Getting Started in Technical Analysis

Submitted by Book Library on 10 March, 2010 - 16:27

Revered by many, reviled by some, technical analysis is the art and science of deciphering price activity to better understand market behavior and identify trading opportunities. In this accessible guide, Jack Schwager perhaps the most recognized and respected name in the field demystifies technical analysis for beginning investors, clearly explaining such basics as trends, trading ranges, chart patterns, stops, entry, and exit and pyramiding approaches.

The book's numerous examples and clear, simple explanations provide a solid framework for using technical analysis to make better, more informed investment decisions and as the basis for mechanical trading systems. Along with Schwager's invaluable trading rules and market observations culled from years of real-world trading experience, Getting Started in Technical Analysis offers in-depth coverage of:

  • Types of charts bar, close-only, point and figure, candlestick.
  • Chart patterns one-day, continuation, top and bottom formations, the importance of failed signals.
  • Trading systems trend-following, counter-trend, pattern recognition.
  • Charting and analysis software price data issues, time frame/trading style considerations, software research.
  • he planned trading approach trading philosophy, choosing markets, risk control strategies, establishing a trading routine.

Positive Review of Book

If you want to trade commodity futures (and who doesn't?), there's no better place to start than with the "Getting Started." series, and this volume in particular. There are books with more detail and broader coverage, but you have no business looking at them until you master the stuff Schwager presents here. And there's a gracious plenty here (339 pages). He covers, among other things, the validity of technical analysis, chart principles and patterns, trendline construction, trade management, and failed signals ("the most important rule in chart analysis"), with enough humor to pleasantly surprise you from time to time. I've been studying commodities for about a year and trading a little, and I keep coming back to Schwager to clear my head.

Negative Review of Book

The prevailing guidance of the book is that traders "need to experiment to see what works" (this phrase is found numerous times in the book). Then why read the book? The author doesn't really offer anything useful to the reader that isn't found in works by other authors. In the first paragraph of Chapter 14 I discovered why: "For obvious reasons, this book will not offer detailed descriptions of the best trading systems I have designed". So, everything the author includes in the book is just second best! Don't waste time studying this book; the author is not interested in helping you!

Author Biography

Jack D. Schwager is currently the Managing Member of Market Wizards Funds, L.L.C., in Vineyard Haven, MA. His prior experience includes 22 years as the director of futures research for some of Wall Street's leading firms.

Table of Contents

    • Charts: Forecasting Tool or Folklore?
    • Types of Charts.
    • Trends.
    • Trading Ranges and Support and Resistance.
    • Chart Patterns.
    • Oscillators.
    • Is Chart Analysis Still Valid?
    • Midtrend Entry and Pyramiding.
    • Choosing Stop-Loss Points.
    • Setting Objectives and Other Position Exit Criteria.
    • The Most Important Rule in Chart Analysis.
    • Real-World Chart Analysis.
    • Charting and Analysis Software.
    • Technical Trading Systems: Structure and Design.
    • Testing and Optimizing Trading Systems.
    • The Planned Trading Approach.
    • Eighty-Two Trading Rules and Market Observations.
    • Market Wiz(ar)dom.

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