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Getting Started in Technical Analysis
Revered by many, reviled by some, technical analysis is the art and science of deciphering price activity to better understand market behavior and identify trading opportunities. In this accessible guide, Jack Schwager-perhaps the most recognized and respected name in the field-demystifies technical analysis for beginning investors, clearly explaining such basics as trends, trading ranges, chart patterns, stops, entry, and exit and pyramiding approaches. The book's numerous examples and clear, simple explanations provide a solid framework for using technical analysis to make better, more informed investment decisions and as the basis for mechanical trading systems. Along with Schwager's invaluable trading rules and market observations culled from years of real-world trading experience, Getting Started in Technical Analysis offers in-depth coverage
* Types of charts-bar, close-only, point-and-figure, 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, software research.
* he planned trading approach-trading philosophy, choosing markets, risk control strategies, establishing a trading routine.
* Types of charts-bar, close-only, point-and-figure, 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, software research.
* he planned trading approach-trading philosophy, choosing markets, risk control strategies, establishing a trading routine.
352 pages, Paperback
First published February 4, 1999
346 people are currently reading
1656 people want to read
About the author
Jack D. Schwager
30 books737 followersJack Schwager is a recognized industry expert in futures and hedge funds and the author of a number of widely acclaimed financial books. He is currently the co-portfolio manager for the ADM Investor Services Diversified Strategies Fund, a portfolio of futures and FX managed accounts. Previously, Mr. Schwager was a partner in the Fortune Group, a London-based hedge fund advisory firm, which specialized in creating customized hedge fund portfolios for institutional clients. His prior experience includes 22 years as Director of Futures research for some of Wall Street’s leading firms and 10 years as the co-principal of a CTA.
Mr. Schwager has written extensively on the futures industry and great traders in all financial markets. He is perhaps best known for his best-selling series of interviews with the greatest hedge fund managers of the last two decades: Market Wizards (1989), The New Market Wizards (1992), and Stock Market Wizards (2001). The latest book in the series, Hedge Fund Market Wizards is due to be released in May 2012. Mr Schwager’s first book, A Complete Guide to the Futures Markets (1984) is considered to be one of the classic reference works in the field. He later revised and expanded this original work into the three-volume series, Schwager on Futures, consisting of Fundamental Analysis (1995), Technical Analysis (1996), and Managed Trading (1996). He is also the author of Getting Started in Technical Analysis (1999), part of John Wiley’s popular Getting Started series.
Mr. Schwager is a frequent seminar speaker and has lectured on a range of analytical topics including the characteristics of great traders, investment fallacies, hedge fund portfolios, managed accounts, technical analysis, and trading system evaluation. He holds a BA in Economics from Brooklyn College (1970) and an MA in Economics from Brown University (1971).
Mr. Schwager has written extensively on the futures industry and great traders in all financial markets. He is perhaps best known for his best-selling series of interviews with the greatest hedge fund managers of the last two decades: Market Wizards (1989), The New Market Wizards (1992), and Stock Market Wizards (2001). The latest book in the series, Hedge Fund Market Wizards is due to be released in May 2012. Mr Schwager’s first book, A Complete Guide to the Futures Markets (1984) is considered to be one of the classic reference works in the field. He later revised and expanded this original work into the three-volume series, Schwager on Futures, consisting of Fundamental Analysis (1995), Technical Analysis (1996), and Managed Trading (1996). He is also the author of Getting Started in Technical Analysis (1999), part of John Wiley’s popular Getting Started series.
Mr. Schwager is a frequent seminar speaker and has lectured on a range of analytical topics including the characteristics of great traders, investment fallacies, hedge fund portfolios, managed accounts, technical analysis, and trading system evaluation. He holds a BA in Economics from Brooklyn College (1970) and an MA in Economics from Brown University (1971).
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Displaying 1 - 25 of 25 reviews
July 25, 2010
Given a finite sequence of numbers, how does one prove either that they follow a pattern (and will continue to do so), or that they are random? As a pretty thorough skeptic, I've been fairly sure for a long time that there is no proof, one way or the other. So why do I come back again and again to the possibility of trading, and technical trading at that?
I got this book to get reacquainted with the trader's way of thinking and talking. On that level, it certainly did why I wanted it to do. I would also have liked it to persuade me away from my skepticism. On that score, I would say that it was a bit less successful.
A few years ago, I got more deeply involved in the possibility of trading. I had developed a few test systems. One of them showed a potential profit of approx. 1100% per year, using a moderately aggressive money management system. A more experienced friend thought that system left something to be desired, mostly from a risk/reward standpoint on individual trades. He thought I should shoot higher on individual trades.
I agreed to look a bit more deeply, and offered to test a promising system that he was developing. My testing showed that this system was not only less than promising, but that in three out of five years, it would lead to financial ruin. In my ignorance, I got scared. (The truth of the matter is that a trader should be ecstatic when he finds a really, really bad system, because all he has to do is trade the opposite, and he has a good winner. At the time, however, I was simply mesmerized by the idea that my "experienced" friend could come up with such a dog.)
At about the same time, I realized that I could probably do well with my own systems. But there was a small catch. It would mean giving up a few things for the indefinite future -- like sleep. So that was the end of that, but not through any conscious decision.
Now, I'm thinking about it again, and again I'm stuck at the start: who has it right, the random walkers, or the technicians? And I don't think there is an answer to that question. At this level, Schwager doesn't impress me.
Here are two quotes from the book about using judgment in trading:
"In conclusion, the skeptics are probably correct in claiming that a Pavlovian response to chart signals will not lead to trading success."
and...
"Act on market dreams. ... Such dreams are often right because they represent your subconscious market knowledge attempting to break through..."
OK, so here he is making a case that skill, experience, intuition and even dreams are vitally important to a sophisticated trader. And there are lots of people who believe this, I guess...
But then, here he is talking about trading plans:
"The more specific the trading strategy, the better. ... Of course, the most specific trading would be one based on a mechanical trading system."
and...
"How did I resolve my conflict? I decided to focus completely on mechanical trading approaches in order to eliminate the emotionality in trading."
Unless Philip Dick got it right, and androids do dream of electric sheep, these two sets of statements contradict each other. Schwager doesn't even attempt to resolve the conflict. He seems to think that they are both true. This problem makes it much harder for me to find many of his other points all that useful.
Another thing I've noticed in these trading books: they all spend the majority of time talking about the set-ups for initiating trades. Then, after doing this, they will pretty uniformly say that the secret to success in trading is money management and knowing where to exit (cutting losses while allowing profits to accumulate). But they pay much, much, much less attention to the areas that they say are more important. On that, this book is no different. There is the customary nod to money and risk management, but it takes a definite backseat to the "sexier" subject of when to pull the trigger.
Finally, Schwager wrote a couple of books consisting of interviews with successful traders. He summarizes some of what he learned from that experience in tips at the end of this book. One of the things he concluded from those interviews is that, looking at the success of those traders, and looking at their consistency, the market can't simply be random. Too bad he, nor anyone else, has ever written a book consisting of interviews with hopeless failures at trading. The sample pool is much bigger, and my guess is that there are probably many, many more lessons to be learned from people's failures. What Schwager fails to consider is that the pool of people who start trading is enormous. Given the number of people who start, even if the market were random, some of those people would end up as very big winners. When all you do is interview the winners, you are bound to start seeing the skill and design in what they did, even if it was just a random occurance. (Given the same number of people who have traded on the stock markets, a model of random success and failure over the same period of time would produce at least one person as successful as Warren Buffett. So, is he a genius or very lucky, or both?)
Anyway, I'm still skeptical. But if there is a skill to trading, I'm confident I can learn it. Or who knows? Maybe I might just get lucky.
I got this book to get reacquainted with the trader's way of thinking and talking. On that level, it certainly did why I wanted it to do. I would also have liked it to persuade me away from my skepticism. On that score, I would say that it was a bit less successful.
A few years ago, I got more deeply involved in the possibility of trading. I had developed a few test systems. One of them showed a potential profit of approx. 1100% per year, using a moderately aggressive money management system. A more experienced friend thought that system left something to be desired, mostly from a risk/reward standpoint on individual trades. He thought I should shoot higher on individual trades.
I agreed to look a bit more deeply, and offered to test a promising system that he was developing. My testing showed that this system was not only less than promising, but that in three out of five years, it would lead to financial ruin. In my ignorance, I got scared. (The truth of the matter is that a trader should be ecstatic when he finds a really, really bad system, because all he has to do is trade the opposite, and he has a good winner. At the time, however, I was simply mesmerized by the idea that my "experienced" friend could come up with such a dog.)
At about the same time, I realized that I could probably do well with my own systems. But there was a small catch. It would mean giving up a few things for the indefinite future -- like sleep. So that was the end of that, but not through any conscious decision.
Now, I'm thinking about it again, and again I'm stuck at the start: who has it right, the random walkers, or the technicians? And I don't think there is an answer to that question. At this level, Schwager doesn't impress me.
Here are two quotes from the book about using judgment in trading:
"In conclusion, the skeptics are probably correct in claiming that a Pavlovian response to chart signals will not lead to trading success."
and...
"Act on market dreams. ... Such dreams are often right because they represent your subconscious market knowledge attempting to break through..."
OK, so here he is making a case that skill, experience, intuition and even dreams are vitally important to a sophisticated trader. And there are lots of people who believe this, I guess...
But then, here he is talking about trading plans:
"The more specific the trading strategy, the better. ... Of course, the most specific trading would be one based on a mechanical trading system."
and...
"How did I resolve my conflict? I decided to focus completely on mechanical trading approaches in order to eliminate the emotionality in trading."
Unless Philip Dick got it right, and androids do dream of electric sheep, these two sets of statements contradict each other. Schwager doesn't even attempt to resolve the conflict. He seems to think that they are both true. This problem makes it much harder for me to find many of his other points all that useful.
Another thing I've noticed in these trading books: they all spend the majority of time talking about the set-ups for initiating trades. Then, after doing this, they will pretty uniformly say that the secret to success in trading is money management and knowing where to exit (cutting losses while allowing profits to accumulate). But they pay much, much, much less attention to the areas that they say are more important. On that, this book is no different. There is the customary nod to money and risk management, but it takes a definite backseat to the "sexier" subject of when to pull the trigger.
Finally, Schwager wrote a couple of books consisting of interviews with successful traders. He summarizes some of what he learned from that experience in tips at the end of this book. One of the things he concluded from those interviews is that, looking at the success of those traders, and looking at their consistency, the market can't simply be random. Too bad he, nor anyone else, has ever written a book consisting of interviews with hopeless failures at trading. The sample pool is much bigger, and my guess is that there are probably many, many more lessons to be learned from people's failures. What Schwager fails to consider is that the pool of people who start trading is enormous. Given the number of people who start, even if the market were random, some of those people would end up as very big winners. When all you do is interview the winners, you are bound to start seeing the skill and design in what they did, even if it was just a random occurance. (Given the same number of people who have traded on the stock markets, a model of random success and failure over the same period of time would produce at least one person as successful as Warren Buffett. So, is he a genius or very lucky, or both?)
Anyway, I'm still skeptical. But if there is a skill to trading, I'm confident I can learn it. Or who knows? Maybe I might just get lucky.
July 3, 2020
This book is for you if:
-you love blindly following advice without any explanation
-you like books that are many times longer than they need to be
-you don't want to do any critical thinking
-you don't mind contradictions
This book is not for you if:
-you want to understand the logic behind technical analysis
-you don't want to waste your time
-you love blindly following advice without any explanation
-you like books that are many times longer than they need to be
-you don't want to do any critical thinking
-you don't mind contradictions
This book is not for you if:
-you want to understand the logic behind technical analysis
-you don't want to waste your time
January 23, 2019
A reasonable introduction to chart analysis that clearly explains basic concepts and points you in the direction of more complex tools that you can explore later. The author encourages critical thinking and developing a trading style that fits the reader's own personality and risk tolerance. The target audience seems to be people interested in creating technical trading systems for day-trading, but it is still helpful for people who want to incorporate some technical analysis in other applications. There are some interesting ideas about the value and methods of analyzing price information to anticipate future trends.
December 28, 2017
I first read this back when it came out in 1999. The book is part tutorial, but its main goal is to help the reader establish a trading system. I've returned to it often.
May 7, 2009
A classic! This is a great starter book and the concepts are timeless.
January 9, 2020
Best book
This entire review has been hidden because of spoilers.
December 1, 2023
A book that serves as an introductory guide to the field of technical analysis, which involves analyzing historical price data and trading volume to forecast future price movements.
1. **Introduction to Technical Analysis:** The book likely begins with a fundamental introduction to technical analysis, explaining its purpose, principles, and how it differs from other forms of market analysis.
2. **Basic Chart Patterns:** It may cover basic chart patterns, such as trends, support and resistance levels, and trendlines. Understanding these foundational concepts is crucial for technical analysis.
3. **Candlestick Patterns:** An introduction to candlestick patterns, including popular patterns like doji, engulfing patterns, and hammers. These patterns are often used to identify potential reversals or continuation signals.
4. **Technical Indicators:** The book may explore common technical indicators like moving averages, relative strength index (RSI), stochastic oscillators, and others. These indicators help traders make sense of price movements and identify potential entry or exit points.
5. **Chart Analysis Techniques:** Techniques for reading and analyzing charts effectively, including the interpretation of price patterns and volume patterns. This section may also cover the significance of timeframes in technical analysis.
6. **Trend Analysis:** Understanding and identifying trends is a fundamental aspect of technical analysis. The book likely covers trend identification, trend reversal signals, and trend confirmation.
7. **Support and Resistance:** Explaining the concepts of support and resistance levels and their importance in making trading decisions. These levels help traders identify potential areas of buying or selling interest.
8. **Risk Management:** A discussion on the importance of risk management in trading. This may include guidance on setting stop-loss orders and managing position sizes.
9. **Psychology of Trading:** Many books on technical analysis touch on the psychological aspects of trading. This could involve discussions on managing emotions, discipline, and developing a trading plan.
10. **Practical Examples and Case Studies:** The book may provide practical examples and case studies to illustrate how technical analysis principles are applied in real market scenarios.
1. **Introduction to Technical Analysis:** The book likely begins with a fundamental introduction to technical analysis, explaining its purpose, principles, and how it differs from other forms of market analysis.
2. **Basic Chart Patterns:** It may cover basic chart patterns, such as trends, support and resistance levels, and trendlines. Understanding these foundational concepts is crucial for technical analysis.
3. **Candlestick Patterns:** An introduction to candlestick patterns, including popular patterns like doji, engulfing patterns, and hammers. These patterns are often used to identify potential reversals or continuation signals.
4. **Technical Indicators:** The book may explore common technical indicators like moving averages, relative strength index (RSI), stochastic oscillators, and others. These indicators help traders make sense of price movements and identify potential entry or exit points.
5. **Chart Analysis Techniques:** Techniques for reading and analyzing charts effectively, including the interpretation of price patterns and volume patterns. This section may also cover the significance of timeframes in technical analysis.
6. **Trend Analysis:** Understanding and identifying trends is a fundamental aspect of technical analysis. The book likely covers trend identification, trend reversal signals, and trend confirmation.
7. **Support and Resistance:** Explaining the concepts of support and resistance levels and their importance in making trading decisions. These levels help traders identify potential areas of buying or selling interest.
8. **Risk Management:** A discussion on the importance of risk management in trading. This may include guidance on setting stop-loss orders and managing position sizes.
9. **Psychology of Trading:** Many books on technical analysis touch on the psychological aspects of trading. This could involve discussions on managing emotions, discipline, and developing a trading plan.
10. **Practical Examples and Case Studies:** The book may provide practical examples and case studies to illustrate how technical analysis principles are applied in real market scenarios.
April 22, 2021
I started reading this after years' bull market and getting interested in trading & crypto. I hoped to find hard proof that TA is not random. While the author refrains from that, it's fairly easy to understand that careful observation of probabilities of multiple signals can lead to a small edge.
The book is a combination of illustrations, explanations, tips and a bit of philosophy. Very accessible, but a lot of the information is overly repeated and reillustrated. Many blogs and review websites recommended this book for absolute beginners and I admit it's a great choice.
The book is a combination of illustrations, explanations, tips and a bit of philosophy. Very accessible, but a lot of the information is overly repeated and reillustrated. Many blogs and review websites recommended this book for absolute beginners and I admit it's a great choice.
February 7, 2021
Great book about learning to read charts, and to begin to make better market decisions, book was written in 90's without out the technology we have today, so some of it is worthless. A must read for newbies.
September 2, 2019
wELL DONE. sOME OF IT WAS TOO ADVANCED FOR ME ATTHHIS TIME
Want to read
April 7, 2022Good
Read
December 8, 2022best book for techanical analysis
May 1, 2023
A good starting book for prospective traders
January 25, 2009
This book provides a lot of information that seems to be more for someone who has read some previous TA texts of has previous knowledge of the subject matter. It doesn't help that a lot of the charts that he describes are on different pages to the descriptions and requires constant flipping back and forth.
Overall I think that Schwager has a lot of very good infomration to present, but falls down slightly on how he goes about it. There is one very good chapter in the book about real-life trading and he discusses his own trades and presents staggered charts to the reader with analysis on what actually happened after he entered the position. If only the rest of the book was up to this standard it would receive 5 stars.
Overall I think that Schwager has a lot of very good infomration to present, but falls down slightly on how he goes about it. There is one very good chapter in the book about real-life trading and he discusses his own trades and presents staggered charts to the reader with analysis on what actually happened after he entered the position. If only the rest of the book was up to this standard it would receive 5 stars.
November 8, 2009
It has taken me over 3 years to finally wade through this book. I made several stabs at it, but found it so incredibly tedious that I would put it down for weeks on end. As someone who trades, I should have gobbled this up, but it just did not grab me one iota.
The charts in the book are dotted all over the place, often pages away from the text referring to them. The print quality is really poor and the charts are hard to read. This book covers a few technical analysis basics, but it most definitely will not help you make any money trading.
It's worth noting that a large number of trading books focus on trading futures. That is very much the case with this book.
Schwager's Market Wizards books are far more readable. This seemed like one long slog.
The charts in the book are dotted all over the place, often pages away from the text referring to them. The print quality is really poor and the charts are hard to read. This book covers a few technical analysis basics, but it most definitely will not help you make any money trading.
It's worth noting that a large number of trading books focus on trading futures. That is very much the case with this book.
Schwager's Market Wizards books are far more readable. This seemed like one long slog.
December 11, 2013
Pros: Wide range of topics
Cons: No depth
The books does exactly what its meant to do, get you started. Technical analysis is a complex subject with a wide variety of sub-topics. The author goes through each of them briefly but explains enough to get you well acquainted. Its contents are well organized and easy to understand. Overall a very good intro to TA.
*If you're looking for something with more depth, you can go for either Kirkpatrick & Dahlquist, Murphy, Pring, or Edwards & Magee's books on TA.
Cons: No depth
The books does exactly what its meant to do, get you started. Technical analysis is a complex subject with a wide variety of sub-topics. The author goes through each of them briefly but explains enough to get you well acquainted. Its contents are well organized and easy to understand. Overall a very good intro to TA.
*If you're looking for something with more depth, you can go for either Kirkpatrick & Dahlquist, Murphy, Pring, or Edwards & Magee's books on TA.
June 19, 2007
I've read this 3 times now but I'm such a dumbass that it's gonna take 3 more times before it sticks.
December 28, 2015
Excited... reads like a textbook, but is the counter argument to Random Walk Down Wall Street.
August 1, 2008
Good book on technical analysis, especially if you are or want to become a stock broker. It is a difficult read for beginners, but if you're interested in day trading, this is a good book to read.
Read
December 12, 2015kj
August 23, 2016
A great book I wish I had read sooner
Read
January 28, 2023Not really recommended as a beginner's reference.
October 26, 2008
I read this too late; it didn't have anything to teach me.
November 26, 2014
Not impressed. I would refer you to Schwager's other books.
Displaying 1 - 25 of 25 reviews