In Trend Qualification and Trading, market technician L.A. Little explains how to identify and qualify these trends to determine the likelihood that they will continue and produce better trading results. By combining price, volume, different timeframes, and the relationship between the general market, sectors, and individual stocks, Little shows how to measure the strength of stock trends. Most importantly, he demonstrates how to determine if a trend has what it takes to develop into a major move with greater profit potential or if it is basically a false signal.
Introduction:
The essence of all successful investing and trading is trend following. Trend following is not just a style or an approach to the market; it is the heart and soul of all profits. There is no way to escape the fact that you must embrace an uptrend of some sort if you hope to eventually recognize a gain. Even the most long-term dedicated value investors, who focuses on fundamentals and buys out of favor stocks, needs to have his or her insight eventually validated by a positive trend. At the other extreme, the aggressive day trader needs a trend of some sort even if lasts for just for a few minutes. Market success and trend following are inescapably connected.
Despite the essential nature of trend following to the investment process, the literature on the topic is woefully lacking. Platitudes such as “the trend is your friend,” “buy low, sell high,” and “cut losers and let winners run” constitute much of the discussion about riding a trend. In many ways trend following is like the famous dicta uttered by Supreme Court Justice Potter Stewart in regards to pornography: “I know it when I see it.” Trends are always easy to see in retrospect. They are almost always painfully obvious when we look at charts, but defining them and exploiting them for profit is a daunting task.
Many market players, including me, like to think that our success in identifying and riding trends is some intuitive skill that is akin to artistic talent. We like to believe that trend trading is an art form that can’t be easily taught or communicated. L.A. Little crushes that conceit with his systematic approach to trend trading. He uncovers and dissects the many nuances and subtle issues that make trend trading so powerful.
Trend trading isn’t just about holding a stock through a series of higher highs and higher lows. That is the easy part. Anyone can hold a stock that goes up endlessly, but, unfortunately, that doesn’t happen that much in the real world. We have news events, shifting sentiments, and a host of factors that toss stocks around at random. Only the best stocks will continue to exhibit relative strength and reward us if we stick with them. Knowing when to hold and when to abandon ship is what this book addresses like no other that I have ever read.
The easiest part of the investment or trading process is the buy point. It is not that hard to find a stock that has a positive technical pattern. The hard part is the sell decision and that is what L.A. Little addresses with great precision. He integrates the concepts of volume, swing points, and anchor bars into the analysis, which greatly aids in determining the health of a trend.
Contents:
- Redefining Trend
- Classical Trend Model
- Neoclassical Trend Model
- Determining Trends
- Qualifying Trends
- Preparing to Trade
- Entering and Exiting Trades
- Reversals and Price Projections
- Time Frames
- Markets, Sectors, and the Trading Cube
- Trading Qualified Trends
Trend Qualification and Trading: Techniques To Identify the Best Trends to Trade By L. A. Little pdf
Princess Bailey (verified owner) –
I read few chapters of this book, it seems very daunting task to do as if I were reading my microeconomics books in my college years. Most points discussed in this book are very rudimentary. It is very informative and helpful for those who do not have any background in trading. Otherwise, I’d skip this book.
Kimber Carpenter (verified owner) –
Having read quite a few TA books, this one is a keeper. LA teaches you how to identify what trends have the best probabilities of continuing and which ones don’t. He has added his own unique approach to the TA world that many will benefit from by putting in the effort to understand the concepts being presented. Trading is about probabilities, not about predicting the future. By reading this book, you will learn how to stack the odds in your favor for successful trading.
Anika Craig (verified owner) –
It’s a must have book for serious trader. Indeed worth more than you pay. It just open up my eyes to a whole new dimension of trading. Nomore to say and yes, its worth every penny i spent.
Carmelo Kemp (verified owner) –
This is a great book for anyone who wants to learn how to invest and trade the stock market. LA Little does a wonderful job covering all the subject matter needed to be a successful trader and invertor.
Let’s face it! We all know it’s one thing to find a good stock to invest in but it’s another to know where to get in and out of that stock and make money. The strategy LA Little covers in this book is a method that anyone can use on any time frame for trading and investing. The Author shows that by examining price and volume of stocks, sectors, and markets that trend can be found and qualified with the likelihood of it continuing or reversing. While trend qualification isn’t a guarantee of subsequent price movements, the fact that support and resistance zones exist validate their use in qualifying trends. L.A.’s perspective is easy to understand, and his methods are simple and effective. This book covers more than just the technical analyst of the stock market. LA covers how to find stocks, and sectors to trade and invest in. He covers how to manage your investments, how to trade in incremental steps to make the investment more profitable, where to get in and out, Risk/Reward, sector analyst, and market analyst. This is an excellent book that LA Little supports with his web site that is based on the same format covered in the book and LA Little provides daily commentary of the markets, sectors, and stocks and how they meet the criteria explained in the book.
Willow Wilkerson (verified owner) –
I first want to say that I love L.A. Little’s trading methodology outlined in this book. The concepts of swing points and anchor bars denoting areas of significance on a chart make perfect sense to me. The use of volume to qualify reactions at these natural support and resistance levels ties it together nicely. While not ideal for very short term traders in my opinion, neoclassical charting is great for swing traders and position players. I’ve grown tired of rsi, macd and stochastics and the constant confusion of mixed and false signals they create. This method is much more specific when it counts. And when trends are ‘suspect’ so should your willingness to put on big positions. Increase your risk when the conviction grows.
However, this book is not without it’s flaws. Firstly, it is not an easy read. Some authors of trading books create a very easy flow to their methodology and message such as Miner & Carter. L.A. Little has a more difficult style of writing. This is very much like a text book but with more redundancy. I realize L.A. is attempting to drive certain points home, but some of the allegory and explanation drones on. It needs more steps for execution (possibly in the form of cleaner summaries) and less overall text. L.A. has a technical background and it shows in his very technical writing style…I sympathize, I’m a very technical writer myself. Also, the fact that swing points require 6 bars between them feels arbitrary. Why 6?
Overall, I like this book and this method…I liked it so much, that I just bought L.A.’s followup “Trend Trading Setups”.
Kyla Coleman (verified owner) –
Completely one dimensional look at trend analysis. Not one chart nor one page on the use of moving averages. While I realize that the author is a successful technician I do not understand how successful trading can be narrowed down to the two or three concepts that are emphasized in this 260 page book.
Axel Mitchell (verified owner) –
The concepts laid out in the book are great! Though there may be certain rules that seem arbitrary (i.e. 6 days to qualify a swing point), overall they make sense. In practice, the trader gains with the use of the concepts in their own logical discretion.
Micah Browning (verified owner) –
I have read a lot of books on technical analysis some good and some not. L.A. Little offers a comprehensive, well written, and easy to digest way of looking at price volume action without the distracting noise of technical indicators. A pure and systematic way of trying to understand and qualify what the chart is really telling you through an emphasis on price and volume.
The book introduced me to a way of looking at the chart from a slightly different perspective from other material I have read. This has helped add clarity to the picture of the market for me and surprisingly it has even provided me a better understanding of some of the other material I have read. In my case this has complemented and enhanced my trading style rather than completely redefining it.
The book is comprehensive and worth a read and re-read as you contemplate, digest, and actualize this approach. I for one need to assimilate most things by doing so I incorporated some of his ideas into an Excel model for my personal experimentation and felt he provided sufficient detail for the most part to understand and simulate his approach. For those who don’t want to experiment on their own or prefer the finished result, he provides the tools on his “TATODAY” site.
In summary, this is one of the few books I refer to often and is always with me because it is part of my ebook (pdf) library. I liked it well enough to buy his follow-on book “Trend Trading Set-ups”.
Avi Russo (verified owner) –
A very well written, exhaustively detailed book with accurately notated chart patterns. If you’ve ever wondered why you get wiped out every time you make a typical trend following trade, this book will show you the reasons why – and how to then turn your trading around in the most useful way imaginable.
Jeremy Vazquez (verified owner) –
I’ve been trading for almost 25 years — fundamental analysis as well as technical analysis — and I’ve read more books than I can remember. LA Little has truly captured what drives stock prices. But this book does more than just show how stock prices move. LA tells you why. He just makes so much sense in his approach when there is so much noise out there distracting us. The writing style is fresh and understandable — plain English for once. You don’t find many books on technical analysis written like this. We all know no system is perfect . . . and LA continually discloses no system is perfect and that being on the right side of the trade is what we should all be shooting for. It isn’t calling a top or a bottom. Pretty refreshing. If you’re like me, you want a system that doesn’t just make you money — but one that also protects what you have. The book is an easy read, it’s step by step, and you can see exactly where his strategy comes from — supply and demand. I’ve already made several trades that made money because his entry and exit strategies make so much sense in the way he calculates them. It’s quite interesting to read someone combine their engineering background with his good-old fashioned horse sense. I highly recommend this book if you’re interested in knowing why stock prices go up, why they go down, and how you can locate those price points with a reasonable probability. Now I can turn off the news, stop reading columns, and other financial writers, and focus on what really drives stock prices. This is a great book!
Jaliyah Peterson (verified owner) –
LA Little has created his own unique style of swing trading. The style is very concise in its analysis and gives clear trade signals. As an a complement to the book you can see his daily market analysis on Youtube. This is very helpful to see him trading his strategy.
I found his book by reading LA’s articles on Marketwatch, which always had intelligent analysis, subsequently proven correct by price action. LA has thought very deeply about trading and it shows in the conceptual discussion in the book.
Miriam Small (verified owner) –
Not what I need.
Santiago Burton (verified owner) –
LA’s methodologies have been particularly helpful in the uncertain areas of my trading. I have applied them directly or retained the principles he shows to give me more confidence with a trade and over a year my hit rate is significantly better. I am a trader with 20 yrs experience & I found many answers in his thorough research.
Rudy Maxwell (verified owner) –
I just finished reading L.A. Little’s book and must say that it is one of the best books I’ve read on technical analysis. I am a quant with an engineering background and am truly delighted to have come across his work. The writing is simple and the underlying logic is quite elegant. The expression of the neoclassical model as a finite state machine with a simple and logical set of transition rules make this book a must-read. I took the model and applied it to some Futures, ETF and Bonds charts. It’s amazing how straightforward this process of reading the charts has become! I look forward to following his work and reading his other publications on the subject.
Tinsley Dougherty (verified owner) –
This book is a gift from LA Little to any trader that would like to have a better understanding of the markets and how they work. Since reading this book, I see trading in a more clear fashion. I am more motivated to trade than ever before. The method seems almost intuitive at first, then with a re-read, you pick up the details of the NeoClassical Model. His other books are great too. I would recommend his material to any serious trader.
Brett Callahan (verified owner) –
The book is good, but you feel its not connecting together. You have to have a good technical analysis knowledge before you start reading this book.
Xzavier Velazquez (verified owner) –
Firstly let me say this book delivers on its title. On comparing what I have learnt from this book compared to the fifty or so I have previously read about technical analysis and stocks, this book is my number one go to for technical analysis and trend qualification. No rehash from other authors, no hype. Written simply and genuinely.
The author’s simple model for trend qualification and attention to additional insight of technical analysis delivers what I was looking for. Now I maintain 3 time frame charts for three important ETF’s which is all I need to trade for income and stay invested when it is relatively safe. In summary his technique involves identifying supply and demand at price areas of significance.
Note that I had to take three reads of this book to put the concepts together in a way which I found practical. On the first read I skipped the detail and tried to catch the main concepts. However I would recommend re-reading to others to note the excellent examples and detail which can be used time and time again when reading the charts – I felt this was a critical complement to using the model. It is much more than building the trend aspects of the charts. It is about tests, retests, and price discovery by the market. Little’s examples of how to determine if the bottom is in over a double bottom through retest is just one great example (you will see this for yourself on inspection of the SPY charts).
There are many scammers but judging by this book, the author is not one of those types. The book is a great contribution to technical analysis. L A Little also has a tatoday website which I visit to see his market reviews. I find his tips useful in cementing the concepts. Note that I do not subscribe to sites as a general rule (have never done so). So I cannot say how good his subscription service or training service is.
This book is a buy not only for traders but serious self directed investors. Buy this book and read it at least twice, apply his simple trend model, and pay attention to the detail given – this will give you a much greater chance of getting the read correct and being on the right side of the market when it counts.
Odin Howell (verified owner) –
Solid trading information look at this book to see other detailed system on how the dow theory could work
The Universal Tactics of Successful Trend Trading: Finding Opportunity in Uncertainty delivers powerful and practical advice for the serious trend trader. Using the principles identified in The Universal Principles of Successful Trading, author Brent Penfold shows curious investors how to become a long-term winner with tried-and-true trend trading methodologies.