exceptional and unexpected that makes you wonder about perceived limitations.

I did actually recognise “Some people I suspect just aren’t suited to T/A full stop.” In post 15 on this thread.

I suppose that if we look at probabilities, a whole raft of people are very unlikely to be successful in the market, but is this irrespective of using a range of effective approaches, or is it that they are using the wrong approaches? I’m really not sure about this.

Why do some people succeed where others fail – individual capacity, system, analysis, psychology, discipline, or maybe even luck?

I agree, the majority are not going to be a Beethoven or a Miles Davis, good analogy, so most of us aren’t going to be a Buffet, or a Soros.

What I can say is that at least people reading these threads are attempting to inform themselves, and that they hopefully stand a better chance of succeeding, or at least investing more wisely than those who do nothing – of course this depends on how they approach risk management, and what advice and information source they access. But sometimes a little bit of knowledge can be harmful too. This is not an easy equation.

Actually, if you read my comments carefully, I do have a bias towards people who think visually or conceptually as I suggested, since this type of person is more likely to benefit from a solid foundation I’m suggesting in the long run. Some of my approaches are clearly a waste of time to some newer T/A aspirants, and I recognise that my T/A approach is certainly not the majority approach… but the majority I would argue get it wrong fairly consistently, wouldn’t you agree? So our core audiences are more of a select group.

But still, I think it is worthwhile to offer alternatives for people to consider, and if they are offered a smorgasbord of choices, some may really benefit from the diversity of information, at least this is my hope.


Regards,


Magdoran

 

[JCB]

Check out these reviews-
http://www.moneybags.com.au/guru.asp?a=74

 

[billhill]

Hi guys. Sorry to bring up an old post but i've always been more a findamental investor rather then a technical trader however joining this site has wet my appetite and i wish to learn a bit about T/A. I understand the basics now and am quite interested in trend trading in particular. I know alot of books have already been mentioned on this thread but i would like to know any quality books that deal with trend trading.

Thanks, billhill.

 

[MichaelD]

i would like to know any quality books that deal with trend trading.

As a first text which will give you all the essential concepts to trend trade profitably, I reckon it's hard to beat Trading Secrets by Louise Bedford.

 

[Magdoran]

As a first text which will give you all the essential concepts to trend trade profitably, I reckon it's hard to beat Trading Secrets by Louise Bedford.

Oh no, Michael, not again.


You are a stirrer aren't you? Either that, or you have royalties coming in for plugging Bedford! Hahaha. You are stubborn aren’t you?

I'm not getting into this argument again. Please billhill read all the previous comments on this thread and make up your own mind.

I still think Bedford is fifth rate at best.

Now, Michael, do tell me, have you read any of the works we were discussing yet? Have you read Douglas yet (not T/A by the way)?


Regards


Magdoran

 

[MichaelD]

You are stubborn aren’t you?

Now, Michael, do tell me, have you read any of the works we were discussing yet? Have you read Douglas yet (not T/A by the way)?

Indeed I am stubborn (and yes I like stirring on occasion), however I still haven't read any book on trend trading which I consider is better than Bedford as an *introductory* text. If I read a better one, I'll change my opinion. (We'll have to agree to disagree.)

Yes, I have now read Douglas. There are many powerful insights in Douglas and I have taken much of it on board...but I was most of the way there already. I had well and truly accepted the concept of each trade as a probabilistic outcome before reading Douglas. The most potent concept for me contained within Douglas is that the market simply "is" and it is our superimposed beliefs that generate an emotional response to it. (The boy vs dog examples were particularly thought-provoking.)

 

[Magdoran]

Indeed I am stubborn (and yes I like stirring on occasion), however I still haven't read any book on trend trading which I consider is better than Bedford as an *introductory* text. If I read a better one, I'll change my opinion. (We'll have to agree to disagree.)

Yes, I have now read Douglas. There are many powerful insights in Douglas and I have taken much of it on board...but I was most of the way there already. I had well and truly accepted the concept of each trade as a probabilistic outcome before reading Douglas. The most potent concept for me contained within Douglas is that the market simply "is" and it is our superimposed beliefs that generate an emotional response to it. (The boy vs dog examples were particularly thought-provoking.)

Hello Michael,


Glad you found it of interest. I agree, the boy vs dog is a nice metaphor to get an otherwise complex concept over quite elegantly.

I figured you’d worked out a lot about psychology, but it is the “colouring” of charts that is well addressed by Douglas.

Good to see you’re continuing to expand your knowledge!


Regards


Magdoran

P.S. You’re a very naughty boy (said in a “Monty Python-esque” voice).

 

[billhill]

Thanks guys for the input. Actually have red befords book MichaelD and magdoran i have read the previous posts but whats these do not indicate is whether they are good for teaching trend trading as opposed to other technical techniques such as trading breakouts. Basically i want more advanced information on identifying trends, how to enter them effectively and how to exit them.

 

[MichaelD]

Basically i want more advanced information on identifying trends, how to enter them effectively and how to exit them.

Identifying uptrends: Price is going up.
How to enter them: Buy at market.
How to exit them: Trailing stop.

It doesn't have to be fancy to be profitable.

However, if you have read Bedford, then from there I suggest Van Tharp's Trading Your Way To Financial Freedom for extensive discussion of various exit techniques (amongst other useful things).

 

[Magdoran]

Thanks guys for the input. Actually have red befords book MichaelD and magdoran i have read the previous posts but whats these do not indicate is whether they are good for teaching trend trading as opposed to other technical techniques such as trading breakouts. Basically i want more advanced information on identifying trends, how to enter them effectively and how to exit them.

Hello Billhill,


Ok, T/A is an art form. Because it involves one very salient variable: … and that is YOU – your capacity, capability, tenacity, imagination, psychology, sheer perspicacity, luck, experience, diligence, intestinal fortitude, focus, learning aptitude, flexibility (of mind and emotion), determination, etc etc… you get the picture.

There are endless books and websites, seminars, DVDs, tapes, courses, mentors… which one is a “goldilocks” (just right) for you? This is your mission that you are on now…

Everyone is unique. There is no panacea, there only disparate trail of bread crumbs across the internet and media, trading groups and an array of money making dog and pony shows that might lead you to something worthwhile, or may not.

This site I believe has many worthwhile starting points and suggestions that are much more salient than most of the deluge of guff poured out worldwide.

Developing ways to become consistently profitable in the market is a journey of discovery, which I believe only ends when you do, if you stay true to your aspirations to succeed. Reality – most fall by the wayside, or clamber up slowly over many years.

So I say it again in a nutshell. If you really had read all my posts and understood them (and not only me but a host of other gifted individuals too), then you wouldn’t be asking this question. Read the posts, make notes, and do the research. It’s all there if you follow the breadcrumbs. We can’t join the dots for you. That is something you have to do. You can’t expect to be spoon fed.

Many posters have spent considerable time formulating excellent sources of knowledge on this site for no material gain. Please, billhill, at least do us the courtesy of reading and considering what we have to say, then try raising some informed questions on points that you can’t fathom on your own that you need to clarify. This requires that you fully study all the information and understand as much as you can, unearthing what speaks to you and works for you. It’s that simple. That’s what we all had to do, and continue to do so – do the hard yards.

I will put a small list for you in a nutshell – Weinstein, Bigalow, Schwager, good basic nuts and bolts. Bunyip likes Darvas and Watkins. Coyotte likes Guppy and Wilson. MichaelD likes Bedford. Add to that Pring, Williams, Prechter and Frost, McLaren, Edwards and McGee, Dow, R.N. Elliott, W.D. Gann (and all the revisionists too many to mention here). And there are many more I haven’t covered here that are listed on the various threads mentioned.

Read them all. When you’ve done that Re read them all. Form or seek out trading groups and contact those willing to discuss, read all the relevant threads on this site. Follow every bread crumb you think is worthwhile, and even some you’re not sure of, but are convinced to do so by people you respect in the field.

Or just follow someone established in T/A (like bunyip, tech/a, wavepicker, for example, or anyone else you choose – whether you are oriented to mechanical, chart, Darvas, Wilson/Guppy, Elliott, Gann, or any other school), and keep it simple if you don’t want to journey on your own path.

If you want the psychological and system components read Douglas, Phantom of the Pits, Ari Kiev, Van Tharp, Radge etc etc…

Realise that there are whole schools of thought written in great detail about determining trends, and how to trade them. And in each of these schools that are distinct groupings and quite disparate interpretations of past works. This is a serious exercise, and to think you can reduce it to a shopping list is folly.

If you want my opinion, or anyone else that seems to make any sense, go back and read every post that has been made by a person you think may have pieces of the puzzle you need. Do not expect this to be an instant coffee and just add water. If you pursue the knowledge, I’m sure you will unearth much wisdom which is contained in the many worthwhile posts on this site.

It’s up to you billhill. Good luck with your journey.


Regards



Magdoran

 

[billhill]

Thanks michaelD and magdoran. MichaelD am actually currently reading van Tharp so i seem to be on the right track. Magdoran i'm trying not to come off as ignorant and beleive me i have read as much as i can on T/A books on this site. I also understant that T\A is about ones own system and not that simply copied from other traders. What i merely wish to do is prioritise my selection of books to those that others have found particually useful.

I do not wish to waste time reading books that in the sceme of things have helped very few people. I think i may have badly worded my first post. I have read enough to identify that a mid to long term trend tradings system would suite my personality. However i do wish to learn as much as possible. What i was trying to say in my first post was from those book previousely mentioned and those not could anyone recommend ones they have found helpful in developing a trend trading system that is all. People recommend books but for all i know they may be entirely based on breakout trading for example. I hope this clarifies what i am getting at.

Thanks billhill.

 

[Magdoran]

Thanks michaelD and magdoran. MichaelD am actually currently reading van Tharp so i seem to be on the right track. Magdoran i'm trying not to come off as ignorant and beleive me i have read as much as i can on T/A books on this site. I also understant that T\A is about ones own system and not that simply copied from other traders. What i merely wish to do is prioritise my selection of books to those that others have found particually useful.

I do not wish to waste time reading books that in the sceme of things have helped very few people. I think i may have badly worded my first post. I have read enough to identify that a mid to long term trend tradings system would suite my personality. However i do wish to learn as much as possible. What i was trying to say in my first post was from those book previousely mentioned and those not could anyone recommend ones they have found helpful in developing a trend trading system that is all. People recommend books but for all i know they may be entirely based on breakout trading for example. I hope this clarifies what i am getting at.

Thanks billhill.

Ok billhill,

Here’s the most powerful T/A combination I know – McLaren, Prechter and Frost, backed by psychology texts so you don’t colour your T/A - Douglas and maybe add Phantom of the Pits. Possibly add to that Bigalow, Williams, and for outside the box non –T/A thinking, Soros.

But these are advanced concepts, and require considerable application. Weinstein and Darvas/Watkins are more in the breakout schools.

Also as an alternative, have a look at tech/A’s tech trader for long term mechanical approaches if you don’t want to study wave structure, or charting based concepts. You could also look at techs works on this site concerning T/A theories too where he is explaining his discretionary approaches. Even if you prefer non mechanical approaches, it is worthwhile to examine a range of different styles. It is well known I have a heavy bias to the non-mechanical, intuitive/discretionary, time cycle and wave structure styles. These may or may not suit you.

But if you’re talking pure charting, Mclaren is the best material for understanding charts I have come across, combined with Prechter and Frost, this forms a formidable grounding in pure charting.

If this works for you, then geometry approaches like Bryce Gilmore’s works for example may be of interest, and of course McLaren’s time cycle and Gann based interpretations and concepts – but you really need the foundations first for this to be effective. But this is very involved T/A, and is radically different from the orthodox schools, and only a small minority really master this kind of T/A.

wavepicker for instance uses a Prechter and Frost inspired interpretation of Elliott Wave principle, and augmented it with the Mclaren foundations materials without embarking on the Gann materials.

But this assumes you may want to embark on pure charting, where you may want to use oscillators and moving averages for instance. Personally I don’t use these, perhaps with the exception of the way wavepicker uses a displacement/cycle approach. So a lot depends on where you want to go. Tech’s system is an excellent place to go if you prefer the mechanical side of T/A – if this is your oyster, check tech trader out.

If you want to understand how any of the T/A based posters work, go back and read what we’ve said and debated. Between the reposts there may be some valuable T/A observations not contained anywhere else.

Once you’ve read all our posts, you’ll know where each poster's bias lays, and can make up your own mind as to which works will suit your continued development.

How’s that?


Magdoran

 

[billhill]

Thanks magdoran. Thats what i was looking for. i appreciate your input.

billhill

 

[coyotte]

billhill :

think it is a bit more than defining just the time frame .
you also need to define the " type " of stocks eg : small cap to blue chip along with the volatility .

for example Nick Radge's methods are tops for the top 300 but I would presume would not be suitable for the small caps.
as the foundation of Radge's method is Elliott Waves , this to would probably not be suitable either for small caps or volatile stocks .

This is where I think Guppy is coming from when he states that most US methods are not suitable for OZ , being composed of mainly small cap volatile stocks .

although this could now be changing with the Oz market starting to mature with larger cap companies , shorting and cfds , maybe we are in a stage when these methods where developed in the US


For " Trend Trading " most Aussie stocks Guppy's book " Trend Trading " is both a easy read along with a kiss approach -- apart from GMMAs no indicators are involved and you are entering the stock only when the trend is underway -- although I think a bit of extra work on setting trailing stops is required than Guppy is stating --- otherwise a good proven KISS trend trading system for the medium to long term . ( 1 month then for as long as the trend remains in tact )


Wilson picks up where Guppy leaves off with tread trading in " The Business of Share Trading " with Stops, ADX , etc but the book is not devoted to "trend trading " but more a intro to trading .,


As mentioned prior Weinstein's book is worth a read for the 4 stage approach to " trend trading " in both Bull & Bear markets as much as to keep reminding you of the BASICS


IF YOUR ARE PREPARED TO PAY $55 A MONTH , STICK WITHIN THE TOP 300 AU STOCKS .( ps READ Adaptive Analysis FIRST )

Then Nick Radge's Service is the way to go -- stocks both long and short term , with analysis and WHY--- BUT up to YOU to carrying on the analys



BUT as I have stated in prior threads -- LEARN TO TRADE --- Analyists are a dime a dozen --- I've had one very well respected Analyist on this site imply that my methods can not work -- well guess what ! ---- LHG hitting $3.00 again from 3 out of 3 trades since lare Sept --- thats the difference between a Trader and a Analyist --- I don't care where my info comes from --just trade it !



Cheers



Cheers

 

[It's Snake Pliskin]

Ask and you'll be told. Seek and you'll understand.

 

[3 veiws of a secret]

BUT as I have stated in prior threads -- LEARN TO TRADE --- Analyists are a dime a dozen --- I've had one very well respected Analyist on this site imply that my methods can not work -- well guess what ! ---- LHG hitting $3.00 again from 3 out of 3 trades since lare Sept --- thats the difference between a Trader and a Analyist --- I don't care where my info comes from --just trade it !

Funny I totally agree with you ,and I have'nt had a drink tonite. Like the old saying goes "you have to be in it, to win it".
I have caught myself watching screens all day ,and bought nothing.....that's not trading. G'nite