Getting Started in Technical Analysis

✍ Scribed by Jack D. Schwager

• Publisher: Wiley
• Year: 1999
• Tongue: English
• Leaves: 338
• Edition: 1
• Category: Library

✦ Synopsis

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 of:
* 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.

✦ Table of Contents

Getting Started in Technical Analysis
CONTENTS
PREFACE
INTRODUCTION— THE GREAT FUNDAMENTAL VERSUS TECHNICAL ANALYSIS DEBATE
PART ONE— BASIC ANALYSIS TOOLS
Chapter 1— Charts: Forecasting Tool or Folklore?
Chapter 2— Types of Charts
Bar Charts
Close-Only Charts
Point-and-Figure Charts
Candlestick Charts
Data
Nearest Futures
Continuous Futures
Constant Forward (''Perpetual") Series
Comparing the Series
Chapter 3— Trends
Defining Trends by Highs and Lows
Trend Line Rules
Drawing Trend Lines
Internal Trend Lines
Moving Averages
Chapter 4— Trading Ranges and Support and Resistance
Trading Ranges: Trading Considerations
Trading Range Breakouts
Support and Resistance
Prior Major Highs and Lows
Concentrations of Relative Highs and Relative Lows
Price Envelope Bands
Chapter 5— Chart Patterns
One-Day Patterns
Gaps
Spikes
Reversal Days
Thrust Days
Wide-Ranging Days
Continuation Patterns
Triangles
Flags and Pennants
Top and Bottom Formations
V Tops and Bottoms
Double Tops and Bottoms
Head and Shoulders
Rounded Tops and Bottoms
Triangles
Wedges
Island Reversals
Chapter 6— Oscillators
Oscillators and Momentum
Basic Oscillators
Overbought, Oversold, and Divergence
Conclusion
Chapter 7— Is Chart Analysis Still Valid?
PART TWO— TRADING ISSUES
Chapter 8— Midtrend Entry and Pyramiding
Chapter 9— Choosing Stop-Loss Points
Chapter 10— Setting Objectives and Other Position Exit Criteria
Chart-Based Objectives
Measured Move
Support and Resistance Levels
Overbought/Oversold Indicators
Contrary Opinion
Trailing Stops
Change of Market Opinion
Chapter 11— The Most Important Rule in Chart Analysis
Failed Signals
Bull and Bear Traps
False Trend Line Breakouts
Filled Gaps
Return to Spike Extremes
Return to Wide-Ranging Day Extremes
Counter-to-Anticipated Breakout of Flag or Pennant
Opposite Direction Breakout of Flag or Pennant Following a Normal Breakout
Penetration of Top and Bottom Formations
Breaking of Curvature
The Future Reliability of Failed Signals
Conclusion
Chapter 12— Real-World Chart Analysis
How to Use This Chapter
Real-World Chart Analysis
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reason
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reason
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reason
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reason
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reasons
Trade Exit
Comment
Trade Entry Reason
Trade Exit
Comment
PART THREE— TRADING SYSTEMS
Chapter 13— Charting and Analysis Software
A Word on Price Data
Software Considerations
Researching Software
Chapter 14— Technical Trading Systems: Structure and Design
What This Book Will and Will Not Tell You about Trading Systems
The Benefits of a Mechanical Trading System
Three Basic Types of Systems
Trend-Following Systems
Moving Average Systems
Breakout Systems
Ten Common Problems with Standard Trend-Following Systems
Possible Modifications for Basic Trend-Following Systems
Confirmation Conditions
Filter
Market Characteristic Adjustments
Differentiation between Buy and Sell Signals
Pyramiding
Trade Exit
Countertrend Systems
General Considerations regarding Countertrend Systems
Types of Countertrend Systems
Diversification
Ten Common Problems with Standard Trend-Following Systems Revisited
Chapter 15— Testing and Optimizing Trading Systems
The Well-Chosen Example
Basic Concepts and Definitions
Choosing the Price Series
Choosing the Time Period
Realistic Assumptions
Optimizing Systems
Testing Versus Fitting
Blind Simulation
Average Parameter Set Performance
The Truth about Simulated Results
Multimarket System Testing
Negative Results
Steps in Constructing and Testing a Trading System
A Note on System Testing Software
Observations about Trading Systems
PART FOUR— PRACTICAL TRADING GUIDELINES
Chapter 16— The Planned Trading Approach
Step One— Define a Trading Philosophy
Step Two— Choose Markets to Be Traded
Suitability to Trading Approach
Diversification
Volatility
Step Three— Specify Risk Control Plan
Maximum Risk Per Trade
Stop-Loss Strategy
Diversification
Reduced Leverage for Correlated Markets
Market Volatility Adjustments
Adjusting Leverage to Equity Changes
Losing Period Adjustments (Discretionary Traders Only)
Step Four— Establish a Planning Time Routine
Step Five— Maintain a Trader's Notebook
Step Six— Maintain a Trader's Diary
Step Seven— Analyze Personal Trading
Analysis of Segmented Trades
Equity Chart
Chapter 17— Eighty-Two Trading Rules and Market Observations
Entering Trades
Exiting Trades and Risk Control (Money Management)
Other Risk-Control (Money Management) Rules
Holding and Exiting Winning Trades
Miscellaneous Principles and Rules
Market Patterns
Analysis and Review
Chapter 18— Market Wiz(ar)dom
APPENDIX— ADDITIONAL CONCEPTS AND FORMULAS
Reaction Count
Relative Strength Index (RSI)
Run Days
Up Run Day
Down Run Day
Spike Day Formula
Stochastics
True Range and Average True Range
Weighted Moving Averages*
Wide-Ranging Day
GLOSSARY
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INDEX
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