John J. Murphy - Study Guide to Technical Analysis of the Financial Markets

NYIF NEW YORK INSTITUTE OF FINANCE NYIF and NEW YORK INSTITUTE OF FINANCE are trademarks of Executive Tax Reports, Inc., used under license by Penguin Putnam Inc.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. From the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations Copyright 1999 Penguin Putnam Inc. Formerly published as Study Guide for Technical
Analysis of the Futures Markets (NYIF, 1987).

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Technical Analysis of the Futures Markets (New York Institute
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Murphy. This workbook is to be used exclusively with John J. Murphys Technical Analysis of the Financial Markets (referred to as the text). The workbooks objective is to testand thereby to ensureyour comprehension of the large body of knowledge associated with technical analysis. The methodology is simple to follow and uses your time efficiently. Here are the recommended steps: Before reading the textbook, go to Lesson One in the Study Guide (page 1). There you will find the Reading Assignment, which for the first lesson is of the text.

You will also find a set of reading Objectives and a Reading Orientation, which give your reading focus and direction. Also note the list of Key Terms (page 2). Following each term is a page reference indicating where in the text you can find a definition or explanation of the term. Pay special attention to these terms. Read the chapters assigned for the lesson. As you read, stay aware of the objectives and key terms.

Ask questions of the text. Dont be afraid to underline what you feel is importantor make marginal notes. Go to the Challenge section of the lesson (starting on page 3). There you will find a Matching Quiz, Multiple Choice, and sometimes Fill-In questions. Answer the questions closed book as best you can. Turn to the Answer Sheet, and compare your answers against those given there.

To grade yourself on these exams, divide the number of correct answers by the total number of answers and multiply the answer by 100. The result is your percentage right. Should your grade be lower than 65%, you should re-read the material for that lesson. The purpose of this comparison, however, is not to give yourself a grade. Rather, it is to determine the areas where your comprehension is weak. Toward that end, each answer has a page reference to the text and a brief explanation of why the answer is correct.

We suggest that you follow up these page references by re-reading the relevant sections of the text and making sure you understand the answer. Once you have taken these steps for , beginning on page 7. This workbook has been produced with the utmost concern for accuracy and freedom from error. Nevertheless, we welcome your comments with regard to improvement. New York Institute of Finance
Publishing Division

Distinguish fundamental from technical analysis. Compare and contrast the Random Walk and Dow Theories. READING ORIENTATION deal largely with the basis and background of technical analysis. As you progress in the course, you will see again and again the terms and concepts that are introduced in these chapters. For now, a general understanding of the basic terms is adequate. Before reading the assignment, review the key terms on the next page.

Look for them as you read. When youve completed your reading, go to page 3. KEY TERMS accumulation, 26 chartist, 1012 confirmation, 27 correction, 26 day trading, 9 descriptive statistics, 18 distribution, 26 divergence, 27 Dow Theory, 27, 31, 3233 efficient market hypothesis, 1921 failure swing, 2931 flow of fund analysis, 15 fundamental forecasting, 56 inductive statistics, 18 lines, 31 market action, 12 minor trend, 2526 price action, 2 primary trend, 2526 public participation, 26 Random Walk Theory, 1921 secondary trend, 26 sentiment indicators, 15 statistical (quantitative) analyst, 11 technical forecasting, 56 technician, 1012 timing, 67 traditional chartist, 1012 trends, 2530 trend trading, 10 volume, 27 CHALLENGE MATCHING QUIZ Match each term at the left with a definition at the right, by placing the number of the definition in the fill-in space next to the term. A definition may be used more than once. There are more definitions than terms.