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The only two books you need to understand Technical Analysis

This is the question I get asked most on twitter, which books should I read if I want to learn technical analysis. There are thousands of books on technical analysis, but these two have stood the test of time and has helped me immensely in my journey as a trader.


Technical Analysis of Stock Trends

by Robert D. Edwards, John Magee


Technical Analysis of Stock Trends was the first book to produce a methodology for interpreting the predictable behavior of investors and markets. It revolutionized technical investment approaches and showed traders and investors how to make money regardless of what the market is doing. Now in its ninth edition, the book remains the benchmark by which all other investment methodologies are measured. An indispensable reference for technical traders, investors, and finance professionals, the ninth edition features:

* Expanded treatment of Magee's ""basing points"" procedure

* In-depth discussion and dissection of Dow Theory

* Extensive new material on commodity trading

* Much-needed perspective on short-term and futures trading

The newest incarnation of one of the true classics of market analysis, this book will be a crucial resource for both seasoned veterans and the new generation alike."


I call this book the Gita/Bible/Koran of technical analysis. While learning the patterns, pay special emphasis on how the authors explain human behavior/psychology which creates these patterns




Martin Pring on Market Momentum



This is the first comprehensive book on momentum destined to become the definitive guide to effective and proper use of Momentum studies and indicators. Examines the principles underlying Market Momentum and discusses the advantages and disadvantages of oscillators, how they are computed, and offers much insight into their proper and effective usage. This Book Will Teach You, In Easily Understood, And Easily Utilized Terms: Characteristics of overbought and oversold markets -- Trend analysis using momentum indicators -- How to become an expert in the use and interpretation of Stochastics, RSI, MACD, and many other indicators -- Pros and Cons of all major oscillators. How to use technical studies and indicators effectively in your trading.


I often use an example from this book while explaining RSI divergences. Pring says " A RSI /momentum divergence is a like a weather report that it 'may' rain, so you go out with an umbrella. However, the weather forecast is no guarantee that it 'will' rain".



These two books read and assimilated properly will give you a solid grounding in technical analysis from where you can build up.


The next post will be on options books one needs to read .


Bye for today, please feel free to comment.

( I have collected the reviews from the net, the reviews which I think properly explains these books. The comments in italics are mine)

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