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Good TA books: Any suggestions?

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nizar

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I dont really know or understand technical analysis to any great degree and know only the very basics...

Can any1 recommend any books to read ?

I heard Edwards and Magee is a really good "manual" but its like $150 - has anybody read this and does any1 rate it ?
 
Louise Bedford's books are good for starters (value wise), but why but when there is so much free info on the net? Try incrediblecharts.com to start- free software (day old data) and lots of info to go with it.
 
I am a subscriber to Nick Radge's 'The Chartist'. After i subscribed he sent me an E-Book, 'Master the Markets'. Its a great read that you get for free when you subscribe. This and Nick's educational newsletter have been invaluable to me.

The biggest single thing i've learned so far is that no matter how good a Company looks on paper, its what the real traders are doing that can make or break you.

I think the book retails for $99.00 USD.

Its worth checking out. I also read Nick's book "Adaptive Analysis", long before i even knew about his newsletter. Althought i'm not keen for the specific style of analysis involving Elliot Waves, i'm a firm believer in his risk management system.

I hope you find what your looking for.

Cheers,
 
Hello nizar,


Have a look at the "Books on Technical Analysis" thread which deals precisely with this topic in depth...

Below is my comment on the situation, and I didn't want to retype it all out again. Also, I am amazed at how many people think Bedford is great (no offence intended juddy - more of an observation – please read of my comments on the other thread for the full perspective).

Regards


Magdoran


 
Nizar

I'm basically a fundamentalist, and had felt daunted by reading much of the previously recommended TA tomes. As someone else has said, Nick Radge's "Adaptive Analysis" is really good for risk management, but I just couldn't get involved in all the Elliott Wave stuff. (No disrespect to either Nick or anyone who enjoys this: I just don't).

Then I read Stan Weinstein's "Secrets for Profiting in Bull and Bear Markets" and so much fell into place. Weinstein presents TA in an easy to understand fashion, and offers you some basic understanding without involving a lot of unnecessary additions. It changed the way I viewed my portfolio and I have subsequently made a lot of changes in (a) stock selection, and (b) exit criteria.

I think it's around $25, available through Moneybags, and imo well worth the money.

If someone who is basically as unattracted to charts as I was can be converted to applying Weinstein's basic philosophy to my essentially blue chip portfolio, then I think most people will find it a useful addition to their investing/trading.

Julia
 
You can pick up a copy of Technical Analysis of Stock Trends (Edwards & Magee ) or Technical Analysis of Financal Markets (Murphy) for under $us 50 + $us10 postage from Amazon

Both are similar (based on patterns ) but are not "how to books"
Murphy's book is a easier read, with virtually the same info.

If your after a "how to book" its pretty hard to go past Guppy's "Share Trading" as a primer --- then move onto the others


Cheers
 
Magdoran said:
I am amazed at how many people think Bedford is great
Click to expand...
Magdoran,

I'm going to take you up on this point and disagree with you. Of all the books I have read to date, I still consider Bedford's Trading Secrets the best book for a novice share trader to begin with.

Why?

1. Because if you read it and trade according to its methodology (long term technical trend trading with proper risk and money management) you will be profitable. The methodology presented is robust.
2. Most importantly, there is a lot of emphasis on the importance of stop losses. If this sinks in, you won't blow up whilst you spend time figuring out what really matters.
3. Even more importantly from a novice point of view, it tells the novice trader what they want to know about at the start of the book, which is the trade entry. Put anything else at the start of a trading book, and novice's eyes will glaze over and they'll skip these chapers and start reading from the trade entry chapter. At least with Trading Secrets, there's a fair chance that you'll subsequently read and think about money/risk management and psychology.

The major weakness of Trading Secrets is its lack of detail on the finer points of money management, but at least it cops an adequate mention to get started.


Books such as Radge's Adaptive Analysis (which btw I need to read again soon to absorb more detail from) and Van Tharp's Trading Your Way To Financial Freedom are not what I'd call novice texts. Novices will skip over the important parts of these books and miss the messages contained therein. You need to have some market exposure before either of these books will be of help to you (both are fabulous IMO).

Novices will simply turn their noses up at books on the psychology of trading - these messages are for much later.

I don't believe anyone wanting to start trading the markets can possibly start with the psychology of trading. In the beginning it's all about profits and calling the broker on the mobile phone from the yacht whilst surrounded by popping champagne corks. Try and suggest that the enemy is within you to a novice trader and see what happens.

Bedford's book manages to fit into the novice mindset whilst gently steering them in the right direction. That I believe is why it is a good starting point.

You've criticized this and other books as "kindergarten" material. That may well be true, but traders must learn to crawl before they can run. Trading Secrets at least allows a trader to crawl safely to begin with.
 
MichaelD

Well put !
we have all got to start in kindy !

Wilson's first 2 books I found to be very dry but packed with info

Juddy's point about Incredible Charts is very true --- if you go through the "HELP " section Colin has placed a virtual E-book there and on top of that you have the forum archives -- massive amount of info -- PLUS a pretty accurate summary of the markets in his weekly diary

Anyone tried out the new Egoli Charting package ?
20 Min delayed --- but with intra / enday for FREE !!!


Cheers
 
Well said Michael D, well said.
 

A good begining book is "Trading Secrets" by Louise Bedford. Read it and then go to other books.
 
Frank Watkins book 'Exploding The Myths' hasn't been around for as long as some of the other books, and is therefore less well known. Nevertheless, it's an excellent book written in a no-nonensence style that blows away the chaff and gets down to the wheat.
His chapter on the Darvis Box system is one of the best explanations I've seen of this method.
This entire chapter has been extracted and put into to his booklet titled 'Darvas Box Trading' - it sells for about $9.

One thing I notice when people start commenting about TA books is that some seem to think that the basics are OK to start with, but if you want to get serious about TA then you need to graduate to more advanced TA strategies.
In my opinion nothing could be further from the truth. Most of the successful traders I know have gone full circle......they started with the basics then explored and experimented with the more advanced and complex systems/strategies.
But they ended up coming back to the basics because they found that the simpler their system, the better they trade.
From my personal experiences I would certainly agree with them.

Bunyip
 


Wow, Michael, I really must have rattled your cage for you to come out railing on your hind legs like this! At the outset just let me say that I recognise that you are an intelligent person, and suspect you have great potential to grow as a trader – but that now it is time to step up to exploring alternative ideas and approaches. (Perhaps it is time for you to venture out of your mechanical play pen?)

Let’s get a few key points straight. I was very specific in my references to Bedford’s Candlestick approaches in comparison to Bigalow’s - the topic was “Good T/A books – any suggestions?”. So, are you really telling me you think Bedford trumps Bigalow? If you really believe so, then we will have to agree to disagree, I think Bigalow is an excellent book for beginners through to experienced T/A practitioners. It is comprehensive, easy to understand, and explains the basics in the preface, and goes into depth later on. It is in my opinion streets ahead of Bedford’s work.

Also, we need to make a distinction between a beginner in T/A and a complete novice. nizar is not a “Novice” but is a beginner in T/A. nizar is a regular commentator on commodities (particularly Gold and Zinc, and also actively tracks ZFX and OXR), hence quite knowledgeable and experienced about the market in other areas and knows “only the very basics” about T/A.

So, all your comments about stop losses, methodology, and money management are a side issue to straight “Technical Analysis” as a discipline, aren’t’ they? - I think you have confused the issue here. The topic was not everything to do with trading, but specifically Technical Analysis.

On this thread I suggested looking at a pervious thread on the same topic since the second seemed to duplicate the first, a logical step wouldn’t you agree? On that thread I was very particular in saying I was venturing an alternative opinion about introducing T/A, and in various threads I have outlined why I suggest alternative approaches in that different people have different preferences for how they learn and see the market.

Specifically on the “Testing a mechanical plan” thread I give the analogy of different teaching approaches to music, and how some people rote learn pieces, and others learn how to improvise… the net result being many musicians can only play music from a staves, while others compose new music, and can “jam” real time. The same I maintain can be true for how people interpret charts. Do you remember the discussion we had on the “Testing a mechanical plan” thread (please, everyone revisit this and see so you can understand the point I am making here)? Also, have a look at this discussion on other threads: “Is T/A based on hope?” and “Books on Technical Analysis” again.

I maintain that there is a significant segment of market participants that work better once they harness their creative side of the mind much like the analogy of a musician who is able to improvise in real time to create new melodies. What I am arguing is that my approach aims to foster this kind of growth to improvise, and that your approach may actually be sabotaging the development of this potential, much like when repetition is imposed on musical students rendering their ability to compose impotent. Yes, I am suggesting there is a potential for “technically castrating” some people from becoming free thinking chartists by starting them off in the wrong direction.

So, Michael, I wonder how much you’ve really looked outside your current “mechanical approach”? Specifically have you read anything on Elliott Wave approaches, Gann, George Soros, Weinstein, Larry Williams, Jack Schwager for example so you can compare and contrast the different styles? I went through the mechanical stage too, and played around with moving averages and oscillators (I note you like the ATR a lot). The difference is I have actively pursued a range of different styles perhaps not unlike martial arts schools, and have opted for a (Bruce Lee like) fluid approach rejecting rigidity.

Michael, you need to recognise the bias in your approach to T/A, and try to look outside the box so you don’t impose this restrictive approach on newer traders (I’m certainly aware of my bias, and openly acknowledge it in my posts). I suspect you haven’t really looked at many of the alternative schools of thought, have you? I would argue that this significantly limits the base of knowledge you are drawing on, and makes it nearly impossible for you to be anything approaching objective in understanding of alternative schools of thinking on T/A, until you make the intellectually challenging journey to explore T/A more thoroughly.

In the previous discussion I thought three books on T/A emerged that were not a bad starting place (and did note that this was an individual pursuit, and that everyone will have their own preference). I thought Weinstein, Schwager and Bigalow were suitable… I also stated that this was just my opinion, and stated so – not gospel.


And this assertion is based on what evidence and experience? How much have you actually thought about how significant psychology is to colouring an individuals perceptions of both the market itself and T/A as a discipline (ala Douglas)? How many traders have you worked with and tried various approaches with? Have you actively tried using and not using Douglas for instance?

What I’m getting at is how many people have you actually worked with doing this and pioneered approaches that you have found effective for helping people develop to their maximum potential? I have spent years doing so, but I’m hardly objective either. I can only venture my best shot guess based on my experience with people, and comment with a genuine intent to help people find their way to develop the best approach to suit them.

I would argue that over time, I found that using Douglas early on resulted in much more fluid thinking and less emotional damage to newer traders. I found that these people recovered more quickly, and developed the “probabilistic mindset” more effectively than those who blundered through. But on the key topic of technical analysis, it actually allowed many to use their creative side, and develop into effective chartists.

But my sample is not what you would call representative on a national sample level, I think for a comprehensive result an academic study would have to be conducted numbering in the thousands to be accurate. Interestingly, I found the majority do not “turn their noses up” at Douglas – the majority responded very well to it, so from my experience I don’t agree with you here.

MichaelD said:
You've criticized this and other books as "kindergarten" material. That may well be true, but traders must learn to crawl before they can run. Trading Secrets at least allows a trader to crawl safely to begin with.
Click to expand...

Now this specious argument implying that I am saying people need to start at the most complex level is sheer bunk, and I object to being mis represented in this way Michael. I clearly do not hold this view. I agree that people need to crawl before they walk. I just don’t think Bedford’s candlestick approach is as good as Bigalow’s. Where we differ is that you think any old toy is OK for a child to learn with. I argue that there are qualitative differences in learning delivery even in infancy, and that significant advantages go to those who are fed on a more nutritious diet. I want my kids to have fluoride so they grow up with strong teeth. Do you get my analogy? Don’t impose rote learning, and do give the newer players the best starter material around, it’s that simple.

I hope that clears things up a bit.


Regards


Magdoran
 
the topic was “Good T/A books – any suggestions?”.
Click to expand...
Gotta admit you've got me there - indeed that's the topic, not good trading books which is what my reply addressed. Hey, there's nothing wrong with the answer - it's the question which is wrong. )

...and now to get off-topic...

...now it is time to step up to exploring alternative ideas and approaches. (Perhaps it is time for you to venture out of your mechanical play pen?)
Click to expand...
Interestingly, I have developed and am currently paper trading two discretionary systems, one ASX and one FOREX. My real money remains very happily trading my mechanical system for the moment until I complete about 30 trades in each of the paper systems.

Why the change?

I have determined that I need to develop more than one system in order to decorrelate my returns. Decorrelation 1 is FOREX. Decorrelation 2 is a substantially shorter timeframe on the ASX. Long term trend following doesn't work 100% robustly on FOREX, hence the need to look at other approaches. Decorrelation 2 requires a different exit to a mechanical ATR exit which I can't code into TradeSim so can't backtest mechanically.

...much like when repetition is imposed on musical students rendering their ability to compose impotent.
Click to expand...
I disagree. This is like putting books in front of children and expecting them to learn to read by recognizing the words. What does this lead to? Year 7 students who can't read (it's happening in some primary schools in the USA - a potential generation of illiterates is very scary).

In the case of trading, the cost of learning without a rigid structure could well be blowing up your capital. That's a bit more significant than either learning or not to play a musical instrument.

Learning to trade isn't as straightforward as trial and error learning anything else; the markets will often reward incorrect trading behaviour with profits and correct trading behaviour with losses - it's pretty hard to learn from this without a structure to guide you.

"Do exactly this and you will be profitable" - a safe way to learn to trade. Many may stop there. Others will move onwards.

Specifically have you read anything on Elliott Wave approaches, Gann, George Soros, Weinstein, Larry Williams, Jack Schwager for example so you can compare and contrast the different styles?
Click to expand...
Elliott Wave: Yes - Radge, and plan to read more
Gann: No
Weinstein: On my list of books to read soon
Williams: Later
Schwager: On my list of books to read soon
Douglas: Soon
Fibonacci interests me
Pivot points interest me
Random Walk Down Wall Street: very interested in reading this


A positive expectancy mechanical trading system frees me to remain in contact with the market safely and profitably whilst I consider other approaches. It also gives me a database of real completed trades to consider and study the consequences of - ones which do not have any backtesting bias.

In market conditions such as we are experiencing at the moment, this approach means I'm a LOT better off than the bull market champions who are currently painfully haemorrhaging to death.
 
Hello Michael,

What??? You haven’t read Douglas??? Michael, my jaw just dropped. I am stunned. Oh, you are in for a treat! Once you’re read this, I think you’ll start to see what I’m on about much more clearly. Both his major works are really worth reading. This explains a lot, because I was addressing you assuming you’d read it cover to cover and it was a foundation stone for you, but now that I think about it, it was coyote who was the enlightened one… Thanks for being honest though, that takes courage, and I appreciate that as a quality in you.

Ok, I need to flesh out my methodology a bit for it to make sense… I used to teach people how to play guitar in my Uni days to bring in extra income, and used to play in a few bands over the years… hence the music analogy. Perhaps I need to make a distinction between practicing notes repetitiously to improve motor skills in execution, and the ability to improvise conceptually free of rote patterns using the individual notes learnt but in an original melody created by the student. Does that make sense? One part is learning the theory behind the music, the other is actually making it real time – essentially the theory and the practice. It is often in the combination of the two many had difficulty with.

If I was just “putting books in front of children and expecting them to learn to read by recognizing the words” you would be correct, this is insufficient, and you need to ensure students understand a range of areas of knowledge to grasp language – the individual letters, the way letters are used together, grammar rules, phonetics, cultural norms and context, etc etc.

What I’m talking about using your analogy is to inspire the individual to develop the capacity to both learn to construct their own written works, and to develop their ability to imagine and create. It is the objective to empower the individual to think and learn for themselves that is at the core here.

When it comes to trading, sure, there are foundations for knowledge that need to be understood to glean the technical technique of a particular approach – this is true of most methods of analysis. Part of the problem I see stems from ingraining “taken for granted concepts” when they preclude the ability to innovate new approaches. When you read Douglas you may recognise the concept of how individuals colour their view and impose it on the market unconsciously. Gann talked about traders having a bias when looking at charts (either bullish or bearish), and McLaren talks about people having a bias in overstaying positions (greed) or in jumping out to early (fear).

In teaching Guitar for example I found people who had either not learned the correct fingering for future development into more complex patterns of music, which impaired their capacity to seamlessly execute particular phrases. 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.

The same I would argue is true for how people develop the analytical skills in Technical Analysis. This is why I think it is important to get the building blocks for future development in place right from the start. Another key element is how the mind works – hence the psychology can actually colour what you’re looking at despite the foundation concepts you have learned. The way you assemble them to make an assessment is as relevant as understanding the concepts, perhaps more so.

Some people I suspect just aren’t suited to T/A full stop. Others are more suited to mathematical calculations, and do better using statistical approaches. Then there are the group that I think I fit best into which is the visual conceptual group, which involves the ability to recognise complex patterns. I used to play chess a lot in my youth (even played some of the masters at one time if you can believe it – didn’t win though, but was offered a draw on occasion – that tussle in the middle to endgame used to bring me undone, I was never quite up to the challenge at this level). What I could do though was to “see” many moves ahead (I think at one time I was seeing over 20 moves ahead at my peak – probably be lucky to see 5 now Hahaha…). 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.

I think that many of the schools of thought like Elliott and Gann have a lot to offer, but take time to understand. Bunyip has it right though that once you master this stuff, you do look for simplicity. It’s a bit like Einstein boiling down all the complexity behind the theory of relativity into one simple formula… but he had pages of proof to demonstrate the theory, and needed an exceptional talent to “see” the simplicity out of the complexity.

I think trading is the same – it’s about screening out the “noise” and boiling it all down into a simple equation – conditions to enter, and a plan of where and when to exit – both partial profits and stop losses included. But this is easier said than done. I think the true masters of any discipline have this ability to intuitively go to the root of the problem, and the best solutions are the elegant ones…

I think I also need to raise an point about what I’m suggesting for newer traders – I advocate that they either paper trade for at least 12 months if not much more (maybe even 2-3 years), or at least trade very small positions to learn before committing real capital. This is so they don’t “blow up their accounts” as you say. Where I think we differ is that I believe this is one of the hardest games in town, and that it requires serious and concerted effort to succeed in the long run. Sure it’s fairly easy to make profits when the market is trending bullishly strongly, but it’s in bear and sideways markets that the wheat is separated from the chaff.

Good luck with your endeavours to change, I could hear it in your previous post. This is a challenging time for you, and you will push your boundaries, but ultimately this is what it is all about, standing at the brink feeling forwards and developing. I look forward to reading your posts once you’ve had time to digest Douglas. If you really want to blow your mind when you feel ready with some really advanced T/A concepts, let me know. The fact you are surviving in the current market conditions augers well, doesn’t it?


Regards


Magdoran
 
I completely agree with you about Tharp and Douglas Magdoran- they are 2 books that I would recommend someone who wants to learn read. Once someone has gotten a grasp of the concepts in those books, they are alot better prepared to deal with T/A and trading in general. When I first began, I picked up a couple of books by Guppy and it ended up taking me a long time to really get a grasp of trading- enter Tharp and Douglas- results improved alot after that.

Nizar,

My recommendation for you learning about T/A would be this-
1. Go and read Tharp and Douglas.
2. Go and get some software with bactesting capabilities. Play around with all the pretty indicators and find a few that you like, then test them out over various timeframes(bull,bear and sideways markets). This doesn't mean that I'm recommending you look into mechanical trading, but being able to test out any ideas you have will be a huge benefit. You'll end up figuring out how well various things like moving averages, oscillators, etc work in different conditions.

Basically any indicator that a charting package has will work well in a bullmarket. If you are looking for shorts, then the same indicators will work well when they are reversed for a bearmarket. Not much will work well in a sideways market. It's pretty well that simple(unless you want get into elliot wave or gann, if you do, disregard my post )
 
Q: A good book to read on T/A ?

A: Every book you can lay your hands on and have the time to read.

Great suggestions and discussion going on here.

I am of the opinion that the more you can read/listen to others/watch etc the better.

Which book to start with, what to read, what not to read – who knows.

That will vary for every person, as it is impossible to predict what someone will learn from any one experience.

Some may start with Bedford for example and find it good in regard to where they are on their learning curve, others may be lucky enough to find Radge (or Douglas) and find them the gems they thought they were looking for.

The point is that we all learn differently at different speeds. Forums like this facilitate the spreading of ideas and concepts about the subject and in this instance what they perceive as good reading material to expand ones knowledge.

I suggest that you read as much as you can (especially if it interests you and hits a chord in the way you think).

Go to your local library, google the net, join a forum, borrow a book from a friend (and return it!), speak to other traders, attend a seminar.

I have always worked on the philosophy that even if I only get 1% out of a book/seminar/talk etc then I am 1% ahead of where I was before.

Accumulate knowledge.

One of the main problems for most people (me included) is that they read one book and think because they got it (the material in the book) they are ready to trade (and do so) and often loose their shirt and leave the game (a little poorer).

It is only when you start accumulating knowledge that you realize how much there is still to learn (it never stops).

So my advice is to read any book you can. Be guided by other peoples experience and suggestions but remember everyone is at a different place along the road of knowledge so be flexible and spongy (soak it all in).

Put the time in to learn before you start trading. When you realize how much you still need to know then your closer to being ready to trade.

Cheers

Dutchie
 

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
 
Bunyip

Your absolutely right, it can be a two edged sword of having too much information.

Part of the learning experience must also involve the analysis of the information gathered. Whats useful - whats not.

But I suppose statistically you have a better chance of making a better decision about anything (especially relationship issues) if you have as much of the information that is available.

Cheers

Dutchie
 
Hello Dutchie,

I fully agree with your perspective here, this certainly lines up with my experience. It was only be trial and error, and poking around everything I could find that I was able to develop an understanding of the strengths and weaknesses of each approach.

I think you have to journey through a period of discovery in part to explore what’s out there in the way of existing knowledge and approaches, and then there is the inner journey and self discovery – what your own bias is, how you learn, how you perceive, what your psychological make up is on several levels. I think we all impose our view of the world on situations, and this is the cornerstone of Douglas’ approach.

Once a person is aware of the way that each individuals past experience necessarily colours their view about anything, this recognition can form the basis for compensating for bias in all the aspects of life, including trading as a discipline, and Technical Analysis as an art.

So I agree, read everything you can – sometimes a mentor may be able to give you a short cut to really move ahead and avoid some pitfalls too, but also maintaining an open but discerning mind is a way of avoiding stagnation, and ensuring concerted growth to meet the ongoing changes and new challenges in a dynamic market.


Regards,


Magdoran
 
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