Investor’s Guide to Charting is packed with purpose-drawn charts and worked examples, and explains in detail how charting theories work. Written with the private investor’s viewpoint in mind the book’s coverage will give you all that you need to start practicing technical analysis and, unlike other books on the subject, will also interest the more sophisticated, experienced practitioner by Comparing technical analysis with fundamental analysis.
Chapter 1 puts charting in perspective. It compares the approach with fundamental analysis and finds a few points of agreement. It deals, only briefly, with the supposed crowd psychology explanation of why charting might work. This book is not a justification of charting, but an exploration.
Chapters 2, 3 and 4 are an account of the chartist’s tool box. Here you will find and should be able to get behind everything from a trend line to Welles Wilder’s RSI. Chapter 4 includes the complete methods of working out some of the popular mathematical indicators. This is the ‘hardest’ section of the book and you may wish to skip it on first reading. Worked examples are given which will enable you to set up technical analysis programmes on a computer spreadsheet or, if you have the time, on paper.
Chapters 5 and 6 deal with two specialised forms of charting: Japanese candlesticks and point and figure charts. Chapter 7 deals with the prominent charting theories, including Elliott Wave Theory, the Coppock indicator and the outlandish notions of W.D. Gann. Chapter 8 briefly covers a few people who have made documented fortunes from charting techniques. Not all of them hung on to these fortunes.
Chapter 9 is a key part of the book. In most books on the subject, you will find what you may consider an undue preponderance of charts
showing successful charting signals: this head and shoulders heralded a price decline of 50 per cent and so on. But a large fraction of charting signals fail. Chapter 9 includes ten years of share price graphs for the UK’s top 20 quoted companies. Each is examined to show what signals it gave and whether they were successful. You will gain a lot of understanding by working through this chapter.
Chapter 10 gathers together a few conclusions for all investors and considers how you might put charting techniques to use. The internet has been a boon for chartists. Chapter 11 surveys this development.
- The art of the chart
- The trend is your friend: basic components of any price chart
- The head and shoulders and friends
- The supporting cast: secondary signals to support the main conclusion
- The technique from Japan: an introduction to candlestick charting
- Is the price moving? Really moving? – Point and figure charts
- A quick guide to the chartist gospels
- Whoever made money from charting?
- A modest grapple with real life: a look at some real charts
- Will it work for you?
- Net gains for charting: what the internet can do for chartists