Technical Analysis is the study of price movements of stock prices plotted on the chart for predictions of the future prices. It’s contrary to the Fundamental analysis which does not include companies in-depth financial research, economic research or any other analysis of the company.
Technical analysts believe that all the information in the market is already factored in the market price of the stock. The price of the stock is plotted on the chart and is used to study the previous movements of the price to predict the future price. They are also known as chartists. Technical analysis can be used by right from short-term traders to long-term investors to help them take a decision on future prices of the stocks.
Technical analysis is art as much as it is science. Technical analysis skills improve over a period of time with experience. A person from the non-finance background with no experience of companies financial statements can also study stocks, commodities & currency with the help of Technical Analysis.
Technical analysis can give you best results when combined with other research and analysis. Although it can be used independently there are certain limitations which one needs to understand to put analysis to the best use.
- 1 How to Start Learning Basic Technical Analysis with Technical Analysis Books
- 1.1 # Study Guide to Technical Analysis of the Financial Markets (New York Institute of Finance) by Murphy J.J
- 1.2 # How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor by Prasenjit Paul
- 1.3 Technical Analysis Explained: The Successful Investor’s Guide to Spotting Investment Trends and Turning Points by Martin J. Pring
- 1.4 Encyclopedia of Chart Patterns (Wiley Trading) by Thomas N. Bulkowski
- 1.5 Japanese Candlestick Charting Techniques by Nison
- 1.6 Over To You
How to Start Learning Basic Technical Analysis with Technical Analysis Books
We have curated the best Technical Analysis books to learn technical analysis right from scratch or even used by professionals to hone their skills is they are already technical analysis traders. Everyone book selected has a certain reason why it has been selected. There are some concepts that are covered elaborately only in certain books which made us select those books.
# Study Guide to Technical Analysis of the Financial Markets (New York Institute of Finance) by Murphy J.J
A Comprehensive Guide to Trading Methods and Applications
As the book subtitle suggests it a comprehensive guide which covers all the most important concepts, methodologies, and basics of technical analysis. The author starts from the basic concept and keeps advancing with the concept for one to set up a chart to predict the price of the stock. It also covers the technical requirements for your trading setups. The author emphasis on various technical tools and indicators that are required for your trade setup. The author has focused on reading charts irrespective of the time frame. Different time frame requires different types of studies which are not covered in this book. Anyone who starts from beginning to analyze the market behavior through technical analysis even in the modern day this books has just everything to start with.
- The chapter Money Management and Trading Tactics lays importance why technical analysis alone won’t suffice. His vast experience in the trading and analyzing market he has concluded that technical analysis has little to do with stock trading strategy and more emphasis has to be laid with Money Management.
- The three most important aspect of the Technical analysis is
- Price Forecasting
- Trading Tactics
- Money Management
- 5 Step Trading System
- Start with a Concept an Idea
- Turning Your Idea to Set of Objective Rule
- Visually Check it Out on the Chart
- Formally Test it With Computer
- Evaluate Results
# How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor by Prasenjit Paul
An easy to understand and practical guide for every investor.
This book lays emphasis on things which one should not do. There are numerous books available in the stock market teach you what should be done and how to do it to earn money in the stock market. But none of them explain you things which should not be done in the stock market. This book covers in detail the stock market scam from where it starts and how to it ends. The author here explains why you should not be a part of this system and what should be done so that even unknowingly you are a part of this system. The second most important aspect that is covered is that most traders make money but only to lose and start over all again. Hence the author explains what is required to consistently earn money in the stock market.
- Stock Market Investment and Trading is not risky if you learn to avoid loss.
- For Technical analysis when to buy and when to sell is more important when compared to fundamental analysis. The shorter the holding period duration more timing becomes important.
- Investing in high-quality business (stock) at the right price and holding them for a reasonable period is the only way for wealth creation.
Technical Analysis Explained: The Successful Investor’s Guide to Spotting Investment Trends and Turning Points by Martin J. Pring
The author has classified the entire book into three section in the First Section you will get to Learn Trend-Determining Techniques in the Second Section emphasis will be on Market Structure and finally, the book talks about Market Peaks, Troughs & other aspects of technical analysis. The author understands that the demand for shorter term trading is much more and hence he has covered momentum-based trading e.i. trading for shorter time frames. The author is also known as “technician’s technician” but this does not make the book very complex because of his straight-talk style. In this book, you will find step by step process for making an informed trading or investment decisions based on technical analysis. My favorite part is when the author talks about the psychology of trader & investors. Behavioral finance is covered with the aim to master your emotions in the stock market.
- Understanding in Stock Market as broad level should be based on.
- Sentiment Indicator
- Flow-of-Funds Indicator
- Market Structure Indicators
- The basic principle of technical analysis is applied to all securities and all time frames from 20minutes to 20 years. Since the short-term trades are random in nature the technical analysis in short-term is less reliable.
- The financial market always moves in trends which are caused by changing attitudes and expectations of the investors regard to the business cycle.
Encyclopedia of Chart Patterns (Wiley Trading) by Thomas N. Bulkowski
The author keeps adding various chart patterns with every update and editions. The book is very focused on discussing all the chart patterns that are possible in the chart for technical analysis. “The complete reference to chart patterns available. It goes where no one has gone before. Bulkowski gives hard data on how good and bad the patterns are. A must-read for anyone that′s ever looked at a chart and wondered what was happening.” – Larry Williams, Recently new 23 patterns were added in the latest edition.
Every chart pattern has been explained in detail with identification guidelines, failures, statics, sample trade and what has to be done for best performance.
- 63 in Total Chart Pattern in Details
- The aspect that is very crucial to putting use chart patterns involves the study of price trend, shape, trendline, touches, volume, and breakout.
- Every Chart pattern based on the above-said parameter calculate the probability of success.
Japanese Candlestick Charting Techniques by Nison
Japanese started using the candlestick in the 17th Century. While the West was using point & scale and bar chart Japanese person named Homma had developed the candlestick charting. A candlestick chart(also known as Japanese Candlestick) is a financial chart which plots four points on the chart for the same period. A single candle covers the four points in four points which are high, low, open & close.
Candlestick charts are now mainstream and the most popular charting tool. This is the tool which finds places among the most chartists. There few other charting styles which have appeared later but candlestick chart still remains the key choice. The author has introduced the Japanese Candlestick chart technique which can be used in the stock market for the analysis purpose. The author has elaborately explained each and every concept in the candlestick charting with its advantages and limitations.
- A must read for beginners and professionals.
- Extensive coverage of the candlestick implementation can be used in multiple fields such as speculations, investment, trading, currency, hedging, commodities etc. The candlestick chart can be applied anywhere technical analysis is used.
- Candlestick chart in itself is very powerful tools but combined with other tools it can be a comprehensive and wonderful synergy of techniques and tools.
- In a very easy to read, understand and implement language, the author has put his years of experience in very simple words.
Over To You
If you are interested in Hedging, Speculating, Trading, Investing in commodities, stock, futures, options, currency, bonds or for that matter any products which have a certain number attached to it technical analysis with advanced charting tools can be applied.
If you are no using technical analysis then you are leaving a lot of money on the table.