Barbara Rockefeller - Technical Analysis for Dummies

Technical Analysis For Dummies, 4th Edition

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Copyright 2020 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

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Library of Congress Control Number: 2019946701

ISBN: 978-1-119-59655-4

ISBN 978-1-119-59667-7 (ebk); ISBN 978-1-119-59670-7 (ebk)

1. Chapter 1
2. Chapter 2
3. Chapter 3
4. Chapter 4
5. Chapter 5
6. Chapter 6
7. Chapter 7
8. Chapter 8
9. Chapter 9
10. Chapter 10
11. Chapter 11
12. Chapter 12
13. Chapter 13
14. Chapter 14
15. Chapter 15
16. Chapter 16
17. Chapter 17
18. Chapter 18

1. Chapter 1
2. Chapter 4
3. Chapter 12
4. Chapter 15
5. Chapter 16
6. Chapter 18

Timing can be everything.

Timing is critical in cooking, romance, music, politics, farming, and a hundred other aspects of life on this planet. Putting money into a securities market and taking it out with a gain is no different: You need good timing to get the best results.

Technical traders all over the world, amateur and professional alike, earn a living using technical analysis to time their trades in many different markets. And theyre still standing after a market crash, unlike many so-called value investors. In this book, I try to explain how they do that and how you can do it, too.

The technical analysis industry is expanding at an exponential pace. A few years ago, an Internet search for the term technical analysis returned 206 million responses. Now it returns 1.36 billion responses. Even after weeding out duplicates and mismatches, its still a huge amount of material. Dont be intimidated by the sheer size of the available material. In this fourth edition of Technical Analysis For Dummies, I cover the core concepts, most of which you could apply today with no further research. If you were to explore the most advanced entry in the 1.36 billion entries, most of it would be familiar to you from reading this book.

Technical ideas range from the super simple to the tremendously complex. I cover the core concepts that are the building blocks of all, or nearly all, of those tremendously complex systems. Its up to you to choose to stay with one of two simple ideas or forge onward to the complex. There is no single best technical idea or combination of ideas, for reasons I explain.

Technical analysis is not only a set of tools. Its also a mindset, a way of looking at securities prices and how they wag and what wags them. The first principle of the technical mindset is to throw conventional wisdom out the window and trade what you see on the chart. Technical analysis is an evidence-based method of making trading decisions, which means you wont be consulting earning per share, cash flow, management quality, or any of the other fundamentals that lead to an assessment of value. Technical analysis isnt value investing. Value investing would have you continue to hold a high-value security despite a big drop in price. The technical analysis trader will sell it, knowing he can always come back after the price bottoms and starts recovering.

Try to think like a 10-year-old as you read this book. In fact, go find a 10-year-old, if you have one handy, and ask him, Which is better to hang on to: a thing that has already let you down (losses) or a different thing thats delivering exactly what you wanted (profits)? See?

That doesnt mean you may not prefer to keep only high-value names in your portfolio and winnow the portfolio for changing value. It does mean your focus is not on the intrinsic value of the securities youre holding, but rather on the gain you expect to make in each security.

Beating the system is fun and rewarding. The market doesnt know you, your age, gender, ethnicity, good looks or lack of them, singing talent, or anything else about you except whether youre a successful trader. The market is blind. In fact, the market is indifferent. Its the one place you can go to be judged solely on your merits. Use this book to help you find your way.