The Visual Investor : How to Spot Market Trends

Rating:
Summary: One of the best books to read and own
Review: I have read most of the books on technical analysis and this is probably the best. The book is well organized, has great examples and charts, and most importantly, the concepts can be applied to real trading.

The book is organized in 4 sections. Section 1, deals with the importance of using charts AND fundamentals, explains when and how to use daily, weekly and monthly charts, and summarizes the most important chart patterns.

Section 2 deals with the indicators. Mr. Murphy cuts to the chase and discusses the most significant indicators in detail. I appreciated this section, because one can quickly become lost in the trees and never see the forest when trying to understand TA, and this section clearly shows the forest.

Section 3 deals with "linkage". A very good discussion on markets, sectors, economics, rotation which provides a good, top down reference for investing.

Section 4 covers mutual funds and global investing.

Mr Murphy wraps up with a summary and some great references for web sites, courses, magazines, software and books.

There are so many garbage books and information available, it is refreshing find a book and reference that is well written, logical and most importantly, usable in the real world.

Rating:
Summary: Great Intro book to Technical Analysis
Review: John Murphy was the technical analysis commentator on CNBC for the longest time and was on TV almost daily for several years. He now runs his own company, murphymorris.com.

The Bottom Line: This book is very easy to read and learn and ideal for those beginners seeking to learn technical analysis. He starts with the basics, then goes into more advanced principles and then explains linkage (how certain sectors outperform when others under perform.) He talks about commodities and equities throughout the book and it is a very good evaluation of market trends. There are tons of graphs to help the reader along.

I personally believe that technical analysis should be incorporated into just about any decision-making process when investing for any fund, stock and/or options. While fundamental analysis should be where most efforts are applied technical analysis can help people in picking entry and exit points to "avoid fighting the tape" which is a real trend in the market.

Rating:
Summary: Good starter book but that's it
Review: This is a good starter book for the beginner, although it will be much too basic for the intermediate or advanced trader. But if you're just starting out, the first 133 pages will give you a basic introduction to the different technical indicators and chart reading. The next half of the book deals with the application of the indicators to mutual funds and other topics. I would just read the first 133 pages, and then go on to one of the more advanced texts now that you have some background, as this book by itself isn't enough to give you a good understanding of the subject. Murphy himself has a more advanced book, and Martin Pring also, and many others. Just be advised this is really just the beginning. The book is also a bit overpriced but I will say it's probably the easiest book I've seen recently for getting your feet wet on the subject.

Perhaps the most important part of the book is Murphy's mentioning that the head and shoulders pattern was investigated by the Federal Reserve and found to be statistically significant, and supposedly now is using the indicator to time its currency interventions. However, the real use of technical analysis is not that the patterns mean anything in and of themselves, its having the experience and judgment to know which pattern applies in a given situation that makes them truly useful, and the fact the traders themselves believe in them, so to some extent they become a self-fulfilling prophecy. So the field of technical analysis is itself a combination of art and science.

And actually, the most important aspect of trading is loss control and sell discipline, and understanding position sizing relative to risk and reward, since understanding the technical indicators is actually fairly straightforward, and many charting packages will do that for you anyway, so you don't even know how to understand how they're derived. And the charting packages will generate buys and sells by whatever indicator you want, but remember, it's knowing when to apply a given indicator that's the hard part. Finally, if you're planning on starting in on trading yourself, make sure you read up on and understand what's known as "money management" thoroughly before you set out--such as proper position sizing (not risking too much money on a given trade) and not selling your losers promply--an almost universal mistake among novice traders--and even pros who should (and do) know better. Good luck and happy trading!