Book Review: Breakthroughs in Technical Analysis

In addition to the basic price and volume, my basic charting platform offers about 40 indicators which can be derived from this data. Wouldn't it be great if I knew how to use them?

Reading this recent collection of essays (edited by David Keller) did not lessen the mystery. Instead, I discovered that there are realms of esoterica in Technical Analysis that are well beyond the commonplace MACD, Bollinger Bands and Fibonacci retracements.

Ten unrelated chapters by different authors offer to introduce the reader to Drummond Geometry, Ichimoku clouds, Gann angles, and a few systems which I gather are proprietary (or at least idiosyncratic) to those particular authors.

The redoubtable Nicole Elliott contributes a chapter; I was intrigued to discover that the Ichimoku cloud is one of her favorite indicators. And fans of point-and-figure charts will enjoy Jeremy du Plessis' essay, which delves deep into the history of this technique, as well as new ideas for exploiting it more fully.

For beginners, there is one chapter (in the middle of the book, when I had almost quit in despair of finding anything I could grasp) about candlestick interpretation, well-written and very accessible. It seemed a bit out of place, though: an island of simplicity in a sea of sophistication.

How useful is a collection like this? Well, if you are an expert at TA and want to learn some new angles, or polish your skills with new tactics for interpreting your favorite indicator, this could be just what you are looking for.

But there are a couple of drawbacks. One is the difficulty of reading some of the charts. When you have 4, 5, or 6 overlays being discussed on the same chart, there simply isn't any coherent way to illustrate them without color; but all we get here are black-and-white graphics. Another problem arises with articles that are elaborations on ideas that the author has described elsewhere. One misses having a link to the earlier article.

This gives rise to the question of why this kind of collection is in a book at all, instead of online, where these problems could be readily solved. I am a big fan of print media—I still read newspapers every day. And so I salute Bloomberg for making an effort to maintain the relevance of books at this most difficult of times. Still, this might not be an ideal matching of medium to content. Furthermore, I imagine it will be a rare trader who will be able to benefit from more than two or three chapters.

This book is available from Bloomberg Press.

Comments

[adt:]

Alan, Thanks for your comments on the book. I have been looking to buy it.

What other tech analysis books would you suggest, for an intermediate tech analysis user, ie as you suggested, a few favorite indicators, and some quant and tech literacy. I am possibly also looking for a combination of tech theory and trading strategies and even investment and trading psychology.

I had in mind DeMark indicators and was looking at the heretics of Finance.

adt - Andrew Turner

Jul 08 02:44 PM