The 7 best books on technical analysis

Many people who invest for the long term look at current trends to determine if it’s a good time to buy or sell an asset. For example, if a company has strong quarterly financial reports, its stock is likely to appreciate.

However, there is an approach that is more popular with short-term trading called technical analysis. This approach is based on the idea that history repeats itself. So if a company’s stock has followed a particular trend in the past, it’s likely to do so again. By looking at historical data, you can see how the stock will perform in the future. Technical analysis is popular with swing trading (where you trade every few days, weeks, or months) and very risky strategy of day trading or buying and selling a stock on the same day.

Some people prefer both methods of trading: looking at technical analysis and looking at current trends (fundamental analysis).

Technical analysis can be a difficult strategy to understand, especially if you want to master it well enough to swing or day trade, which have the potential for big wins or big losses. We do not recommend technical analysis for everyone as it is difficult to understand it well enough to see significant gains. But if you want to get started, here are some of the best books to help you understand technical analysis for trading.

Best for Beginners: “Getting Started in Technical Analysis” by Jack Schwager

Schwager divides this book into four main sections: basic analytical tools, trading problems, trading systems, and practical trading guidelines. By the time you’ve finished reading, you should have a good grasp of the basic concepts of technical analysis.

The book covers important parts of technical analysis such as: B. Chart patterns, when to enter and exit an asset, what software to use and how to set stop-loss orders. Schwager also has a chapter on 82 rules and observations about the stock market that is helpful for any beginner.

Best for Beginners, Second: “Technical Analysis A to Z” by Steven B. Achelis

The first part of Technical Analysis A to Z gives you the basics of technical analysis, including a detailed explanation of what it is and how it works. It also walks you through several popular types of charts used in technical analysis and strategies such as support and resistance triggers.

The second part is an extensive glossary of terms you should know. Technical analysis is a complex subject, so this glossary is a great reference for both beginners and people who are ready to move on to actual trading.

Let’s assume you understand how technical analysis works and know some of the most popular charts and strategies. Now you might be ready to dive into even more complex topics.

Murphy’s book begins with basic information such as the concept of a trend and chart. He then moves on to topics such as major reversal patterns, continuation patterns, and long-term charts. If these terms are unfamiliar to you, this could be a good book to take your understanding to the next level.

Best for a comprehensive overview: “Technical Analysis Explained” by Martin Pring

Technical Analysis Explained covers a wide variety of topics related to technical analysis and by the time you’ve finished reading you should have a fairly comprehensive understanding of all that goes into it.

Pring starts with the basics, like defining trends and patterns. He then dives into the ins and outs of the market – because to use technical analysis successfully, you must already have a strong understanding of how the stock market works. Technical analysis, day and swing trading are not for people who are new to the stock market. Pring also covers larger topics like the psychology of trading and how interest rates affect the market.

Best for learning about patterns: “Encyclopedia of Chart Patterns” by Thomas Bulkowski

There are numerous chart patterns that you can use in technical analysis. These patterns show you how a stock (or other asset) has performed repeatedly in the past — and according to technical analysis, the asset is likely to perform the same way again.

Bulkowski first explains how to trade by looking at chart patterns, then dives into over 70 patterns you can use to determine when to buy and sell an asset based on technical analysis. This level of detail can help you choose the few patterns you want to use when trading.

Best for learning candlestick charting: Steve Nison’s Japanese Candlestick Charting Techniques

While “Encyclopedia of Chart Patterns” covers dozens of charts in technical analysis, this book focuses on a popular main topic: candlestick charts. A candlestick chart shows the movement of an asset using four points: open price, close price, low price and high price. Together, these four vertical points on a chart approximate the shape of a candlestick.

There are several types of candlestick patterns that can help you predict how an asset will perform in the future. This book goes into the history and meaning of candlestick charts, then explains each of the pattern types.

Best for hands-on experience: “Technical Analysis of Stock Trends” by Robert D. Edwards, John Magee

“Technical Analysis of Stock Trends” covers many of the same topics covered by our other top picks: charts, reversal patterns, and trends, to name a few. But there are also sections designed to help you decide what to do with your money when you’re ready to actually get started.

For example, you will read about how to choose stocks, how to diversify your choices, and how to decide how much money to invest in the market.

Other technical analysis books we considered

frequently asked Questions

What is technical analysis?

Technical analysis is a strategy for trading stocks and other assets. They look at historical chart patterns to determine how the asset will perform in the future, which can help you decide when to buy or sell the asset.

This is in contrast to fundamental analysis, which examines a company’s current financial condition to determine whether it is a good time to buy or sell.

Does technical analysis work?

Yes, technical analysis works overall – once you have a deep understanding of the stock market, have done your research, and know what chart patterns to use. Technical analysis probably won’t work for beginners because it’s a complicated concept with many moving parts.

Technical analysis is definitely not for everyone, and for it to work, you really need to know your stuff.

Does Warren Buffett Use Technical Analysis?

No, Warren Buffett does not use technical analysis when investing. Buffett looks at a company’s current financial health and decides to invest in companies that he believes have strong earnings potential.

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