Amazon has
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy (Kindle eBook) on sale for
$1.99.
Apple Books has
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy (eBook) on sale for
$1.99.
Thanks to Deal Hunter
phoinix for sharing this deal.
About this book:
- John J. Murphy has now updated his landmark bestseller Technical Analysis of the Futures Markets, to include all of the financial markets. This outstanding reference has already taught thousands of traders the concepts of technical analysis and their application in the futures and stock markets. Covering the latest developments in computer technology, technical tools, and indicators, the second edition features new material on candlestick charting, intermarket relationships, stocks and stock rotation, plus state-of-the-art examples and figures. From how to read charts to understanding indicators and the crucial role technical analysis plays in investing, readers gain a thorough and accessible overview of the field of technical analysis, with a special emphasis on futures markets. Revised and expanded for the demands of today's financial world, this book is essential reading for anyone interested in tracking and analyzing market behavior.
Top Comments
Just overall recycled advice with no real depth. Kinda wild too, considering the author tanked a few businesses before finally "making it" with something that smells a little like a Ponzi scheme.
When attempting to make money via publicly-traded assets, the basic premise is that you want to find a mismatch between its current price, and what is it actually worth. In theory, those two things should be the same if everyone had perfect information and perfect insight. I.e. that markets are basically efficient, where information spreads rapidly, and investors reach the same rationale conclusions given that data. This theory is broadly known as the Efficient Market Hypothesis.
How then, can one make money?
One method, is by being the first or most clever to spot and synthesize new information. You can pour over a company's financial statements, read reporting, try to connect other dots from disparate sources of information no one has thought of using some special insight or skill that you have, and use that to forecast the company's future performance. If you project that they are going to do better than the market consensus, the price of their stock may rise once everyone else figures out the same thing you did, or the actual results come in. If you bought the stock when it was low, you can enjoy the gains that others missed. This method, of examining the basic publicly available information and trying to find novel insight into it to correctly price an asset, is known as Fundamental Analysis.
But Fundamental Analysis is hard and time consuming. How often do you read a company's annual shareholders report in full? Or sat in on an analysts call? Or read an industry report? Or listened exhaustively to talks or interviews given by their executives? If the answer is "seldom" or "never", then you've got a problem; there are banks, hedge funds, and private investors with entire departments dedicated to these tasks. For some analysts, understanding this picture of a company from the outside is their full-time job. If the premise of Fundamental Analysis is to find a special insight that others have missed in the data, you as an individual are unlikely to realistically outwit or outpace the competition in a race where milliseconds matter.
One alternative then, is try to compete not on the basis of superior analysis and pricing of capital assets. But instead, to trade on the psychology of market participants. As I mentioned above, one of the reasons markets aren't truly efficient is that not everyone has access to the same information or insights at the same time. Another reason why is because market participants aren't necessarily rational. They trade on bad information, or on instinct, or on hopes and dreams, or fears and anxieties. They may make decisions on things like favoring round numbers; "I'll buy the stock if it falls down to $10", even if $9.76 is the true fair market value, or "I think the stock can hit $100, so I won't sell until then", even if the maximum fair price is really $99. Individual psychology becomes group psychology.
The question becomes, if group psychology and behavioral economics are predictable fields of study with a firm scientific basis and repeatability, then can one develop tools to consistently evaluate how these behaviors translate into decisions by investors in the market, and therefore be a useful predictor of asset prices? Some say yes, and the study of markets in this light and the tools developed to do so, are broadly referred to as Technical Analysis. Effectively, applying pattern recognition to market data to predict future price movement and get ahead of it to make money. Technical Analysis purports to answer questions like - "what does a stock market crash look like, and what behaviors are visible in stock prices before it occurs?", or "how does a day with bad news make investors skittish versus greedy?", or "can you spot a pattern of trades being made by investors who want to cash out before they go on Christmas vacation?"
Now, does it work? That's controversial. The premise is that you can look at the historical price movement of a stock to make an inference about the psychology that is driving it. But that interpretation can be wrong, and is only as good as the information you have to explain it. For example, if a large investor in a company suddenly liquidates all of their holdings, a Technical Analysis approach might tell you that this is a clear indication that an insider is trying to get out because they anticipate major under performance of the company. Know that this is coming, you might decide to short the stock, expecting other investors will by rushing to sell as well. But for all you know, the insider got divorced and needed cash to fund a settlement, and the company is sound.
That in mind, one shouldn't treat Technical Analysis as a secret code to cracking the markets and making money. There are plenty of charlatans or other influencers out there who might try to convince you otherwise, and induce you to buy watch/read/buy their content or make trades based on their advice, using the trappings of Technical Analysis to pull the wool over your eyes. Technical Analysis is best seen as a curiosity or another tool in one's tool belt. If you want to buy this book, go into it treating it that way.
13 Comments
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Our community has rated this post as helpful. If you agree, why not thank omar10wahab
Just overall recycled advice with no real depth. Kinda wild too, considering the author tanked a few businesses before finally "making it" with something that smells a little like a Ponzi scheme.
Our community has rated this post as helpful. If you agree, why not thank MostBased
Just overall recycled advice with no real depth. Kinda wild too, considering the author tanked a few businesses before finally "making it" with something that smells a little like a Ponzi scheme.
Glad I'm not the only one who found this book underwhelming.
Our community has rated this post as helpful. If you agree, why not thank ImJustHereForTheDeal
When attempting to make money via publicly-traded assets, the basic premise is that you want to find a mismatch between its current price, and what is it actually worth. In theory, those two things should be the same if everyone had perfect information and perfect insight. I.e. that markets are basically efficient, where information spreads rapidly, and investors reach the same rationale conclusions given that data. This theory is broadly known as the Efficient Market Hypothesis.
How then, can one make money?
One method, is by being the first or most clever to spot and synthesize new information. You can pour over a company's financial statements, read reporting, try to connect other dots from disparate sources of information no one has thought of using some special insight or skill that you have, and use that to forecast the company's future performance. If you project that they are going to do better than the market consensus, the price of their stock may rise once everyone else figures out the same thing you did, or the actual results come in. If you bought the stock when it was low, you can enjoy the gains that others missed. This method, of examining the basic publicly available information and trying to find novel insight into it to correctly price an asset, is known as Fundamental Analysis.
But Fundamental Analysis is hard and time consuming. How often do you read a company's annual shareholders report in full? Or sat in on an analysts call? Or read an industry report? Or listened exhaustively to talks or interviews given by their executives? If the answer is "seldom" or "never", then you've got a problem; there are banks, hedge funds, and private investors with entire departments dedicated to these tasks. For some analysts, understanding this picture of a company from the outside is their full-time job. If the premise of Fundamental Analysis is to find a special insight that others have missed in the data, you as an individual are unlikely to realistically outwit or outpace the competition in a race where milliseconds matter.
One alternative then, is try to compete not on the basis of superior analysis and pricing of capital assets. But instead, to trade on the psychology of market participants. As I mentioned above, one of the reasons markets aren't truly efficient is that not everyone has access to the same information or insights at the same time. Another reason why is because market participants aren't necessarily rational. They trade on bad information, or on instinct, or on hopes and dreams, or fears and anxieties. They may make decisions on things like favoring round numbers; "I'll buy the stock if it falls down to $10", even if $9.76 is the true fair market value, or "I think the stock can hit $100, so I won't sell until then", even if the maximum fair price is really $99. Individual psychology becomes group psychology.
The question becomes, if group psychology and behavioral economics are predictable fields of study with a firm scientific basis and repeatability, then can one develop tools to consistently evaluate how these behaviors translate into decisions by investors in the market, and therefore be a useful predictor of asset prices? Some say yes, and the study of markets in this light and the tools developed to do so, are broadly referred to as Technical Analysis. Effectively, applying pattern recognition to market data to predict future price movement and get ahead of it to make money. Technical Analysis purports to answer questions like - "what does a stock market crash look like, and what behaviors are visible in stock prices before it occurs?", or "how does a day with bad news make investors skittish versus greedy?", or "can you spot a pattern of trades being made by investors who want to cash out before they go on Christmas vacation?"
Now, does it work? That's controversial. The premise is that you can look at the historical price movement of a stock to make an inference about the psychology that is driving it. But that interpretation can be wrong, and is only as good as the information you have to explain it. For example, if a large investor in a company suddenly liquidates all of their holdings, a Technical Analysis approach might tell you that this is a clear indication that an insider is trying to get out because they anticipate major under performance of the company. Know that this is coming, you might decide to short the stock, expecting other investors will by rushing to sell as well. But for all you know, the insider got divorced and needed cash to fund a settlement, and the company is sound.
That in mind, one shouldn't treat Technical Analysis as a secret code to cracking the markets and making money. There are plenty of charlatans or other influencers out there who might try to convince you otherwise, and induce you to buy watch/read/buy their content or make trades based on their advice, using the trappings of Technical Analysis to pull the wool over your eyes. Technical Analysis is best seen as a curiosity or another tool in one's tool belt. If you want to buy this book, go into it treating it that way.
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Don't let this book or other people make you feel confident you will make money (especially in the long term) using only these strategies. It ignores all basics of valuation, industry and geopolitical context, etc and treats the price as the only thing that is relevant to the security.
So I guess what I'm saying is this is a bad deal, because even if well written and entertaining and a low price, using TA as if it is scientific or as your main basis for investing is a bad idea.