Best books for technical analysis

Technical Analysis of stocks means forecasting the future price movement of a financial instrument (stocks, currencies, indices, futures, etc.) based on its past price movements and patterns.  Technical analysis is a collection of techniques designed to help you make trading decisions in securities markets. So a thorough knowledge of technical analysis is very important for an intraday or positional trader .These are some of the best technical analysis book from my research.

‘Technical Analysis of the Financial Markets’ by John J. Murphy

The author John J. Murphy is an American financial analyst and former technical analyst for CNBC

His book ‘Technical Analysis of the Financial Markets’ is considered the bible of technical analysis. I would strongly recommend this book is an excellent book for someone who knows their market basics, and looking to advance their understanding of technical analysis .

He provides insights into major technical indicators like trend analysis, price patterns, candles, oscillators, etc. He also helps us to understand when, why and how each indicator type is used .

This book is a strong buy for anyone looking to advance their understanding of technical analysis and market behavior.

 ‘Encyclopedia of Chart Patterns’ by Thomas N. Bulkowski  

The author Thomas N. Bulkowski is a successful investor and trader with over 35 years of experience in trading stocks.

Bulkowski tells you how to trade the significant events such as quarterly earnings announcements, retail sales, stock upgrades and downgrades.

Every chart pattern is identified and carefully explained with statistical data by the author. He also explained how they are used to predict price movements in the bull and bear markets.

‘Japanese Candlestick Charting Techniques’ by Steve Nison

The author Steve Nison introduced candle stick patterns to western world in his book ‘Japanese Candlestick Charting Techniques‘.He was among the first to receive the Chartered Market Technician (CMT) designation.

In this book he explains how candlestick techniques can be used in all of today’s markets with hundreds of examples .How these candle patterns form the basis of larger chart patterns, how candles can be used with support, resistance, trend lines and indicators. Steven Nison is the person who actually introduced candles to Wall Street, from Japan, where they had been in use for centuries as in rice and commodity markets. He demonstrates how to combine the western chart patterns with the candle for double confirmation. Moreover, the author throws in some Japanese history that is related to candle.

 It reviews some basic reversal patterns (hammer, hanging man, engulfing, dark-cloud cover, piercing pattern, morning/ evening strs, shooting star, harami, tweezers, belt-hold, crows, windows, doji). Japanese candlestick charting is a highly effective method for timing the market for short-term profits. Unlike most western techniques—moving average, relative strength index, MACD, stochastic, Bollinger bands, or Elliot waves—candlestick charting signals are based on very close analysis of product price, producing accurate buy or sell signals than other techniques.

‘Technical Analysis for Dummies’ by Barbara Rockefeller

The author ‘Barbara Rockefeller’ is an international economist and forecaster who specializes in foreign exchange.

It is really a good book for beginners covers all the aspects of technical analysis.. As per the author the best way to maximize return is to focuses on utilizing the concepts of technical analysis for intelligent trading decisions.

She explains how to spot trends,how to manage trades and control losses. We should understand the current market conditions and using actual data to decide which securities one should hold and sell, identifying crowd behavior and patterns, using chart indicators, and carrying out dynamic analysis. In short the book ‘Technical Analysis For Dummies ‘ shows you how to make better trading decisions for maximum profit.

‘Technical Analysis from A to Z’ by Steven B Achelis

Steven B. Achelis is the founder of Equis International, Inc, a leading provider of investment analysis, portfolio management, and stock market data collection software.

This book is a really good reference for the novice traders. However it does not go into details .It contain complete summary of major indicators, it covers every trading tool from the Absolute Breadth Index to the Zig Zag .Indicators include Arms Index, Dow Theory, and Elliott Wave Theory also mentioned.  . It is a comprehensive book on Technical Analysis.

The author gives an overview of the indicator, the interpretation, an example, then shows how to calculate it with the mathematical formulas used and a table for reference .

‘Getting Started in Technical Analysis‘ by Jack Schwager

The author Jack D. Schwager is an American trader ,expert in futures and hedge funds . His other books include Market Wizards (1989), The New Market Wizards (1992), Stock Market Wizards (2001) and Unknown Market Wizards.

This book is a great introduction for everyone who is interested to get into trading and who wants to utilize technical analysis as another tool in order to increase the probabilities of entering profitable positions. The author points out the strengths and weaknesses of each indicator . He clearly explained such basics as trends, trading ranges, chart patterns, stops, entry, and exit and pyramiding approaches. The book contain clear and simple explanations with numerous examples .

By reading this book we can get in depth knowledge of

*Types of charts-bar, close-only, point-and-figure and 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 and software research.

‘Trading Price Action Trends: Technical Analysis of Price Charts Bar by Bar for the Serious Trader’ by AL BROOKS

The author AL BROOKS is a technical analysis contributor to Futures magazine and an independent day trader.

A practical guide to profiting from institutional trading trends. It contains a detailed explanation of price patterns, charts, trends, and market psychology. The key to being a successful trader is finding a system that works and sticking with it. ‘Price Action Trends Bar by Bar ‘describes in detail what individual bars and combinations of bars can tell a trader about what institutions are doing. This is critical because the key to making money in trading is to piggyback institutions, which cannot be done unless you understand what the charts are telling you about their behavior.

This book will allow you to see what type of trend is unfolding, so that you can use techniques that are specific to that type of trend, in order to help you place the right trades. Discusses how to profit from institutional trading trends using technical analysis. This book is however, not meant for beginners. As the title suggests, it’s for serious traders who wish to develop their skills and take better decisions during intraday or swing trading. It outlines a detailed and original trading approach developed over the author’s successful career as an independent trader.

Conclusion

Trading in the stock market is very difficult, especially if you are a beginner. So a knowledge of technical analysis is essential to how the markets work and do your trades accordingly.

We do not recommend technical analysis for everyone, because it can be a difficult strategy to understand, especially if you are a novice trader . It may end up in great loss as well. So reading these books will certainly offer new insights for such traders.

FAQs

What is the logic behind the technical analysis?

Technical analysis helps in predicting future price movements by examining historical data, mainly price and volume

Is technical analysis useful?

Technical analysis can be helpful to improve timing, and to trade strategies appropriate to the market conditions.By examining the chart you can quickly see whether a stock price is in a trading range or a trend.

Technical analysis helps in predicting future price movements by examining historical data, mainly price and volume