Pattern Recognition and Trading Decisions shows active traders how to realize when a pattern is developing, distinguish between a genuine pattern and a misleading series of events, and apply this recognition for success in specific trading situations.
Introduction:
Participants in the markets of the late 1990s may have thought then that profitable investing was easy, only to learn later, to their cost, that it may be easy during a bull market but not necessarily at other times. There are books that claim to make investing easy and other books that typically claim that you too can be rich if you follow the guru who wrote it.
With respect, the points I make to the guru are that when financial conditions change, exploitation strategies need to change with them, meaning that any single method will not work all the time. Furthermore, investors have such a wide range of preferences, individual circumstances, and needs that a guru’s method is likely to be appropriate for only a subset of their population.
With regard to those who claim to make investing easy, if they could, professionals would use their methods and perform much better than they do. I would add that there is also a crucial step that is often glossed over.
Typically, potential investors are given the address of useful Web sites where they can obtain the information they need to make their decisions. When the new investors go to one of these Web sites, they are likely to be confronted by information in jargon they do not understand, for which they have no background knowledge but from which they are supposed to make a decision.
Pattern Recognition and Trading Decisions is about market decisions. It offers no empty promises for easy wealth. It aims to help people to understand the methods and terminology used by the investment industry and give background on decision techniques in general, so that they can select those that best suit their needs, or reject them if they feel they have something better.
It offers a representative span of the decision processes between understanding financial instruments to managing portfolios. It does not cover other aspects, such as selecting a broker, at any length.
Contents:
- Behavior of Financial Instruments
- Investment Psychology
- Background to Investment Decisions: Practice and Theory
- Introduction to Fundamental Analysis
- Introductory Fundamental Analysis
- Fundamental Analysis in Practice
- Introduction to Technical Analysis
- Technical Analysis without Formulas
- Indicators: Technical Analysis with Formulas
- Trading Patterns
- Forecasting Technologies and Their Limitations
- Exits
- Trends
- Contrarian Strategies
- Trading Systems and Risk Assessments
- Portfolio Diversification
- Management of Portfolio Decisions