Pring - Technical analysis explained the successful investors guide to spotting investment trends and turning points

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To my son, Thomas William Pring

There is no reason why anyone cannot make a substantial amount of money in the financial markets, but there are many reasons why many people will not. As with most endeavors in life, the key to success is knowledge and action. This book has been written in an attempt to shed some light on the internal workings of the markets and to help expand the knowledge component, leaving the action to the patience, discipline, and objectivity of the individual investor.

The mid- to late-1980s saw the expansion of investment and trading opportunities to a global scale in terms of both the cash and the futures markets. In the 1990s, innovations in the communications industry enabled anyone to plot data on an intraday basis for relatively little cost. Today, numerous charting sites have sprung up on the Internet, so now virtually anyone has the ability to practice technical analysis. Indeed, the technology of teaching technical analysis has progressed since the first edition of this book in 1979. We pioneered the teaching of the subject in video format in the mid-1980s, but Ill venture to guess that technological progress and the acceptance of new media formats will mean that e-book sales of this edition will outstrip traditional sales of the physical book before it runs its course. Already, the written word is in competition with audiovisual presentations, such as my recently introduced online interactive technical analysis video course at pring.com; others are sure to follow!

As a consequence of the technological revolution, time horizons have been greatly shortened. I am not sure that this is a good thing because short-term trends experience more random noise than longer-term ones. This means that the technical indicators, while still the most effective tool, are not generally as successful when applied to longer-term trends. The fifth edition of Technical Analysis Explained has been expanded and totally revised to keep abreast of many of these changes, and to include some technical innovations and evolvement in my own thinking since the publication of the fourth edition. Nearly every chapter has been thoroughly reworked and expanded. In the interest of efficiency, some have been dropped and others substituted.

Considerable attention continues to be focused on the U.S. equity market, but many of the marketplace examples feature international stock indexes, currencies, commodities, and precious metals. Special chapters also feature technical analysis of the credit markets and global equities. Our focus has also been expanded to include analysis of the secular, or very long-term, trends of stocks, bonds, and commodities. In most cases, the marketplace examples have been updated, but some older ones from previous editions have been left in deliberately to give the book some historical perspective. These historical examples also underscore the point that nothing has really changed in the last 100 years. The same tried-and-true principles are as relevant today as they always were. I have no doubt whatsoever that this will continue to be so in the future.

Thus, technical analysis could be applied in New York in 1850, in Tokyo in 1950, and in Moscow in 2150. This is true because price action in financial markets is a reflection of human nature, and human nature remains more or less constant. Technical principles can also be applied to any freely traded entity in any time frame. A trend-reversal signal on a 5-minute bar chart is based on the same indicators as one on a monthly chart; only the significance is different. Shorter time frames reflect shorter trends and are, therefore, less significant.

The chronological sequence of some of the opening chapters differs from previous editions. In Martin Pring on Price Patterns