Where to start?
I'm a new reader to your blog. I am trying my best to increase my
understanding of the markets, and I'm curious if you can point me in the right direction. I've seen all kinds of graphs and charts on yours and other blogs (like this for example), but I have no idea as to how to read or interpret it. Is there a book, or series of books, that I can pick up that might help?
Thanks for your time!
Welcome aboard Wade! If you are looking for reading material, the best place to start (I think) is with John Murphy's "Technical Analysis of the Financial Markets". I found it an easier read than Pring's "Technical Analysis Explained". The MTA (Market Technicians Association) have recommended Edward and Magee's "Technical Analysis of Stock Trends", but I don't own a copy I can't comment on it. The latter book is the most expensive at over $60, Pring's is cheapest with a listed price of $35 with Murphy coming in between at $54 (although you can grab a copy for $44). With one of these books you have a great starter kit and can expand your collection as money and reading time allows.
When you delve into the more specialized areas you have Steve Nison for candlestick charts. Morris also has a recommended book on candlestick charting but I don't have a copy. I would head to Murphy again for intermarket analysis, a great book to for the current economic situation as he details the relationship between commodities, stocks, dollar and interest rates. If you are interested in Elliot Wave analysis (it's beyond me) then there's Frost and Co. One on my 'to get' list is a book on point-n-figure charting.
You will see two trends develop here; one, there is a huge range of resource material on the various specialities in technical analysis; second, it's an expensive hobby to collect them all. I try and pick up new copies sold at discount on Amazon, or if there is a deep discount second hand copy I will get this and buy new if it's worth it.
The other resource which is growing at an exponential rate is the information you can get for free on the web. Other than the growing list of blogs, there are sites like Thomas Bulkowski's which has one of the most comprehensive candlestick resource, including pattern probability information. He also publishes a list of books on the subject. Investopedia is great for definitions and as a glossary of terms. Trending 1-2-3 and Incredible Charts (the latter site I found hard to navigate) is also good for definitions. Wikipedia has a respectable technical analysis area too.
None of these books tell you 'How' to trade. I am currently reading a book by Brian Shannon which very neatly keeps the focus on developing your trading technique; the pitfalls and what to watch for. There is no clutter with indicators or complex charts where the focus is ultimately on price action. You can buy a copy here. Although I don't have a copy of the next book by Brett Steenbarger, he does have an excellent blog on market sentiment and trader psychology. His book is, not surprisingly, on Trading Psychology. It's one of the few books out there dealing with the mental side of trading.
Hope this helps. Comments welcome.
Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website