19/05/2024

Trading is both a skill and an artform. The Corona Pandemic saw a sudden spurt in the rise of number of people taking to trading as a means of livelihood. With little else to do and restrictions on stepping out ,people looked for ways to make money. Proliferation of Youtube channels teaching ropes of trading also contributed to the rise of wannabe and budding traders.  For some it is a ‘get rich quick’ scheme  and for others it is serious business. Staying long enough with your capital intact in the market can be a daunting task leave apart  earning  profits. Entering the market without the right amount of knowledge and emotional stability can be a disaster in the making.

Technical Analysis has the potential to predict the direction of the market along with other macro-economic parameters. Thorough knowledge and expertise in Technical  Analysis can help one become a successful trader in any of the Equity , Futures and Options , Commodities or Forex markets. What is most beneficial about Technical Analysis is that the singular study and rules of TA can be applied across  markets for determining the direction.

Whereas Fundamental  Analysis requires that each market , equity scrip or commodity be studied differently for they all have different underlying fundamental principals.

Technical  Analysis is the study of Market Action ( which is different from Price action and consists of not only price action but also Volume and Open Interest ) through the study of charts and graphs for the purpose of determining the direction of the market.

Though , various other quarters need to be mastered such as one’s own temperament , an understanding of mass psychology , Technical Analyses forms the backbone of edifice of skills required to be a master trader.

The Following list of books is what a both novice and master trader should have in his arsenal :

1.Technical Analysis Of The Financial Markets by John J. Murphy :

This book is aptly considered the bible of Technical Analysis and is one of the recommended starters in prestigious courses like CFA and CMT. The beauty of the book lies in the fact that a complete amateur can read it with complete understanding and get a head start. The book covers just about every topic that constitutes Technical Analysis and covers it exhaustively. It talks about Dow Theory , how to construct charts , concepts of trend , reversal and continuation patterns,  volume and open interest ,moving averages and various other indicators both basic and advanced. It is a wonderful book on Technical Analysis to start with.

2.The Handbook  of Technical Analyses by Mark Andrew lim :

This is a great book to build up on the knowledge acquired from the first one. It takes you into greater depths of the various topics and deals with them in a far greater detail. It deals with the complex topics like Fibonacci sequence and Gann analysis very expertly and in a way  that makes it super easy for you to understand.

3.Secrets Of A Pivot Boss by Franklin O. Ochoa:

This is one gem of a book that deals with a part of Technical Analysis which can said to be existing on its outer fringes but an essential part in your journey to be a master trader nonetheless. It deals with the topic of Pivot Points in great detail which are said to be the crucial point prices where the potential for a turnaround is great. The book puts across the complex ideas like the camarilla concepts in quite an easy to understand way. The other concepts dealt with in the book are Floor Pivots , Money zone , Pivot Hot Zones. This book covers topics which have the potential to turn you into an expert and  profitable trader.

4.The New Trading For A Living by Dr. Alexander Elder  :

This book deals primarily in the psychology of trading both mass and individual. It helps you train your mind for trading and identify your emotions and deal with them effectively. Learning  Technical Analysis is only a part of the game, mastering your own emotions and handling them in different market conditions is what makes you one of the rare and celebrated breed of profitable traders. Though there are other books on psychology of trading by Mark Douglas and Van k. Tharp and various others , but you are better off starting out with this one.

5.Market Wizards by Jack Schwager:

This book includes interviews with  expert traders  like Van K.Tharp , William O’ Neil , Ed Seykota and many more. These traders  share their wisdom about market behavior that they have accumulated over the years. These insights can play a decisive role in making you an adept trader. Market Wizards is more of a Franchise with Unknown Market Wizards , The New Market Wizards , The little Book OF Market Wizards being others. These books can be great additions to your library on trading books.

These above mentioned books can give you  a great leg up on trading and trading psychology and get you started on your hard but yet beautiful and rewarding journey of becoming a profitable trader. Keep Learning ,Keep Trading.

Happy Trading!

References : http://www.investing.com