What is technical trading?
Also known as technical analysis or charting, technical trading is a method of trying to predict/forecast the movement of a security based on historical price movements. The principles are the same across stocks, currencies and now crypto (yes I know crypto are not securities)!
This is a one line summary and for now I will leave it here as I want to focus on the aim of this post......MY FAVOURITE BOOKS.
Background
I first got into technical trading around 12 years ago, when Google and Youtube were not the main source of information. I first dipped my toes into the stock market and then moved into currencies. I then took a break from trading but with the run of cryptocurrencies I have dived back in with vigour. It is amazing how crypto has opened the world of technical trading to so many who did not care much for it, I have observed the change even amongst my friends.
Back when I started, books were the only way to gain a solid grounding on subject matters. To date, books hold great value in society but with the advent of the digital era, many turn are turning away from them so it will be interesting to see where books go in a few years time.
Listed below are my top 3 (in no particular order).
The Books
Stan Weinstein - Secrets for profiting in bull and bear markets
My very first book I read and one that I lent to many people over the years. The book is considered a "classic" (first publishedin the 80s). Stan uses simple charts and cases to help the beginner understand the concept of trading and provides excellent strategies that can be used to get started and provide excellent results. Interestingly I started here then went to multiple indicators and then reverted back to a simpler method of trading, much similar to how Stan explained it.
Mark Douglas - Trading in the Zone
The reason behind the success of technical analysis is that it captures market emotion and sentiment. After all, that is what trading is about. This book is a must read for any prospective trader, no matter how good your fundamental analysis or technical analysis is, you must develop the MINDSET to become successful in this business. Yes, it is a business! Mark starts off with an ATTITUDE SURVEY, walks you through the different aspects of mastering "confidence, discipline and a winning attitude" then asks you to re-evaluate the survey. A game changer if you ask me.
Leon Wilson - The Business of Share Trading
Leon provides an amazing detailed, yet simple explanation of the A-Z in technical trading, including basics through to advanced patterns etc. It is quite an extensive read but I basically read it on my train journey to and from my summer job placement. So it does not need you to sit down and write notes, it just flows and you can come back to key concepts any time. Leon's book is when I first realised the importance of treating this entire thing like a business, not just a hobby. He mentions the importance of record keeping and systematising your approach to become almost machine like and try to remove emotion from trading. This is a great book for all types of traders from long term swing traders to day traders.
##Special Mentions
Edwin Lefevre - Reminiscences of a Stock Operator
Basically this book paths the life of Jesse Livermore a famous securities trader in the early 1900s who made millions, lost millions and did this on repeat. It taught me a valuable lesson about trusting yourself and not believing in hype, your interpretation of the charts (or referred to as "tape" in the book), having conviction in your decisions and a bunch of other good things which still apply to this date. In particular in the crypto world which has rumours and experts flying all over the place. Much like Jesse would have to deal with back in the day.
Curtis Faith - Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders
If ever you needed to understand the importance of a system, this book is it. Basically a trading expert shows his account of how he managed to convert a bunch of ordinary people into exceptional traders through the use of his system. The participants made millions (one made $30mil in a few years!) and this book shows you why without a system you are just throwing darts on a board (with a blindfold on)! True story this one!
What I did next?
My next steps from here involved hours of charting, I really enjoyed it so had no problems sitting there learning. I do not do this full time but have considered it a few times. Since reading these books I moved on to forums to further enhance my learning and sought people who were more experienced to gather their views. This is the reason I simplified my trading and now I am more into "naked trading". No I do not sit in the nude looking at the screen, it is looking at the charts with basically only moving averages and volume. More on that another time!
I hope you found the post valuable. Happy to answer any questions on the books or technical analysis in comments :)
Happy reading/charting.