The most recommended technical analysis books

Technical Analysis is traditionally denigrated by the academic community, not without good reasons. But as a matter of fact, traders and practitioners used them (also, not without good reasons) extensively, to the extent that Technical Analysis is often qualified as “self-fulfilling prophecy”.

There is therefore a good reason to be more or less familiar with these techniques, at worst, following the adage “Know your enemy”. The problem, with Technical Analysis, is that, as it is not a true science, it is not easy to find books about it, written in a serious way. This is however the case with this one, covering all the usual technical analysis methods, both the graphic and the numeric ones, in a clear, concise, and exemplified way.

Greg Morris created one of the first (if not the first) candlestick charting educational books a few decades ago and set the standard for learning about this technical analysis technique.

We had worked together on my newsletter for a period of time as he helped create some of the charts (non-candlestick) that I used. We became personal friends. One of the greatest honors for me is that he wrote the intro to my book. How can I not like him?

Greg Morris and I have been friends for decades. He wrote the introduction to my book but regardless I admired him as a great market technician and contributor to technical analysis. He also helped me personally creating charts for my VR newsletter and went out of his way doing so.

We sometimes think patterns like a double top or a triangle are old-fashioned and not useful, but Bulkowksi not only demonstrates but proves otherwise. He set the standard for how technical analysis should be presented—with hard facts about how a pattern is identified, how well it works on specific securities over time, its gain/loss ratio, and other data. And he provides updates on his website. Bulkowski has also done simillar work on swing trading and candlesticks. I like Bulkowski’s work because he uses the scientific approach of forming a hypothesis, testing and re-testing it, and honestly reporting whether a hypothesis is valid (or to what extent it can be trusted).

The subtitle is The Untold Story of the Scientific Betting System that Beat the Casinos and Wall Street. This book is an easy-to-read narrative of the intersection of the grimy underbelly of betting--with high-minded math. It reminds you that trading is not conducted in a clean little bubble. Technical analysis can give you an edge, but trading is still engaging in battle with opposing forces; strategy and tactics can count as much as building an elegant technical system. 

Your opponent on the trading battlefield will try to trick you, like a general in real warfare. He may keep selling and selling after you have bought, triggering a sell signal in your trading system. He is hunting for your sell signal. The mechanical response is to sell—your system says sell, and you should follow your system. To exit a position when the market goes against you is named a stop,… show more.

Another trader who writes about the reality of trading for a living, Dr. Elder has really laid out many of the critical fundamentals of a successful trading operation in this book.  

Engaging and easy to read, this book will likely shock you with its simplicity, focus on planning, and conservative “grinding” for cash-flowing the markets.

Trading has this sexy image of well-dressed men screaming into phones, before they head out to their yachts. In reality it is supremely boring and the best traders I know live lives of complete freedom… Often totally unrecognized by their neighbors. 

This book gives you a real insight into the day-to-day operations of a career trader and it’s an important perspective shift for anybody wanting to make trading a significant aspect of their life.

This book has been the bible for technical analysts since its first iteration in 1985 and is a comprehensive guide to the established knowledge of the markets. It covers chart structure, trends, moving averages, oscillators, technical indicators, and all types of charts in the 542 pages of the 1999 edition, which added candlestick patterns to the older version, and is a great reference guide for all the traditional charting.

However, that is the latest edition, so it contains nothing on Ichimoku (cloud) charting, an incredibly interesting if esoteric development, which is one of the reasons I felt that I should write my book including these latest advances.

Trading Systems is an encyclopedia of all the technical ideas ever devised and the trading methods associated with the technical ideas and how those methods can be used to manage risk. Like any encyclopedia, this book has far more information and insight than you can possibly absorb in a single sitting—or 50. Kaufman presents thorny math subjects with the math (if you can stomach it) and also in prose for those of us less-gifted. When I read some headline or assertion about a market that strikes me as absurd, I head straight for Kaufman to find out what he says about it. This usually ends in a reference to another author who has studied the topic in deep detail—Kaufman names just about every chart guru that ever developed anything worth knowing. I also consult Kaufman when I think I see something on a chart and want to know what it… show more.

Technical Analysis of Stock Trends was the first book to produce a methodology for interpreting the predictable behavior of investors and markets.

It revolutionized technical investment approaches and showed traders and investors how to make money regardless of what the market is doing. It displays all the basic technical chart patterns that are still widely used today.

The book remains the benchmark by which all other investment methodologies are measured. An indispensable reference for technical traders, investors, and finance professionals. If you wish to become a technical chartist, you have to start here.

Robert and I were friends and co-members of the Market Technician's Assn back in the late 1980s and I was honored that chose my Volume Reversal Indicator to be mentioned in the book.

I was a friend of Robert Colby and co-members of the Market Technicians Association and was personally honored he incorporated my VR (Volume Reversal) in his book. I also felt he was way ahead of the crowd in putting together such a comprehensive book and I wanted to honor him with a mention.

To say this book is a bargain is an understatement, as it is only $4.99 in Kindle format. For me, it fills in what may be overlooked by those who have a passing knowledge of technical analysis and only focus on the look of the charts, and that is the importance of volume, you know, the little bar at the bottom!

Volume is such a powerful indicator but is easily disregarded in the excitement of a dramatic price move. Yet it is the confirmation that what you are seeing is not just an apparition and will lead to the expected outcome. All traders should read this!