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Technical Analysis of the Financial Markets A Comprehensive Guide to Trading Methods & Applications [HC,1999]
Technical Analysis of the Financial A Comprehensive Guide to Trading Methods and Applications by John J. Murphy. Prentice Hall Pr,1999
Unknown Binding
First published January 1, 1986
1785 people are currently reading
11054 people want to read
About the author
John J. Murphy
89 books136 followersJohn J. Murphy is an American financial market analyst and is considered to be the Father of Inter-market Analysis. He received an award for outstanding contribution to global technical analysis by the International Federation of Technical Analysts.
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Displaying 1 - 30 of 227 reviews
August 3, 2015
I remember back in 2004 when I was just a teenager someone recommended this book to me in an online forum and I bought it and read it so many times and absolutely fell in love with this business and today this is my job so I think this book changed the course of my life. I read so many books in the past decade and tried so many methods and even created so many Trading strategies for myself,in fact it make me feel exhausted even thinking about it but it was all started with this book. Today when I sit behind the monitor every morning I don't use and need much more than what Mr. John J. Murphy wrote in this book.I read this book so many times but I didn't understand things wrote in it like I should. Now I ask this question every time I saw a book that I read before,"Did I read that book the way it deserved? and was there any things I could understand that I didn't?".
Mr. C.S. Lewis once said “Clearly one must read every good book at least once every ten years.”
Mr. C.S. Lewis once said “Clearly one must read every good book at least once every ten years.”
February 5, 2014
This is a very good overview of basic technical analysis. It's 15 years old so some of the computer stuff is out of date but the analysis part is fairly timeless.
Murphy is, remarkably for the subject, not too dry and does a good job of explaining things. Where the book falls short (and where most books like this do in my opinion, is that it cherry picks its examples and doesn't show much of the cases where the analysis fails or where it can be misapplied.
Even so, worth reading.
Murphy is, remarkably for the subject, not too dry and does a good job of explaining things. Where the book falls short (and where most books like this do in my opinion, is that it cherry picks its examples and doesn't show much of the cases where the analysis fails or where it can be misapplied.
Even so, worth reading.
July 7, 2020
To trade in the market you can use fundamental analysis or technical analysis. Everyone already understands fundamental analysis. You buy bitcoin because you believe in its fundamentals; you believe that, in the future, many transactions will take place over the bitcoin network. The problem is everyone understands fundamentals and any information you use in your fundamental analysis is known to every market participant already. Therefore fundamental analysis isn't that useful for a trader. What's more useful is the strange craft called--quite generically--technical analysis.
In technical analysis you don't need to know what bitcoin is (that's irrelevant). All you need is price action and volume of bitcoin in a trading market. These two pieces of data are the beginning and end of all methods of technical analysis.
Murphy goes through all the major methods in this book, emphasizing classical charting styles of TA. After reading this book you should be able to begin charting--that is applying technical analysis--right away. It's a fun and weird craft, but don't expect to be using it to predict stock prices and making money right away. The golden era of TA seemed to be in the 80s when a lot of the techniques described in this book had a lot of success. The game has changed a lot. Some methods are still valid in some situations in today's markets. Unlike the name implies, technical is a craft (or even an art as Murphy says) that requires judgment, experience, and good sense. There is no hard rule to when and how TA can be used in today's markets
The book won't give you an edge, even though most people who invest in the market or trade casually aren't even aware of technical analysis. (No book will give you an edge because if such information is published, it wouldn't be an edge anymore.) This book will make you less naive about how the market works. It will make you wary of fundamentals, especially news events which, still today as in the 80s, are opportunities to manipulate and mislead. The book will inspire you to be more technical about the markets. Even if classical technical analysis is more of a craft or art, at bottom there is hard data the market provides (price action and volume), and it should be this data that guides your trading, not the opinion of some guy or yourself.
Trading in 2020 is dominated by actual technical systems, super-quantum-AI algorithms and such things. Should humans despair and not get into the same arena as these machines that use really technical technical analysis? No. A crafty human with knowledge of the methods in this book and other methods can still win.
Clear writing, good examples. Reads much smoothly. It's not a textbook even though it may kind of look like one.
In technical analysis you don't need to know what bitcoin is (that's irrelevant). All you need is price action and volume of bitcoin in a trading market. These two pieces of data are the beginning and end of all methods of technical analysis.
Murphy goes through all the major methods in this book, emphasizing classical charting styles of TA. After reading this book you should be able to begin charting--that is applying technical analysis--right away. It's a fun and weird craft, but don't expect to be using it to predict stock prices and making money right away. The golden era of TA seemed to be in the 80s when a lot of the techniques described in this book had a lot of success. The game has changed a lot. Some methods are still valid in some situations in today's markets. Unlike the name implies, technical is a craft (or even an art as Murphy says) that requires judgment, experience, and good sense. There is no hard rule to when and how TA can be used in today's markets
The book won't give you an edge, even though most people who invest in the market or trade casually aren't even aware of technical analysis. (No book will give you an edge because if such information is published, it wouldn't be an edge anymore.) This book will make you less naive about how the market works. It will make you wary of fundamentals, especially news events which, still today as in the 80s, are opportunities to manipulate and mislead. The book will inspire you to be more technical about the markets. Even if classical technical analysis is more of a craft or art, at bottom there is hard data the market provides (price action and volume), and it should be this data that guides your trading, not the opinion of some guy or yourself.
Trading in 2020 is dominated by actual technical systems, super-quantum-AI algorithms and such things. Should humans despair and not get into the same arena as these machines that use really technical technical analysis? No. A crafty human with knowledge of the methods in this book and other methods can still win.
Clear writing, good examples. Reads much smoothly. It's not a textbook even though it may kind of look like one.
January 21, 2013
This is a solid introduction to technical analysis. Jack Schwager and Martin Pring have written good basic TA books that I have also read. The grandfather of all is Edwards and Magee, a new edition of which has been edited by WHC Bassetti. Edwards and Magee should be read in addition to one of the three authors above -- OR -- a more recent book (that I haven't read) by the notable duo, Kirkpatrick & Dahlquist.
May 7, 2016
This book is complete, but most of the strategies don't work in real life when trading expenses and slipage are taken into account and certainly not in a taxable account.
January 11, 2016
فصلهای 5(الگوهای مهم برگشتی)، 6(الگوهای ادامه دهنده) 9(میانگین متحرک)، (10(اسیلاتورها)، 13(نظریه موج الیوت) در حد مقدماتی خیلی مفید بودند
January 23, 2018
After reading it I finally understand why it's called the bible for Technical Analysis. Will definitely be getting a hard copy for future reference.
I was smiling to myself while reading chapter 15 - Computers and Trading systems; its a keyhole into the past and also a reminder on how far technology has come.
I was smiling to myself while reading chapter 15 - Computers and Trading systems; its a keyhole into the past and also a reminder on how far technology has come.
October 23, 2018
مطالعه این کتاب قبل از ورود به هر بازاری اجباریه به نظرم. گرچه میشه گفت حاوی ابتداییترین مفاهیم تحلیل تکنیکاله، اما اگر عمیق و دقیق مطالعه بشه به تنهایی میتونه معاملات پر سودی رو پیش روی افراد بذاره.
June 24, 2014
A classic of Technical Analysis. The basic concepts are timeless, so if you want to learn the basics of TA, this book will help you get some general knowdlege of the subject.
Some indicator/oscilators proposed,money management and actual trading tips are sometimes outdated, but you can get the general concept here and start working your way up.
A great rookie book, with all the basics you need to cover. Mind you, this book should be only used as an introduction to TA and trading, and you should by all means, look for more material of each of the subjects presented in this book. You will find countless books that will help you. Use this book as a basic starting point.
Some indicator/oscilators proposed,money management and actual trading tips are sometimes outdated, but you can get the general concept here and start working your way up.
A great rookie book, with all the basics you need to cover. Mind you, this book should be only used as an introduction to TA and trading, and you should by all means, look for more material of each of the subjects presented in this book. You will find countless books that will help you. Use this book as a basic starting point.
June 13, 2020
A great introduction to Technical Analysis (TA). It reads like a text book explaining everything there is to learn about TA. It provides all the nuts and bolts on which we can build upon. Everything that I learnt may not be useful but TA gives me a new angle to view the markets.
August 28, 2022
Impressive book about stock technical analysis. Each concept is introduced with well-edited text as well as examples, so it's easy to move through the book quickly without getting bogged down.
My only complaint: The Kindle ebook is priced at $65, making it a little expensive. (I borrowed the ebook from the library.)
My only complaint: The Kindle ebook is priced at $65, making it a little expensive. (I borrowed the ebook from the library.)
March 2, 2018
I came across this book while searching for some good content on Technical Analysis of Stock Markets and during my hunt Murphy's book was omnipresent. I shall say the book is a good introductory material but that's what it is, at best, an introduction. It isn't much of a guide nor it is very comprehensive in the sense. The book is more of an academic standard than practical purpose. Mr. Murphy at times go on elaborating certain aspects which aren't much of a show and in particular the volume interpretation of his is a bit irking. After a while the content will sound repetitive, the author has conveniently picked up some of the key indicators and he keeps on explaining them now and then, each page in the second half looks like an old wine in a new bottle.
But what really disappointed me such a disrespect being done by Mr. Murphy to the candlesticks patterns. Again owing to his comfort zone he put together a list of pictures of different patterns without even bothering to explain a little about the underlying market dynamics.
The book is a good introduction for anyone who is a newbie and has no idea whatsoever Technical Analysis is but for anyone who wants to go a little deeper, this book will be an utter disappointment.
But what really disappointed me such a disrespect being done by Mr. Murphy to the candlesticks patterns. Again owing to his comfort zone he put together a list of pictures of different patterns without even bothering to explain a little about the underlying market dynamics.
The book is a good introduction for anyone who is a newbie and has no idea whatsoever Technical Analysis is but for anyone who wants to go a little deeper, this book will be an utter disappointment.
August 18, 2020
Usefulness of this book depends on your goals. If you are looking for information that would help you formulate a profitable trading strategy, this book is not going to be helpful as it lacks detail. However, if you would like to learn about basics of technical analysis, say to be able to understand what others are talking about, then it's a good book that will give you solid foundations. For example, if you do not know what an oscillator or head and shoulders pattern is, then this book will help you fill those gaps.
I am giving it 3 starts, because it's rather general and vague, i.e. it uses terms such as "often", "most of the time", "sometimes", "rarely" which are not useful when you are preparing to actually trade. It's still a good read if you are just beginning to learn about trading/investing, even if it's only to expand your vocabulary.
I am giving it 3 starts, because it's rather general and vague, i.e. it uses terms such as "often", "most of the time", "sometimes", "rarely" which are not useful when you are preparing to actually trade. It's still a good read if you are just beginning to learn about trading/investing, even if it's only to expand your vocabulary.
September 14, 2015
This book is a gargatuan aggregation of technical analysis concepts covering stock, commodities etc . The market is tanking as I am writing this review but hei, it is never too early or late to learn something. Much to be learned though.
September 18, 2015
This Book Is really give a great overview of how FA makes good Judgment before going on trade
Although I'm still learning in the Financial Markets but i can Say this book is a real strong base for anyone to start
Although I'm still learning in the Financial Markets but i can Say this book is a real strong base for anyone to start
December 31, 2014
Initially I borrowed it from the library. After reading it, I decided to have a copy. Highly recommend.
July 26, 2018
Best book out there for Technical analysis.
December 25, 2020
Buku teks dalam technical analysis
April 3, 2022
Awesome profitable Book yet some chapters arent totally handy nowadays however I could use most of the concepts and laws as a technical analysis reference.
February 15, 2022
Um livro clássico de análise técnica, que traz a maioria das ferramentas que o analistas técnicos usam, em linguagem fácil.
Gostaria de achar tão interessante este tema, como já achei no passado, mas a cada novo livro de análise técnica que leio, vejo que pouca coisa é realmente aproveitável. John Murphy mostra a premissa de que o preço desconta tudo, e logo não seria necessário análise de outros fatores senão o gráfico, para apreciação do preço dos ativos.
Traz conceitos sobre tendência, reversão, candlesticks, padrões gráficos, volume, interesse aberto, indicadores, gráficos de ponto e figura, etc.
Nota-se que, diferente dos livros do Bulkowski, não há estatísticas para embasar minimamente os já subjetivos padrões, o que deixa sempre a porta aberta para a desculpa de, se não fizer dinheiro, faltou estudo/interpretação. Uma forma difícil de se trabalhar.
Tem um capítulo sobre as danosas ondas de Elliott, o nível máximo da subjetividade e impossibilidade de efetivamente ensinar alguém como ganhar dinheiro com isso.
Pincela algumas teorias de ciclos, como a pífia, e ainda famosa, de Kondratieff. Mas traz ideias coerentes quanto à sazonalidade, especialmente de commodities, que é baseada em sólidos fundamentos.
Sobre sistemas mecânicos, o autor diz que umas das desvantagens deles é que a maioria são seguidores de tendência e então perdem em mercado lateral. Estranho essa afirmação, talvez fizesse sentido à época, o que mais se propaga na internet/livros são na verdade sistemas de volatilidade.
Tem úteis informações sobre análises intermercado, mostrando o "cash and carry", relações entre commodites-dólar-ações-títulos do tesouro. Mostra a utilidade da análise de seletividade do mercado (como a linha de avanço e declínio e oscilador McClellan), para verificar eventuais divergências, indicadores ARMS e equivolume.
Segue-se um apêndice de um resumo de alguns outros indicadores alternativos (ou nem tanto, como canais de Keltner) e Volume Profile. Uma parte um pouco mais útil é o apêndice que trata de construção de um sistema de trading, que não foi escrito pelo próprio autor, mas que no geral faz sentido.
Em resumo, um livro para iniciantes/intermediários, que acrescente poucas ideias novas, mas que pode dar uma boa base para iniciar no ramo.
Tempo estimado de leitura: 6h30m
Gostaria de achar tão interessante este tema, como já achei no passado, mas a cada novo livro de análise técnica que leio, vejo que pouca coisa é realmente aproveitável. John Murphy mostra a premissa de que o preço desconta tudo, e logo não seria necessário análise de outros fatores senão o gráfico, para apreciação do preço dos ativos.
Traz conceitos sobre tendência, reversão, candlesticks, padrões gráficos, volume, interesse aberto, indicadores, gráficos de ponto e figura, etc.
Nota-se que, diferente dos livros do Bulkowski, não há estatísticas para embasar minimamente os já subjetivos padrões, o que deixa sempre a porta aberta para a desculpa de, se não fizer dinheiro, faltou estudo/interpretação. Uma forma difícil de se trabalhar.
Tem um capítulo sobre as danosas ondas de Elliott, o nível máximo da subjetividade e impossibilidade de efetivamente ensinar alguém como ganhar dinheiro com isso.
Pincela algumas teorias de ciclos, como a pífia, e ainda famosa, de Kondratieff. Mas traz ideias coerentes quanto à sazonalidade, especialmente de commodities, que é baseada em sólidos fundamentos.
Sobre sistemas mecânicos, o autor diz que umas das desvantagens deles é que a maioria são seguidores de tendência e então perdem em mercado lateral. Estranho essa afirmação, talvez fizesse sentido à época, o que mais se propaga na internet/livros são na verdade sistemas de volatilidade.
Tem úteis informações sobre análises intermercado, mostrando o "cash and carry", relações entre commodites-dólar-ações-títulos do tesouro. Mostra a utilidade da análise de seletividade do mercado (como a linha de avanço e declínio e oscilador McClellan), para verificar eventuais divergências, indicadores ARMS e equivolume.
Segue-se um apêndice de um resumo de alguns outros indicadores alternativos (ou nem tanto, como canais de Keltner) e Volume Profile. Uma parte um pouco mais útil é o apêndice que trata de construção de um sistema de trading, que não foi escrito pelo próprio autor, mas que no geral faz sentido.
Em resumo, um livro para iniciantes/intermediários, que acrescente poucas ideias novas, mas que pode dar uma boa base para iniciar no ramo.
Tempo estimado de leitura: 6h30m
July 12, 2021
One of the best books I have read on the subject! The author does a great job describing many different techniques and the ideas behind them. If you really want a course in market analysis this should be one of the first places to look.
November 1, 2022
Бараг 20, 30 жилийн өмнөх ном гэхэд зарим нэг бүлгүүд нь гар утсаараа арилжаанд оролцож болдог өнөө үед ч маш хэрэгтэй ойлголтуудыг агуулжээ
June 17, 2021
older but good info
Some are very basic some are very complex.
Need to finish but cant keep my eyes open when reading it.
Some are very basic some are very complex.
Need to finish but cant keep my eyes open when reading it.
December 30, 2024
John j. Murphy geht sehr gut auf die Technische Analyse der Aktienmärkte ein.
Er illustriert dies nicht nur hervorragend in seinem Buch, sondern liefert außerdem eine verständliche Erklärung.
Murphy begnügt sich nicht nur mit den Basic Indikatoren, sondern beschreibt eine Menge Wege und Möglichkeiten um herauszufinden, ob der Markt über oder unterverkauft ist.
Die EWT ist ebenfalls im Buch vertreten, wer jedoch mehr über diese erfahren möchte wird mit dem Buch ‚Elliot Wellen Leicht Verständlich‘ besser geholfen.
Er illustriert dies nicht nur hervorragend in seinem Buch, sondern liefert außerdem eine verständliche Erklärung.
Murphy begnügt sich nicht nur mit den Basic Indikatoren, sondern beschreibt eine Menge Wege und Möglichkeiten um herauszufinden, ob der Markt über oder unterverkauft ist.
Die EWT ist ebenfalls im Buch vertreten, wer jedoch mehr über diese erfahren möchte wird mit dem Buch ‚Elliot Wellen Leicht Verständlich‘ besser geholfen.
April 10, 2020
I started trading a month ago, because of the COVID-19 and I decided that since I was going to stay at home for the next couple of weeks, I better use my time wisely and start doing something productive, and learning a new skill was definitely one of the things I could do.
And so I decided to learn about investing and trading, and after reading some articles and reviews of some books, I thought that this particular book would be the one to introduce me to the understanding of the markets and how I can increase my chances of making a profit, and I am so delighted to say that I wasn't disappointed of the result and the knowledge I got after (and during) reading this book.
The book contains everything a beginner needs to know if he decides to enter the world of trading, from the fundamentals including the philosophy and history of technical analysis, to some of the most important (and some maybe not so much) technical definitions and concepts everyone should know, to the very helpful continuation or reversal patterns, to some of the groundbreaking theories that shaped the field of technical analysis.
I would definitely recommend it to anyone who wants to begin the journey of trading or investing. It is totally worth reading!
And so I decided to learn about investing and trading, and after reading some articles and reviews of some books, I thought that this particular book would be the one to introduce me to the understanding of the markets and how I can increase my chances of making a profit, and I am so delighted to say that I wasn't disappointed of the result and the knowledge I got after (and during) reading this book.
The book contains everything a beginner needs to know if he decides to enter the world of trading, from the fundamentals including the philosophy and history of technical analysis, to some of the most important (and some maybe not so much) technical definitions and concepts everyone should know, to the very helpful continuation or reversal patterns, to some of the groundbreaking theories that shaped the field of technical analysis.
I would definitely recommend it to anyone who wants to begin the journey of trading or investing. It is totally worth reading!
January 13, 2021
It reads like an academic textbook, but if you're serious about understanding the theory of technical analysis - charts, trends, indexes, oscillators, and even basics of money management - then this is an absolute must read.
Technical vs Fundamental analysis is a hotly debated subject, but technicians believe that trends already reflect the underlying factors and usually, no one can figure out all the reasons why something happened, and by the time they do, its impossible to ride the wave. So reading charts is where the money is at 😂 I don't have very strong feelings on technical vs fundamental approaches to studying the market, and have my own personal middle ground, but I have very strong feelings about not getting mixed up in the stocks without research, education, and a system.
I started with stock tips and my instincts at 18, and sure I made profits even during the recession, but it's like playing with fire and I know a lot of people who didn't have my luck and were badly burned. So read this book, it won't teach you everything but it's a great introduction to the tools of technical analysis.
Technical vs Fundamental analysis is a hotly debated subject, but technicians believe that trends already reflect the underlying factors and usually, no one can figure out all the reasons why something happened, and by the time they do, its impossible to ride the wave. So reading charts is where the money is at 😂 I don't have very strong feelings on technical vs fundamental approaches to studying the market, and have my own personal middle ground, but I have very strong feelings about not getting mixed up in the stocks without research, education, and a system.
I started with stock tips and my instincts at 18, and sure I made profits even during the recession, but it's like playing with fire and I know a lot of people who didn't have my luck and were badly burned. So read this book, it won't teach you everything but it's a great introduction to the tools of technical analysis.
Read
August 5, 2024Day Trading vs. Long-Term Trading: Finding Your Forex Style
In the dynamic world of forex trading, the choice between day trading and long-term trading is pivotal. Both strategies have their own set of benefits and drawbacks, and finding the one that aligns with your personal style and goals can make all the difference in your trading success. As an expert in the field, I’ll guide you through the nuances of these two approaches, helping you determine which strategy best suits your needs.
Forex trading is not a one-size-fits-all endeavor. With myriad strategies available, it’s crucial to understand the differences between day trading and long-term trading to make informed decisions. Whether you're just starting out or looking to refine your approach, grasping these trading styles can significantly impact your trading effectiveness and financial outcomes. Let’s check out both Forex trading strategies, the key points, and the benefits of each:
Day Trading
Day trading involves buying and selling forex pairs within the same trading day. This style is favored by those who thrive in fast-paced environments and seek to capitalize on short-term market fluctuations.
1. Quick Profits:
Day traders aim for small but frequent profits, which can add up significantly over time.
2. No Overnight Risks:
Since positions are closed before the end of the trading day, there's no risk of adverse news or events affecting your trades overnight.
3. Leverage Market Movements:
Day traders can benefit from market volatility, making the most of even minor price movements.
Long-Term Trading
Long-term trading, or position trading, involves holding positions for weeks, months, or even years. This style is suited for those who prefer a more measured approach and are comfortable with extended timeframes.
1. Reduced Stress:
Long-term trading minimizes the need for constant monitoring and decision-making, reducing stress and allowing for a more balanced lifestyle.
2. Focus on Fundamentals:
This style allows traders to focus on broader economic trends and fundamental analysis, which can lead to substantial gains over time.
3. Lower Transaction Costs:
Fewer trades mean lower transaction costs and potentially higher net profits after accounting for fees.
Choosing between day trading and long-term trading depends on various factors including your risk tolerance, time commitment, and financial goals.
Day Trading Insights:
- High Activity Levels:
Day trading requires significant time and effort, as traders need to be active throughout the trading day.
- Technical Analysis:
Proficiency in technical analysis and chart reading is essential for day traders to make informed decisions quickly.
Long-Term Trading Insights:
- Strategic Planning: Long-term traders must develop and adhere to a robust trading plan, focusing on fundamental analysis and macroeconomic indicators.
- Patience is Key: Success in long-term trading often involves waiting for the right market conditions and allowing trades to mature over time.
Imagine you’re a day trader focusing on the EUR/USD currency pair. You start your trading day by analyzing the market's opening trends and looking at recent news that might affect the euro or the US dollar.
1. Market Analysis: you notice that a recent economic report from the EU showed better-than-expected economic growth, causing the euro to strengthen.
2. Trade Execution: based on this, you decide to buy EUR/USD at 1.1800.
3. Intra-Day Monitoring: throughout the day, you monitor price movements and set a target to sell if the price reaches 1.1850.
4. Closing the Trade: by midday, the price hits 1.1850 due to continued positive sentiment, and you sell, making a 50-pip profit.
Now, let’s consider long-term trading with the USD/JPY pair. You’re looking at broader economic trends and geopolitical factors to inform your decision.
1. Fundamental Analysis: you research and find that the US economy is expected to perform well over the next year, while Japan's economy might face challenges due to demographic issues and low consumer spending.
2. Trade Execution: you decide to buy USD/JPY at 110.00, planning to hold this position for several months.
3. Monitoring: over the next few months, you keep an eye on major economic indicators, central bank announcements, and any geopolitical events that might impact the USD or JPY.
4. Adjusting Position: as expected, the US dollar strengthens due to positive economic data, and the yen weakens. After six months, the USD/JPY rate reaches 115.00.
5. Closing the Trade: satisfied with the gain, you close your position, making a 500-pip profit.
Both examples show different approaches to forex trading. Day trading requires constant attention and quick decision-making, while long-term trading involves patience and a focus on fundamental analysis. If you want to dive deeper into different Forex trading strategies and stay updated with market trends, I recommend checking out https://55brokers.com/ . This platform offers a bunch of resources and tools to help you navigate the Forex market effectively.
Both day trading and long-term trading have their merits and challenges. By understanding the differences and considering your personal preferences and goals, you can choose the strategy that best suits you. Remember, the key to successful trading is not just the strategy but also the discipline and knowledge you bring to it. I encourage you to delve deeper into forex trading and continuously refine your approach to achieve your financial objectives.
Whether you’re drawn to the fast-paced nature of day trading or the strategic depth of long-term trading, there’s a path for you to explore and master in the fascinating world of forex trading.
In the dynamic world of forex trading, the choice between day trading and long-term trading is pivotal. Both strategies have their own set of benefits and drawbacks, and finding the one that aligns with your personal style and goals can make all the difference in your trading success. As an expert in the field, I’ll guide you through the nuances of these two approaches, helping you determine which strategy best suits your needs.
Forex trading is not a one-size-fits-all endeavor. With myriad strategies available, it’s crucial to understand the differences between day trading and long-term trading to make informed decisions. Whether you're just starting out or looking to refine your approach, grasping these trading styles can significantly impact your trading effectiveness and financial outcomes. Let’s check out both Forex trading strategies, the key points, and the benefits of each:
Day Trading
Day trading involves buying and selling forex pairs within the same trading day. This style is favored by those who thrive in fast-paced environments and seek to capitalize on short-term market fluctuations.
1. Quick Profits:
Day traders aim for small but frequent profits, which can add up significantly over time.
2. No Overnight Risks:
Since positions are closed before the end of the trading day, there's no risk of adverse news or events affecting your trades overnight.
3. Leverage Market Movements:
Day traders can benefit from market volatility, making the most of even minor price movements.
Long-Term Trading
Long-term trading, or position trading, involves holding positions for weeks, months, or even years. This style is suited for those who prefer a more measured approach and are comfortable with extended timeframes.
1. Reduced Stress:
Long-term trading minimizes the need for constant monitoring and decision-making, reducing stress and allowing for a more balanced lifestyle.
2. Focus on Fundamentals:
This style allows traders to focus on broader economic trends and fundamental analysis, which can lead to substantial gains over time.
3. Lower Transaction Costs:
Fewer trades mean lower transaction costs and potentially higher net profits after accounting for fees.
Choosing between day trading and long-term trading depends on various factors including your risk tolerance, time commitment, and financial goals.
Day Trading Insights:
- High Activity Levels:
Day trading requires significant time and effort, as traders need to be active throughout the trading day.
- Technical Analysis:
Proficiency in technical analysis and chart reading is essential for day traders to make informed decisions quickly.
Long-Term Trading Insights:
- Strategic Planning: Long-term traders must develop and adhere to a robust trading plan, focusing on fundamental analysis and macroeconomic indicators.
- Patience is Key: Success in long-term trading often involves waiting for the right market conditions and allowing trades to mature over time.
Imagine you’re a day trader focusing on the EUR/USD currency pair. You start your trading day by analyzing the market's opening trends and looking at recent news that might affect the euro or the US dollar.
1. Market Analysis: you notice that a recent economic report from the EU showed better-than-expected economic growth, causing the euro to strengthen.
2. Trade Execution: based on this, you decide to buy EUR/USD at 1.1800.
3. Intra-Day Monitoring: throughout the day, you monitor price movements and set a target to sell if the price reaches 1.1850.
4. Closing the Trade: by midday, the price hits 1.1850 due to continued positive sentiment, and you sell, making a 50-pip profit.
Now, let’s consider long-term trading with the USD/JPY pair. You’re looking at broader economic trends and geopolitical factors to inform your decision.
1. Fundamental Analysis: you research and find that the US economy is expected to perform well over the next year, while Japan's economy might face challenges due to demographic issues and low consumer spending.
2. Trade Execution: you decide to buy USD/JPY at 110.00, planning to hold this position for several months.
3. Monitoring: over the next few months, you keep an eye on major economic indicators, central bank announcements, and any geopolitical events that might impact the USD or JPY.
4. Adjusting Position: as expected, the US dollar strengthens due to positive economic data, and the yen weakens. After six months, the USD/JPY rate reaches 115.00.
5. Closing the Trade: satisfied with the gain, you close your position, making a 500-pip profit.
Both examples show different approaches to forex trading. Day trading requires constant attention and quick decision-making, while long-term trading involves patience and a focus on fundamental analysis. If you want to dive deeper into different Forex trading strategies and stay updated with market trends, I recommend checking out https://55brokers.com/ . This platform offers a bunch of resources and tools to help you navigate the Forex market effectively.
Both day trading and long-term trading have their merits and challenges. By understanding the differences and considering your personal preferences and goals, you can choose the strategy that best suits you. Remember, the key to successful trading is not just the strategy but also the discipline and knowledge you bring to it. I encourage you to delve deeper into forex trading and continuously refine your approach to achieve your financial objectives.
Whether you’re drawn to the fast-paced nature of day trading or the strategic depth of long-term trading, there’s a path for you to explore and master in the fascinating world of forex trading.
January 15, 2020
Technical Analysis of the Financial Markets is a decent primer on technical analysis. Most can expect to learn the value of support/resistance lines, volume, and indicators. Some of the concepts and strategies are out of date (especially the section on indicators) but his discussion on support/resistance lines continues to be relevant and useful in the real markets. For someone just entering the markets and looking to learn technical analysis, this is a good place to start, even if it does get a bit dry at times. I would definitely keep building on the base provided by this book.
February 12, 2021
I still literally read this book on a regular basis, it tutors on the subject of technical analysis in a professional and beginner style. It is essential practical to use and easy to learn from. The language is also technical in its nature. He John gives a simplified definition on the basic concepts of trend analysis. The introductory part details the philosophy and rationale behind the concept of trend analysis. And most importantly John introduces the basics of Japanese candlesticks and candle pattern analysis.
July 27, 2020
Excellent intro book, the kind of resource for explanations you can always come back to to remember things. I used to be sceptical about the whole discipline, but turns out if you do it properly *a lot emphasis on properly, then it can produce statistically significant profit, which is another indictment against the efficient market hypothesis. Still I probably wouldn't put my money relying on just this thing. Day trading is only for the chronic gamble addicts.
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