Recommend me a Technical Analysis book

[DcifrThs]

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“I realized that technical analysis didn’t work when I turned the chart upside down and
didn’t get a different answer.”

Warren Buffett



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Read "The Intelligent Investor" instead.

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another vote for NOT reading TA here:

benoit mandelbrot's MMAR is able to produce price change and asset price charts that fool people into seeing patterns.

he believes, and i agree, that human beings are built to try to find patterns in life and in charts. thus technical analysts come about claiming (and having) success by following patters in markets.

these "chartists" as BM calls them, are the but of many jokes he's played on them as they've found support levels, varying degrees of trends (some unbelieveably long), and other TA type factors from charts he generated with his (completely randomly seeded) model.

the point he tries to make is that the markets are so random as to make chartists useles..

now, that being said, he has acknowledged the surprising ability for chartists to make money, as do i since one logical explanation for it does come to mind: if 100% of the market followed charts and acted on them, that woudl move the market. if 0 people did it obviously it woud have no affect.

so 2 things can be going on 1) enough participants can be doing it (TA) so that the results are then reinforced by the participants; and 2) there might be a very complex hand behind movement of "chartists success" that does not converge and is constantly changing just like variance of price charts (variance doesn't converge for the most part). so this change might be very slow and we may be in a boom of technical analysts success right now that may not continue or be successful itno the future.

this 2nd one can be going on now, but may not be expected to persist into the future.

thus, i prefer to put my money behind logic and reason vs. chartists that can be fooled by a 100% random model and their historical results.

Barron

[mrbaseball]

[ QUOTE ]
these "chartists" as BM calls them, are the but of many jokes he's played on them as they've found support levels, varying degrees of trends (some unbelieveably long), and other TA type factors from charts he generated with his (completely randomly seeded) model.

[/ QUOTE ]

Well? There are pyscholgical effects at play. Support and resistance being key. The market is made up of people and these support and resistance areas coupled with volume can tell you what these people are doing and thinking which all shows up on the chart.

There is no Holy Grail in TA. Just a lot of information when understood as a whole can give certain insights into what might be happening. It's a lot of work putting together a reasonable technical picture.

Besides what is the short term player or the market maker to use? The market is currently experiencing some very volatile swings. Are these swings based on fundamentals? Or are they based on human nature, fear and greed? TA is a graphical representation of human nature, fear and greed.

[DOTTT]

Some books I'll add to the list.

1. Trading for a Living
2. High Porbablity Trading

[mrbaseball]

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Some books I'll add to the list.

1. Trading for a Living
2. High Porbablity Trading


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These are both great. I especially like High Probability Trading. But OP mentioned nothing about trading merely an interest in learning about TA. Therefore I think a book like Murphy's which pretty much touches on everything is an important base for the novice. The trading books get a bit more involved and assume a base knowledge of TA going in.

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
these "chartists" as BM calls them, are the but of many jokes he's played on them as they've found support levels, varying degrees of trends (some unbelieveably long), and other TA type factors from charts he generated with his (completely randomly seeded) model.

[/ QUOTE ]

Well? There are pyscholgical effects at play. Support and resistance being key. The market is made up of people and these support and resistance areas coupled with volume can tell you what these people are doing and thinking which all shows up on the chart.

There is no Holy Grail in TA. Just a lot of information when understood as a whole can give certain insights into what might be happening. It's a lot of work putting together a reasonable technical picture.

Besides what is the short term player or the market maker to use? The market is currently experiencing some very volatile swings. Are these swings based on fundamentals? Or are they based on human nature, fear and greed? TA is a graphical representation of human nature, fear and greed.

[/ QUOTE ]

i realize this and we've all hashed this out before, fear and greed and human emotion/psychology contribute to market actions and may be able to be broken down. but the human mind is disproportionately likely to see, incorrectly, that fear and greed in a chart that may not have it (and is just the product of a random model).

like i said, TAs can be extremely successful and i don't want to have another conversation about this. my personal leaning is obviously away from something that can be so easily fooled.

Barron

[DesertCat]

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Just the greatest and most effective TA method ever, the "not using TA" method.


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OP said he wanted to "learn" about technical analysis. Learning is typically a good thing. Once you "learn" you can decide whether you want to "use" it or not. Ignorance of technical analysis is probably not a good idea even if you never plan to to use it.


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If people want to discuss TA, I'll stay out of the way of your fun. But he sounds like a novice so I wanted to point out the "other approach" to him.


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I'll bet you even Buffett knows a thing or two about chart patterns, trend channels, support, resistance and overbought/oversold indicators even if it isn't his main or even tertiary focus.

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He has said he studied them early in his career and found them useless.

[DesertCat]

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Read "The Intelligent Investor" instead.

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Hmmm? I didn't realize that was a technical analysis book? What kinds of TA methods does it focus on?

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Just the greatest and most effective TA method ever, the "not using TA" method.

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DC, I know you're a FA investor, but have you ever worked on or studied TA extensively?

I believe both methods can compliment each other. FA can provide you with set-ups and TA can privide your entries and exits.

TA, when used properly, can act like a looking glass mapping the patterns of buying and selling which often points towards impeding moves.

Completely disregarding TA surely will make you lose some edge when using FA for set-ups.

[/ QUOTE ]

My returns say otherwise I'm not holding positions above IV, nor am I selling at well below IV. I've been doing this long enough to know I have no insight into price patterns.

[DesertCat]

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[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Read "The Intelligent Investor" instead.

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Hmmm? I didn't realize that was a technical analysis book? What kinds of TA methods does it focus on?

[/ QUOTE ]

Just the greatest and most effective TA method ever, the "not using TA" method.

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You've gotta love the open mindedness of the Finance section. So, if Buffet can't figure it out or use it, I guess it just doesn't work. So, I guess Steven Cohen and Bruce Kovner are on the Forbes riches people by sheer and freak luck.

THE HUN.

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just because you, and a few experts can succeed at TA doesn't mean most will. The worlds great investors list (guys who've proven their skill over decades) is full of FA types.

And LOL at SAC's success being due to TA.

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The payments grease the superpowerful information machine that Cohen has built at SAC. The firm's credo, says a former SAC trader, is to "try to get the information before anyone else." The torrent of commissions wins Cohen the clout that often makes him privy to trading and analyst information ahead of rivals. Says one analyst: "I call Stevie personally when I have any insight or news tidbit on a company. I know he'll put the info to use and actually trade off it." Cohen expects to get the first call when an analyst upgrades or downgrades a stock, and if he doesn't, offenders have been known to get a tongue-lashing from SAC traders. Brokers lavish plenty of other privileges on him. For instance, SAC was a big beneficiary of allocations of red-hot initial public offering shares during the Internet boom, according to several former SAC traders.

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[thehun69]

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my personal leaning is obviously away from something that can be so easily fooled.

Barron

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This is why I responded in this thread, as I know Desert Cat feels the same way as you. Yes, both of you use FA in your analysis of stocks. I am one of a handful of people here who do use TA instead. We have been over this pissing contest before of TA vs. FA and I don't want to go over it either.

That being said, what is disconcerting is the fact that the two of you have said that you both lean to FA, and that is fine. The OP had asked for some TA books. Why chime in? Why not let the TA's out there give the OP advice and move on? Instead, it is both you and DC that jump into the fray of "oh TA is nothing but tea leaves and FA rules all because it's logical and depends on numbers, and of course EVERY single trader on the planet is using the EXACT same models acting rationally all the time, so if those models state something is undervalued jump right on in, look at Buffett as aparently no one else on the planet can make money in the stock market using any other type of analysis". That is what is disconcerting. I keep hearing of how that type of analysis is what you use, and Desert Cat. Fine. Use it. But if someone wants to learn TA, and know some books, then let those who are knowledgeable about the subject be helpful and post some suggestions without starting up the usual pissing fight.

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like i said, TAs can be extremely successful and i don't want to have another conversation about this.

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Then don't chime in.

THE HUN.

[mrbaseball]

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just because you, and a few experts can succeed at TA doesn't mean most will. The worlds great investors list (guys who've proven their skill over decades) is full of FA types.


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just because you, and a few experts can succeed at FA doesn't mean most will. The worlds great traders list (guys who've proven their skill over decades) is full of TA types.

Too often we blur the line between trading and investing in these discussions. It really is an apple and oranges comparison.