Recently a "posting" friend asked me about how does one learn about Technical Analysis(TA)- charts, patterns, indicators etc.
I have been studying TA for 8 years or so and have found it works for me far better than analysing financial reports etc.
Nortel, for example, went from low dollars to $124.50 per share from which point the price went down. If you listened to the rhetoric from management you would think that it was only a temporary correction, but as we all know now the price collapsed to just pennies.
Any investor who had used TA would have sold their shares above $100.
Maybe there are other posters on this board who are interested in learning about TA so here is my advice to my 'posting" friend.
" I have found that to be reasonably successful with TA it has to be a definite part of your life. I use it every day.
The ultimate goal is to be able to read a chart by just glancing at it. When you get proficient patterns will leap off the page and you will be able to "read" indicators also at a glance.
First, do not try to learn everything at once.
Second, go to www.stockcharts.com and learn all about their charts including the basics of Japanese Candlesticks.
Third, learn about chart patterns. The "bible" on this subject is
"Technical Analysis of Stock Trends" by Edwards and Magee.
http://www.amazon.com/Technical-Analysis-Stock-Trends-8th/dp/0814406807
This book is a must read and is well worth the cost because you will continuously use this for reference. Personally I did not buy one at first I persuaded my library to buy a copy.
This book deals exclusively with chart patterns, at least my old edition does, the only indicator it deals with in depth is "volume".
I strongly suggest you master chart patterns first before you study "indicators" such as RSI etc. An old mentor of mine used to say " The chart patterns plus volume give you at least 90% of the information you need to know".
Here are a few other books:
Technical Analysis for Dummies
Getting started in Tech. Anal. by Schwager
All about Tech. Anal. by Constance Brown
Remember this. "No pattern and no indicator is infallible, they can and do fail sometimes".
Welcome to the world of TA, a very exciting place to be."
Good Luck
Centurion
