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I like Al Brooks, especially his explanation of ranging versus trending versus breakout price action conditions. Recognition of price action condition is necessary for trading setups. Al uses essentially no indicators, and the previous contributors to this thread debunk routine indicators.
Edwards and Magee is the classic. I think the first edition was about five thousand years ago. I have the fifth edition, from the 1980's... they are up to the eleventh edition now, but I'm sure Edwards and Magee themselves are long gone. It's expensive and I recall it as hard going, and it's not going to give you anything but pure charting, unless they've seriously changed since the 5th edition.
Whether chart patterns will work for you is always going to be another matter. Books have been written debunking the whole thing, and they are just as convincing as the books that are in favor of it (at least the good ones.)
As with everything, don't pay that much attention to anyone's opinion, pro or con, just find out what they are saying and see if it works out for you, when you use it. Throw it out if it doesn't. (This goes for my opinion too. )
There's a joke about everyone has on opinion, which you probably know.
FWIW, I liked the book and still remember it fondly, and I'm glad I read it and know what the classic patterns are and can recognize them... but I don't use any of it very much.
If you're into anybody's version of price action, it would be very helpful. But remember, not an easy read (somehow, none of that PA stuff is, for some reason.)
The BEST book is hard to define as I have read quite a few really good ones.
However, I will cast my vote for Make The Trade by David Cummings. He is a Kansas City, Kansas (my home state) entrepreneur who took on Wall Street. Chapter 7 is on Trading Systems where he states that his firm maximized the odds of success, rather than the magnitude of success. His firm has less than 10 losing days total in those 17 years. And, I have seen his profitability reports for those years as they are filed with the SEC.
Dave's complex system development is broken down in Chapter 7 of the book.
His last paragraph of that chapter tells us the secret sauce. "It's not one thing. It's doing a bunch of small things well. Remember, the game is very hard. There is no magic bullet. You will be trading against some extremely talented companies. The market is unforgiving. Expect losses. Be humble and learn from your mistakes."
By the way, the book is not easy to locate. I luckily found it from a source that no longer has copies.
I would stay away from Al Brooks - lot of information in his books but the ideas are untradeable...
Bulkowski is also a waste of time. You cant trade a list of 150 patterns !!!
Edwards and Magee is good, more because it feels great to be reading "The Bible" of chart patterns and historical relevance.
But none of these books will teach you how to trade price action, and to read it correctly in real time (for daytrading) is probably one of the hardest things ever...
Plenty of copies on Amazon. I have not read this book so I'll grab a copy. Thanks for the tip.
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- Trade what you see. Invest in what you believe -
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David Aronson's book is particularly dangerous, as he very confidently claims this and that doesnt work. Its a book written by somebody comfortable with high school level statistics and that somehow makes it look very rigorous. Anyone using the scientific method to refute "technical analysis" clearly knows nothing about either the scientific method, or technical analysis. I've seen academic papers where a phd student will refute technical analysis by showing how trend following (using a trivial triple-MAx crossover type system) doesnt work etc. Similarly, showing how chart patterns dont work by showing cognitive bias in identifying with perfect hindsight a H&S vs flag pattern, or showing Elliott wave doesnt work really doesnt prove anything...
What is "Technical Analysis" ? Surely there is nothing "technical" about it at all (just like there is nothing "stochastic" about the stochastic indicator ). Its simply an attempt to base a buying/selling decision based on past data on prices/volume. There are lot of canned theories like Elliott wave etc where you can find people on both sides of the argument whether it works or not. It may work for some people but its simply not tradeable as you would read about it in books/courses. Price patterns/Elliott wave are all good descriptive models that can provide a common language to describe past market action and a basis for expecting future px action. You may agree/disagree but if I said a certain market is in 3rd of the 3rd of the 3rd wave, you pretty much know what it looks like. That doesnt make the forecast any more reliable (especially in real time).
Any trading plan would certainly incorporate some expectation from a trading setup but would also include some game plan around what to do if something totally different happens. So from Aronson book, you would have some kind of short trade based on H&S type pattern, but also some game plan around how/when to stop out (and possibly) reverse to long market is bullish and in hindsight it looks like a bull flag. Anyway, already spent more energy typing this post than the book deserves
Technical analysis really the analysis of market psychology and the idea that the market has a memory. IIRC there's been a study shown that technical analysis doesn't work in artificial markets where the data was completely randomly generated.
You won't get many likes for this post. Al Brooks has been the subject of much controversy on FIO over the years, ala stating he trades live but wouldn't produce any kind of trading record to suggest he does. However, he is very highly regarded on FIO (not by myself) and so bashing Al on FIO is like kicking the hornets nest.
I have read all of Al's books and I do happen to agree with you. However, I have not read Bob Volman's book, so I might look that one up.
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- Trade what you see. Invest in what you believe -
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I have read that white paper (or a paper very similar to it) and it was fascinating. Damn, I'll try to dig it out. It is on one of my computers somewhere.
From memory, the patterns and/or any anomalies in artificial markets performed only slightly more terribly than ones in the real market over the short term. Over the long term they normalized and performed equally as bad as one another.
If the markets are random, then using artificial markets is a great bell weather to determine if luck or band wagon indicators have some predictive power (or to put another way), luck.
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- Trade what you see. Invest in what you believe -
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