Technical analysis is an important part of stock market investing. It helps in analyzing the price movement, and sentiment of the market, if used correctly, it can also give us exact price points where we should buy or sell a stock thus maximizing our gains. Learning technical analysis requires practice and patience but once you learn it properly and start practicing on a regular basis, it can prove to be a great tool for your financial success.
There are many useful books written by some of the most experienced investors and trader. Some of th books I personally like and would like to recommend to you are as follows:
The book starts with very basic concepts about technical analysis. The first chapter covers the philosophy of technical analysis, where the author discusses the basics of technical analysis such as what technical analysis means and what is the objective of analyzing assets on a technical charts? The second chapter of the book talks about basic chart construction to major technical patterns and explains them in a simple language with ample examples. The book the third and the fourth chapter discusses in detail about the reversal patterns, consolidation patterns and gaps that you will find useful while making buying and selling decisions.
Chapter six to eleven gives you detailed insights on analytical tools such as trend lines, support and resistance, momentum indicators and how to spot failed signals. The book also gives ample examples on how to use volumes along with these indicators as a confirmation of pattern formation. The final chapters talk about how to weigh the evidences and make the best investment decisions based on the facts in front of an analyst.
Written By Bhushan Jadhav, the book is short and concise, but explains all the concepts related to technical analysis in detail. The first and second chapter are all about basic introduction to technical analysis and some important terms related to them such as what is support and resistance, the trends of the market and how to read an individual candlestick? The book discusses all the concepts related to analysis of candlestick patterns such as hammer, hanging man, shooting star doji, evening star and many more.
Subsequent chapters of the book talk about Dow theory and chart patterns which include rounding top, rounding bottom, double top, double bottom, head and shoulders pattern, cup with handle pattern, flags and pennants etc. From chapter nine to eleven the book give details about how to use pivot tables and other technical indicators such as moving averages, MACD, RSI, Bollinger bands and Fibonacci retracements. The final two chapters give you a detailed insights on how to use stoploss and follow trading disciplines to maximize profits and minimize losses.
The book written by John Magee, is the ninth edition, fully revised and updated and in considered to be the bible of technical analysis. The book contains investment techniques on how to improve your trading and investment performance y analyzing stock chart patterns and trends. The book discusses in detail on how one can use the basic principles of charting and interpret common patterns. The book is full of real life examples on how to use bullish and bearish patterns and use them for long and shorting opportunities. Just like the previous books, this book also discusses Dow theory and gives you real life examples on how to profit from them.
Technical analysis is gaining popularity with time as it has the power to predict the human nature and psychology and take advantage of them. The books mentioned above are written by some of the most successful chartists and traders that did not shy away from sharing it all with their readers. By reading these books and practicing the concepts mentioned, you too can become a successful technical analyst and make a fortune out of it.