Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications

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Summary: An Instant Classic
Review: This is a reworked, up to date edition of his classic, "Technical Analysis of the Futures Market". The part I really like are the chapters on candlestick charting. Much better than his Visual Investor book.

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Summary: If you lost 50% of your initial deposit - buy this book
Review: This is an excellent book for anyone who is planning to start trading seriously as well as for those who are completely confused with trading. John Murphy consolidated all what is needed for understanding the underlying structure and psychology of the financial markets. The most what I liked about this book is how John reflects on and stresses the importance of trend in the financial markets. I used his book to trade in the FOREX Market - it works great. While not going into nuts and bolts of technical analysis, he embraces all major point in an easy and accessible language. Consider, however, that this book does not cover in great detail any specific technical indicator or oscillator. In conclusion, this book would be also useful for those who need to round up their knowledge and see a bigger picture.

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Summary: Bible of Technical Analysis.
Review: This is by far one of the best sources on Technical Analysis that onecan be lucky enough to find. Mr. Murphy has a clear and simple way ofconveying the subject to us.

The book starts off with thePhilosophy behind Technical Trading, Dow Theory, chart construction,then moves onto the basic concepts of Trend, and General Patterns,Moving Averages, Oscillators, Japanese Candlesticks, Time Cycles,Money Management, and eventually leads onto a Checklist.

What Ilike about Mr. Murphy is his way of showing and proving a point. Letme digress here to show you what I mean: Say you had a daughter andwanted to show her how to figure out the area of an Isoscelestriangle. Well, you could tell her to memorize that it isbase*height/2. Or if you really wanted her to learn it thoroughly youcan show her how to draw a parallel line to the height, then join theends to make a nice rectangle. Then to compute the area of a rectanglejust multiply the two sides, one being the height, the other beinghalf the base. She will then "derive" this and"understand" how they got the formula. You see, then she cancompute the area under a hexagon or a tetrahedron or any complexobject.

Well, Mr. Murphy will show us the same way and"derive" for us concepts such as how a resistance line laterbecomes a support line! The reson for this is so amusing that afterone reads about it we just go "wow..."" Now I understand whythis occurs". You will see how Trend is the most importantconcept in this field, how some indicators are trend following and whyat other times we need other indicators for sideway markets. You willsee how a Moving Average is nothing but a dynamically updatedtrendline. You will see examples of all kinds of charts, indicators,and explanations. Everything is derived and it is this derivation thatmakes this book stand out.

Chapter 16 is an important one to payattention to called "Money Management and TradingTactics". You see, the tactic behind every action has a greatsignificance in its outsome. I'd say this is half the game, knowinghow much to devote to a trade and what to risk and how much torisk. If we lose the "base money", which is the money we useto trade, then the game will be over, so we better be careful aboutwhat percentage to use for a trade and what to do with the profitsand/or losses. You need to make rules and stick to them that suitsyour style, here's when the discipline saves you.

I used to makefun of Technical Analysis and did not believe in it, but after havingread this book and seeing it live in action, I think this is the onlyway to signal important events that are about to happen, and the bestthing about it is that the chart reading that applies to a 10 year ora 1 year charts, also applies to the intra-day charts! This is goodfor everybody from day traders to the people who do this for a secondincome. You can go on to your daily life, check that things are inorder at night and all indicators are in place and know that yourportfolio is in order and on track! ....

Good Luck! Steve.

Rating:
Summary: Great Book and Worth the Read
Review: This is one of the most comprehensive Books I have come across in my 5 years of trading. While most PM do not buy into technical analysis schemes publicly, they most certainly do privately. I have used many of the techniques presented in this book and have been reasonably happy. The only warning I can offer is that the trader needs to understand when a persistent tend is done.

Rating:
Summary: The Technical Analyst's bible
Review: This is the authoritative reference for Technical Analysis and should be in the toolbox of every technical trader, and the non-technical traders could benefit from it as well. Like a dictionary, it's something you should keep handy in your office.

For beginners, however, there is a lot of information that will be hard to distill. You'll be introduced to a bewildering array of patterns, oscillators, and indicators, and be faced with a confusing complexity of choices about when to use what. There isn't a lot about strategy; he introduces the tools, and leaves the rest up to you. What the book book contains about the psychological underpinnings of technical analysis is intriguing, but there ain't much -- just a couple of paragraphs!

Again: this book's value is as a REFERENCE. Don't base your strategies on it necessarily, but use it to supplement books by people like Dave Landry or Toni Turner. But for any trader John Murphy's book is a must-have; no question about it.

Rating:
Summary: comprehensive
Review: thorough and complete, the reader is left believing that upon completion they have seen and learned all there is to be known about charting.

a bible of technical analysis (if you're a believer). i cannot recommend it highly enough.

Rating:
Summary: nice reference book ... nothing more
Review: Very good compilation of decriptions on the subject. Will not give you any original idea, and unlikely any tradable idea.

Rating:
Summary: Well done.
Review: Very well written

Rating:
Summary: Good for beginners
Review: When I first read this book three years ago, I found it was very good. Easy to read. Concise. Lots of charts. But now I know just learn how to draw trend lines or use an indicator isn't enough to be a good trader. The trading psychology, especially the discipline, is also very critical. Alex Elder's book beats it in this area. Murphy discussed many different methods and indicators but he didn't mention how to construct a trading system in detail. Elder's book is also good in this area. But the intermarket analysis is always Murphy's strong area.

Do I demand too much from it? Anyway, this book is still very good for beginning traders. Just don't expect it is the last book to read!

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Summary: Murphy's Law?
Review: When they say this is the bible of technical analysis, this is quite literally so. The Market Technicians Association (mta.org) recommends this Murphy tome or "Technical Analysis Explained" by Pring.

If you are serious about TA, then you'll need either of these two TA bibles in order to become a MTA professionally certified TA "chartist". Before diving in, please first ponder if the professional securities trading associations are correct, then there are only about 5000 full-time day traders in the USA. Out of the minions of 8 million "day traders", are the statistical odds against your own full-time success?

If you can identify the difference between a hedge fund from a mutual fund, then you might be savvy enough to cut the mustard.
If not, then I would start with "The Fundamentals of Investment" which makes the Murphy book look like a real bargain. At least that recommended textbook will focus your thoughts on what is truly right for you.

Can you grasp the essence of statistics? For example, does the inverse relationship between interest rates and price earnings ratios excite your bottom line of probabilities?

If not, then you should probably take a college-level statistics class (ie. sociological statistics, political statistics, or business statistics). This basic foundation should bring the Murphy book into a much better focus of your profitable ambition.
You will be able to more fully appreciate any group psychology, social dynamics of inferential statistical analysis and that TA toolbox in Murphy's book.

If all of this review is too dry for your tastes, then you can always look for a nice mutual fund. Obviously, you are not cut out for this particular speculative field of exotic investments (equities, forex, commodities, etc) and TA analysis. If you are not so sure about this simplistic self-assessment, then by all means please do thoroughly read the "Reminiscences of a Stock Operator". It could become an epithet on your personal history for cyclical successes and failures.

And do buy yourself an irrevocable annuity before your demise.

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