Customer Reviews

Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)

5 star:		(87)
4 star:		(26)
3 star:		(9)
2 star:		(5)
1 star:		(1)

 

 

It is entirely possible to spend more time reading trading books than doing any actual trading. This is one of the few books that will remain on my bookshelf and I highly recommend it FOR WHAT IT IS INTENDED - an excellent reference on technical analysis (TA).

What I was looking for was something to provide clear, concise descriptions on various technical indicators across all types - trend analysis, price patterns, candles, oscillators, etc. And Murphy not only does this well, but his work provides enough information that I do not see the need for another book on TA on my bookshelf, even though I know that other very good books are available (e.g. Pring). But this one is enough for me. It is well organized and indexed so that I can rapidly look up something while I am setting up trades and get the basic info that I need.

One surprise was how well written the book was and how much I enjoyed reading it. I expected a dry reference book but instead found an excellent and engaging read, perhaps with the exception of the chapter on point and figure which was not up to the rest of the book. (If you are completely new to TA, you might find it less entertaining, but in comparison to the dry tome that I expected when the monster-sized book arrived, Murphy is remarkable in his ability to convert most TA topics and examples into 'normal' English.) He also is not a proponent or zealot about any one indicator type, which I appreciate. He does a good job of describing each within the context of its value without trying to convert anyone to any specific indicator. As I do not believe in magic bullets in trading, I appreciate his straightforward approach.

Let me also note what this book is NOT so that you do not buy it for the wrong reasons:

a) As you should gather from the above, this is not a trading system. Murphy will not tell you which indicators to use most or in which combinations to produce the best results. He will provide insight into many indicators and classes of indicators but he is NOT trying to convince you to use any specific indicator in any specific way. So he doesn't try to convince you of WHAT to use, just helps you understand WHEN, WHY and HOW each indicator type is used by various traders.

b) Also, this is NOT intended to be the complete, in depth statement on any of the topics covered. For example, his section on Candlestick formations is simple, clear and includes many examples, but it is undoubtedly not the same as picking up Nison's works on Candlesticks. Similarly, you can find many books dedicated to Elliot Waves, Fibonaccis and other topics. Murphy provides the basics, but do not expect as thorough an explanation or justification as a dedicated book would provide. Then again, expect a dedicated book to try and convince you why its particular system or method is so much better than any other, something that Murphey will not try to do to you!

c) Finally, this book is NOT intended to convert people who do not accept TA into believers. Frankly, it is much easier to get most people to accept that `fundamental analysis' affects a stock's value and price, but it is harder for most to understand and accept that simply analyzing the stock's price and related indicators can predict future moves. Murphy's opening chapters include some simple basic background on TA, but verbal explanations have limited value in convincing a pure `fundamentalist' that properly used technical analysis works. The only way to break down this barrier, IMO, is simply to learn and use various indicators for a while to begin seeing how predictive they can be. Murphy does not try to convert - he simply provides a learning reference. From there, anyone using TA needs to practice to become proficient.

So, in summary, I highly recommend buying this book for what it is intended to be - a reference book on technical analysis. It does this job excellently.

Investing isn't easy. Investing profitably is even harder. As a result, investors are always looking for that `angle', that `edge' that will help them realize more consistent profits.

In the past 2 decades, many on Wall Street have come to believe that technical analysis of stock charts is one of those tools. Having worked in the financial services markets since 1987, I do believe that technical analysis can be a helpful tool. And if you are looking for a definitive source of TA, then look no further.

Technical Analysis of the Financial Markets by John Murphy covers all the basic aspects of TA: philosophy, chart construction, fundamental vs. technical analysis, trends, major technical pattern recognition, moving averages, oscillators, times cycles, computer trading systems and much more. He also covers different methods of charting, including bar, point and figure and candlestick (be aware that most of the analysis techniques he presents apply to bar charting, not PnF or candlestick).

What I like most about the book is that it written clearly, simply and logically. It uses many graphical examples that SHOWS the reader what to look for. It does not rage on about the merits of TA (which many investors feel is complete hooey) but how to apply basic (and sophisticated) TA techniques. I use TA frequently in my business and find that it helps me manage my client's portfolios more effectively, especially when it comes to SELLING a position, whether to lock-in gains or limit losses.

If you are a TA convert, or if you have an interest in learning more about it, this book is a useful guide and should be purchased. Today, it remains one of the few investment reference books that I keep in my office.

This is by far one of the best sources on Technical Analysis that one
can be lucky enough to find. Mr. Murphy has a clear and simple way of
conveying the subject to us.

The book starts off with the
Philosophy behind Technical Trading, Dow Theory, chart construction,
then moves onto the basic concepts of Trend, and General Patterns,
Moving Averages, Oscillators, Japanese Candlesticks, Time Cycles,
Money Management, and eventually leads onto a Checklist.

What I
like about Mr. Murphy is his way of showing and proving a point. Let
me digress here to show you what I mean: Say you had a daughter and
wanted to show her how to figure out the area of an Isosceles
triangle. Well, you could tell her to memorize that it is
base*height/2. Or if you really wanted her to learn it thoroughly you
can show her how to draw a parallel line to the height, then join the
ends to make a nice rectangle. Then to compute the area of a rectangle
just multiply the two sides, one being the height, the other being
half the base. She will then "derive" this and
"understand" how they got the formula. You see, then she can
compute the area under a hexagon or a tetrahedron or any complex
object.

Well, Mr. Murphy will show us the same way and
"derive" for us concepts such as how a resistance line later
becomes a support line! The reson for this is so amusing that after
one reads about it we just go "wow..."" Now I understand why
this occurs". You will see how Trend is the most important
concept in this field, how some indicators are trend following and why
at other times we need other indicators for sideway markets. You will
see how a Moving Average is nothing but a dynamically updated
trendline. You will see examples of all kinds of charts, indicators,
and explanations. Everything is derived and it is this derivation that
makes this book stand out.

Chapter 16 is an important one to pay
attention to called "Money Management and Trading
Tactics". You see, the tactic behind every action has a great
significance in its outsome. I'd say this is half the game, knowing
how much to devote to a trade and what to risk and how much to
risk. If we lose the "base money", which is the money we use
to trade, then the game will be over, so we better be careful about
what percentage to use for a trade and what to do with the profits
and/or losses. You need to make rules and stick to them that suits
your style, here's when the discipline saves you.

I used to make
fun of Technical Analysis and did not believe in it, but after having
read this book and seeing it live in action, I think this is the only
way to signal important events that are about to happen, and the best
thing about it is that the chart reading that applies to a 10 year or
a 1 year charts, also applies to the intra-day charts! This is good
for everybody from day traders to the people who do this for a second
income. You can go on to your daily life, check that things are in
order at night and all indicators are in place and know that your
portfolio is in order and on track! ....

Good Luck! Steve.

John Murphy was the technical analysis commentator on CNBC for the longest time and was on TV almost daily for several years. He now runs his own company, murphymorris.com. Before you think about buying this I ask you "Why are you thinking about buying this book?"

If you are seeking a good introduction to technical analysis then try his cheaper and easier to read book entitled The Visual Investor. If you read that book and want to learn more about the subject then read on!

This behemoth of a book (over 540 pages total!) is easy to read and learn but is definitely more suited and designed for those seeking intermediate to advanced knowledge on technical analysis. Don't get me wrong; you can start here but the odds of you finishing, if you are a beginner, are slim.

Murphy starts with the basics, then goes into more advanced principles and then explains linkage (how certain sectors outperform when others under perform.) He talks about commodities and equities throughout the book and it is a very good evaluation of market trends. There are tons of graphs to help the reader along.

This book definitely covers all the basic aspects of TA: philosophy, chart construction, fundamental vs. technical analysis, trends, major technical pattern recognition, moving averages, oscillators, times cycles, computer trading systems and much more. He also covers different methods of charting, including bar, point and figure and candlestick (be aware that most of the analysis techniques he presents apply to bar charting, not PnF or candlestick).

I personally believe that technical analysis should be incorporated into just about any decision-making process when investing for any fund, stock and/or options. While fundamental analysis should be where most efforts start applied technical analysis can help people in picking entry and exit points to "avoid fighting the tape" which is a real problem for investors in the market. If you are a trader you are missing so many opportunities by not learning TA. This is the book to learn TA with! Get this book and the accompanying study guide.

Starting of with the positives, this is a great easy read for those with no prior experience in technical analysis. Explanations and examples are simple and straight forward. The basic tools are heavily emphasized here. Book is deceptively long because the text type is quite large. Some diagrams are not easy to read.

This book, unfortunately, is not for the intermediate trader. There is too much emphasis on simple trends and outof date wave analysis. More current topics (such as oscillators and divergence analysis) are only briefly touched on. This is not a reference type book but more of an introduction to technical analysis...still a good read.

If there is a single book on Technical Analysis that I would recommend to anyone, this is it! Mr. Murphy covers quite a large spectrum of Technical Analysis and yet remains easy to understand for the beginners and intermediates alike. The methods are applicable across a wide range of financial instruments. Also, chart examples include market data that is recent and modern enough to reflect the faster online trading markets. You can't go wrong adding this great book to your collection.

10 out of 10

I have not finished reading it, I am only 60% of the way through, but I had to write a review NOW to help you decide.

Chances are, the price overwhelms you, and you are looking at many other TA books trying to find an equivalent cheaper one. There aren't any.

This book is worth ever dollar. Many other books make TA seem so complicated, difficult. Furthermore, it gives a much deeper understanding of what it explains, many other books simply tell you something but you don't learn why, how, what to do if there is a variance, etc etc you get the idea.

It is a huge book and very well presented. The graphs are well located to the text, easy to understand, each with its own detailed annotations directly underneath as well as references in the text.

It is recently updated, and might I say ~thoroughly~ updated, it has a section on Japanese Candlesticks which makes obsolete a previous book I bought (by the same author, looks like he pasted most of it in this book). Look at the contents, it covers most everything, including Elliot Wave theory. They have done an excellent job at updating it.

There are other TA "Bible" books out there, classic masterpieces, which are very good, however the recent updates made to this one, combined with its easy to read, learn and wonderful presentation make this the winner.

If you get one book on TA, get this one. It is worth the money. You will save money in three ways:

1. if you get another book instead, you won't have to purchase this one later when you realise how lacking the other one is (or worse, buy several trying to fill knowledge gaps)

2. you will make better trades

3. you will save time, learning faster

I really cannot emphasise how well the concepts are explained. This is a class act all the way, I highly recommend it, I cannot believe there are not 80+ positive reviews, I guess all the other TA people out there either want to keep the knowledge to themselves or are too lazy.

If you already own a previous version of this book, I would even recommend getting this latest one as well.

Also I recommend The Disciplined Trader, Candlesticks by Nison.

Good luck!

This is an excellent book for someone who knows their market basics, and perhaps a little technical analysis, and wants to move toward a more intermediate level in the subject. The book is extremely clear, well-written, and balanced in its coverage. In a field with much poor writing and extravagant claims it's almost a joy to read (if one is so inclined). It was easy to spend the better part of an evening getting through 100 or more pages without getting confused or bogged down, or feeling like it was hard work. I found most all of it very thought provoking.

While the book basically focuses on trend-following techniques -- about which I have many reservations -- the book also covers numerous contrarian tools as a way to time an entry into the predominant trend during a shorter-term pause/pull-back/consolidation period. The emphasis is as much on charting techniques as on strictly numerical indicators, and Murphy is probably at his best in explaining how best to use this or that item in the toolbox to ones advantage and what its limitations are and what can go wrong. The overall tone is very solid and realistic. I especially liked his clear exposition of the important differences between the futures/commodities markets (where many of these techniques originated) and the stock market.

I'm marking it down one tick for a couple of reasons. First, I would have liked more quantitative depth; qualitative discussions such as this can only take one so far toward actual applications. Second, there's virtually nothing here on options and their effects on the markets; the same could be said about computerized trading systems (some coverage but not nearly enough). Third, there were a couple of glaring ommisions: in talking about saucer bottoms he doesn't mention the well-known tea-cup-with-handle formation even though the handle shows clearly on the chart he uses to illustrate it; when talking about simple moving averages he neglects to mention the important "box-car" effect of big changes moving out the tail end of the averaging period; and while Wilder's RSI gets plenty of good coverage the recipe for it he gives is a bit misleading in that it only allows one to construct the first value, not any subsequent values. And, fourth, I think he gives period analysis and Elliott wave theory more attention than is deserved and never mentions the application of Fourier techniques in this arena; I could say much the same with regard to ideas based on Fibonacci numbers (perhaps I'm yet unconvinced in these areas). So the book could have been better in some places.

For their historical significance I especially liked all the charts from the 1997-9 time period which show things in the glory days just before the top of the market bubble in 2000: Intel at $100 ($20 today), Bristol Meyers at $95 ($20-25 today), crude oil at $16, etc. [I was trading Micron (pg 127) actively during the period when it spiked to $60 ($12-13 recently) and remember those days well]. So the many charts used to illustrate various things were a bonus to me, though they remind me there was no mention of market manias and how to correctly read extremes and their subsequent breakdowns. Perhaps it would have been asking too much for a closing chapter prognosticating the future as he saw it then, though it would have been interesting had he thought to write such a chapter. This is still a very good book for what it is. 4+ stars.

This book taught me from the absolute basics how to get tons of useful information out of a chart. Several tools are detailed chapter by chapter, and each one can prove very profitable for any trader. Reading this has taken me from relying on fundamentals to being a candidate for Chartered Market Technician (CMT). Mr. Murphy even introduces important concepts about which there are whole books written, such as Japanese Candlesticks and Intermarket Analysis. If you buy only one book on market technical analysis, make it this one.

I am not going to write a review defending or attacking the practice of technical analysis, which is roughly defined as the use of historic trading data, especially prices, volume, and open interest, usually visually displayed as charts, in order to predict future prices of securities, currencies, and commodities. If you believe in pure market efficiency or fundamental analysis only, you're not interested in technical analysis and should stop reading right here. If you are interested in technical analysis, this is an excellent place to start.

Description:
Murphy's basic text, updated substantially from its first edition, walks the reader through the fundamentals of the most common forms of technical analysis. Each major topic typically receives a chapter giving basic definitions and an introduction to the subject. Topics covered include but are not limited to:
* Dow Theory, the beginning of Western technical analysis
* Basic chart construction (i.e. how to draw a bar or candlestick chart)
* Classical charting formations and techniques
* Trends, how to identify and draw
* The use of volume and open interest
* Japanese candlesticks
* Point and figure charting
* Oscillators
* Elliott Wave theory
* Time cycles
Murphy's text addresses specifics of both futures and stocks. The book was originally written for the futures markets, but material salient to stocks, such as market breadth. This book is part of the curriculum for the Market Technician Association's CMT (Chartered Market Technician) Level I exam because it gives an overview and introduction to many major technical analysis topics.

Opinion:
Murphy's book has long been one of the classics of technical analysis literature. This book will allow the reader to quickly become familiar with the field; even experienced traders often keep it on their bookshelf to refresh their memory once in a while. The major flaw behind this book is that, due to its encyclopedic breadth, each topic receives only an introduction. It is unlikely the novice technician would be prepared to trade off Japanese candlesticks or Elliott Wave counts using only the material in this book. Murphy's book is, however, an excellent place to start and specialty books can be purchased later for any topic in which the reader is especially interested.