Top 5 Books to Learn Technical Analysis

25 April 2017, 04:55
Dahmani Mustapha

"Technical Analysis Explained," by Martin Pring

This book by Martin Pring is considered by many to be the "Bible" of technical analysis. The book, in fact, goes well beyond just explaining technical analysis, addressing subjects such as the structure and interconnection of financial markets and trading psychology. Nonetheless, the book's central focus is the subject of technical analysis, and Pring aims to offer an extensive understanding of the basic principles that underlie all technical analysis and how technical analysis is used to predict future market price movements, and to present practical technical analysis strategies for traders to use. One of the book's major pluses is the fact that Pring presents an exhaustive amount of information on the subject in a manner that is clear and easy to understand, even for fairly novice traders. First published in the 1980s, the book remains a favorite with technical traders.

"How to Make Money in Stocks," by William O'Neill

"How to Make Money in Stocks" is considered a classic work on technical analysis, and is a trading bestseller partly because it was written by William O'Neill, founder of the financial newspaper, Investor's Business Daily. O'Neill, a strong advocate of technical trading methods, studied over 100 years of stock price movements, going all the way back to 1880, in researching the book. In it, he presents a variety of technical strategies that can be applied to trading stocks, commodities,ETFsor the forex market, along with tips on minimizing risk and identifying the most advantageous risk/reward situations, and on identifying favorable entry and exit points for trades. O'Neill also explains his own CAN-SLIM technical trading strategy that he used to amass a fortune through trading in the 1960s.

"Japanese Candlestick Charting Techniques," by Steve Nison

Candlestick charting is one of the most commonly used technical analysis tools, and Steve Nison's book, "Japanese Candlestick Charting Techniques," is considered the definitive volume on the subject. Although commonly used by market analysts in Japan for years,candlestick chartingwas relatively unknown in the West prior to Nison publicizing it, first by teaching institutional traders and analysts at top investment banking firms such as JPMorgan Chase & Company (NYSE:JPM

) and Goldman Sachs Group Inc. (NYSE:GS
), and subsequently by writing books on the subject. The book offers a thorough explanation and understanding of candlestick charting, as well as explaining virtually all of the candlestick patterns most commonly used by technical traders.

"Encyclopedia of Chart Patterns," by Thomas Bulkowski

The title of Thomas Bulkowski's book is not an overstatement, as it does provide truly encyclopedic coverage of technical chart patterns by the well-known chartist and market analyst. Bulkowski presents extensive explanations on virtually every candlestick charting pattern ever identified, and goes further by providing statistical information on how often each pattern has proved correct in predicting future price movements in both bull and bear markets. The updated version of the book also includes a section onevent tradingthat shows technical patterns related to news events such as major economic data releases and company earnings reports.

"Technical Analysis Using Multiple Timeframes," by Brian Shannon

Brian Shannon's book has wide appeal for technical traders because it can be helpful to traders regardless of what specific technical trading strategy, or strategies, that they may be using. Shannon's book points out the value of applying technical analysis across multiple timeframes in order to identify trades with the highest probability of success. The book also goes well beyond what its title indicates, including coverage of subjects such as short selling, proper placement of stop-loss orders and identifying target prices for maximally profitable trade exits.

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