Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
This outstanding reference has already taught thousands of traders the concepts of technical analysis and their application in the futures and stock markets. Covering the latest developments in computer technology, technical tools, and indicators, the second edition features new material on candlestick charting, intermarket relationships, stocks and stock rotation, plus state-of-the-art examples and figures. From how to read charts to understanding indicators and the crucial role technical analy
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An excellent reference – well worth the investment,
It is entirely possible to spend more time reading trading books than doing any actual trading. This is one of the few books that will remain on my bookshelf and I highly recommend it FOR WHAT IT IS INTENDED – an excellent reference on technical analysis (TA).
What I was looking for was something to provide clear, concise descriptions on various technical indicators across all types – trend analysis, price patterns, candles, oscillators, etc. And Murphy not only does this well, but his work provides enough information that I do not see the need for another book on TA on my bookshelf, even though I know that other very good books are available (e.g. Pring). But this one is enough for me. It is well organized and indexed so that I can rapidly look up something while I am setting up trades and get the basic info that I need.
One surprise was how well written the book was and how much I enjoyed reading it. I expected a dry reference book but instead found an excellent and engaging read, perhaps with the exception of the chapter on point and figure which was not up to the rest of the book. (If you are completely new to TA, you might find it less entertaining, but in comparison to the dry tome that I expected when the monster-sized book arrived, Murphy is remarkable in his ability to convert most TA topics and examples into ‘normal’ English.) He also is not a proponent or zealot about any one indicator type, which I appreciate. He does a good job of describing each within the context of its value without trying to convert anyone to any specific indicator. As I do not believe in magic bullets in trading, I appreciate his straightforward approach.
Let me also note what this book is NOT so that you do not buy it for the wrong reasons:
a) As you should gather from the above, this is not a trading system. Murphy will not tell you which indicators to use most or in which combinations to produce the best results. He will provide insight into many indicators and classes of indicators but he is NOT trying to convince you to use any specific indicator in any specific way. So he doesn’t try to convince you of WHAT to use, just helps you understand WHEN, WHY and HOW each indicator type is used by various traders.
b) Also, this is NOT intended to be the complete, in depth statement on any of the topics covered. For example, his section on Candlestick formations is simple, clear and includes many examples, but it is undoubtedly not the same as picking up Nison’s works on Candlesticks. Similarly, you can find many books dedicated to Elliot Waves, Fibonaccis and other topics. Murphy provides the basics, but do not expect as thorough an explanation or justification as a dedicated book would provide. Then again, expect a dedicated book to try and convince you why its particular system or method is so much better than any other, something that Murphey will not try to do to you!
c) Finally, this book is NOT intended to convert people who do not accept TA into believers. Frankly, it is much easier to get most people to accept that `fundamental analysis’ affects a stock’s value and price, but it is harder for most to understand and accept that simply analyzing the stock’s price and related indicators can predict future moves. Murphy’s opening chapters include some simple basic background on TA, but verbal explanations have limited value in convincing a pure `fundamentalist’ that properly used technical analysis works. The only way to break down this barrier, IMO, is simply to learn and use various indicators for a while to begin seeing how predictive they can be. Murphy does not try to convert – he simply provides a learning reference. From there, anyone using TA needs to practice to become proficient.
So, in summary, I highly recommend buying this book for what it is intended to be – a reference book on technical analysis. It does this job excellently.
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|Technically speaking, one should buy this book,
Investing isn’t easy. Investing profitably is even harder. As a result, investors are always looking for that `angle’, that `edge’ that will help them realize more consistent profits.
In the past 2 decades, many on Wall Street have come to believe that technical analysis of stock charts is one of those tools. Having worked in the financial services markets since 1987, I do believe that technical analysis can be a helpful tool. And if you are looking for a definitive source of TA, then look no further.
Technical Analysis of the Financial Markets by John Murphy covers all the basic aspects of TA: philosophy, chart construction, fundamental vs. technical analysis, trends, major technical pattern recognition, moving averages, oscillators, times cycles, computer trading systems and much more. He also covers different methods of charting, including bar, point and figure and candlestick (be aware that most of the analysis techniques he presents apply to bar charting, not PnF or candlestick).
What I like most about the book is that it written clearly, simply and logically. It uses many graphical examples that SHOWS the reader what to look for. It does not rage on about the merits of TA (which many investors feel is complete hooey) but how to apply basic (and sophisticated) TA techniques. I use TA frequently in my business and find that it helps me manage my client’s portfolios more effectively, especially when it comes to SELLING a position, whether to lock-in gains or limit losses.
If you are a TA convert, or if you have an interest in learning more about it, this book is a useful guide and should be purchased. Today, it remains one of the few investment reference books that I keep in my office.
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|Bible of Technical Analysis.,
This is by far one of the best sources on Technical Analysis that one
can be lucky enough to find. Mr. Murphy has a clear and simple way of
conveying the subject to us.
The book starts off with the
Philosophy behind Technical Trading, Dow Theory, chart construction,
then moves onto the basic concepts of Trend, and General Patterns,
Moving Averages, Oscillators, Japanese Candlesticks, Time Cycles,
Money Management, and eventually leads onto a Checklist.
What I
like about Mr. Murphy is his way of showing and proving a point. Let
me digress here to show you what I mean: Say you had a daughter and
wanted to show her how to figure out the area of an Isosceles
triangle. Well, you could tell her to memorize that it is
base*height/2. Or if you really wanted her to learn it thoroughly you
can show her how to draw a parallel line to the height, then join the
ends to make a nice rectangle. Then to compute the area of a rectangle
just multiply the two sides, one being the height, the other being
half the base. She will then “derive” this and
“understand” how they got the formula. You see, then she can
compute the area under a hexagon or a tetrahedron or any complex
object.
Well, Mr. Murphy will show us the same way and
“derive” for us concepts such as how a resistance line later
becomes a support line! The reson for this is so amusing that after
one reads about it we just go “wow…”” Now I understand why
this occurs”. You will see how Trend is the most important
concept in this field, how some indicators are trend following and why
at other times we need other indicators for sideway markets. You will
see how a Moving Average is nothing but a dynamically updated
trendline. You will see examples of all kinds of charts, indicators,
and explanations. Everything is derived and it is this derivation that
makes this book stand out.
Chapter 16 is an important one to pay
attention to called “Money Management and Trading
Tactics”. You see, the tactic behind every action has a great
significance in its outsome. I’d say this is half the game, knowing
how much to devote to a trade and what to risk and how much to
risk. If we lose the “base money”, which is the money we use
to trade, then the game will be over, so we better be careful about
what percentage to use for a trade and what to do with the profits
and/or losses. You need to make rules and stick to them that suits
your style, here’s when the discipline saves you.
I used to make
fun of Technical Analysis and did not believe in it, but after having
read this book and seeing it live in action, I think this is the only
way to signal important events that are about to happen, and the best
thing about it is that the chart reading that applies to a 10 year or
a 1 year charts, also applies to the intra-day charts! This is good
for everybody from day traders to the people who do this for a second
income. You can go on to your daily life, check that things are in
order at night and all indicators are in place and know that your
portfolio is in order and on track! ….
Good Luck! Steve.
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