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on June 20, 2011
Unless markets are absolutely comatose they swing. There are swing points in uptrends, downtrends, and sideways movement. Ideally the short-term trader buys close to the low swing points and sells close to the high swing points. The savvy trend trader ignores the minor swing points; he simply has to identify when he is about to overstay his welcome. All this is patently obvious in hindsight, hellishly difficult at the hard right edge.

In Trend Qualification and Trading: Techniques to Identify the Best Trends to Trade L. A. Little offers what he calls a neoclassical model of trends that relies in large measure on defining and qualifying swing points. The classical model, developed and popularized by Charles Dow and his followers, has of late morphed into what one might call the reductionist classical model: "A trend is evident when two consecutive sets of higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend) occur within any given time frame." (p. 23) This reductionist model, Little argues, doesn't work: for one thing, it triggers premature exits.

In its stead Little offers a neoclassical model of trend. "The neoclassical trend model no longer consists of black and white--up or down and nothing in between. It displays varying shades of trend. It qualifies trend on a more granular level; a level that allows the trader to make intelligent decisions based more on probability than supposed absolutes." (p. 26)

For Little, trends should be qualified as suspect and confirmed. The two inputs necessary to differentiate between a suspect trend and a confirmed trend are swing point price and volume. In its most basic terms, "When the current price trades lower (downtrend) or higher (uptrend) than the previous swing point price and volume contracts, the trend is suspect." "When the current price trades lower (downtrend) or higher (uptrend) than the previous swing point price and volume expands, the trend is confirmed." (p. 28)

Of course, nothing is ever so simple in trading. First of all, it's important to identify swing points, both potential and actualized. Any current bar whose high is higher than that of the preceding bar has the potential to be a swing point high. It does not become an actualized swing high, according to Little, until it has remained the highest high for six successive bars. "The time element," Little writes, "can be optimized for differing markets and equities, but my research has shown that six bars tends to represent the optimal `wait time' across most equities, sectors, and general market indexes." (p. 31) This can be six days, six weeks, or six months.

Little offers numerous chart illustrations of potential and actualized swing points and of suspect and confirmed trends in a variety of market regimens.

Little admits that "although trend theory is a necessary condition to trading trends profitably, in itself it isn't sufficient. It is necessary to take the theory and integrate it into a workable and profitable trading system...." (p. 109) The second part of the book therefore deals with preparing to trade, entering and exiting trades, reversals and price projections, time frames, the trading cube, and trading qualified trends. Among the key concepts are anchor bars, which "identify chart price areas where significance exists" (p. 156) (as opposed to swing points, which normally define areas where a price boundary exists), and price zones (not lines).

Naturally, some of the material in the second part of the book is familiar. We encounter, for instance, support and resistance (though viewed as zones, not lines), measured moves (AB = CD), and the usual catalogue of gaps. But Little integrates the familiar with his own contributions and illustrates his points with marked-up charts.

Trend Qualification and Trading is an intermediate-level book for chartists. The only things on Little's charts are price bars, volume, and labeled lines and zones that go far beyond the standard trend lines. For those who like to mark up charts, this book will be a satisfying read.
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on June 11, 2011
I work in the industry on the buy-side, helping to build trading systems and I have a good amount of exposure to strategy development. I have read a mass of books on finance, trading, technical analysis and trading algorithm development. Theres some good books out there, some ok books, some dead-awful books and some really great contributions to the field. This book is a great contribution. This book covers a different approach to looking at the markets through what is clearly a well understood view of a complex world. From that deeper understanding, Little has formulated and systematized a way to increase your probabilities of succeeding with your trading. His formulation helps you to discern the style of market you are in, using an interesting technique that is extremely accurate at correctly qualifying the trend. I found I had to read the earlier chapters multiple times, not because the concepts are difficult, but ironically because they are brilliantly simple. The book is not just about qualification of trend, though Little spends a good amount of time explaining all of the different types of markets (bullish, bearish, ranging, but he qualifies them even further to great accuracy) and how to define them using his simple yet profound approach. From there he further explicates the finer aspects of trading with or against the trend, how to extend canonical technical analysis principles such as support and resistance lines into zones, which have even more chances of allowing you succeed with trading.

My view of the trading space has been deepened greatly by this book. I used the techniques to make some successful ETF trades recently, as well as recognizing I had made a bad trade (before I had read this book), which I closed out right before the price tanked. I did that because I spotted a suspect bear was turning into a confirmed bear (suspect and confirmed are further extended ways to categorize trends Little introduces you too in the book). The book isnt just about trends. Little shares his deep knowledge of the practice of trading, and it is that that makes this book extra special.

In my career I have come to realize there are a thousand and one authors and many more books on the subjects of my craft, but I only have a small shelf to house the books that I really need. That handful of books embody the master crasftman at work; they embody the essence of the profession. With the right mentors, thats all you need. Others will stand on their shoulders, others will reformulate or regurgitate, and none will have a place on my bookshelf. On the originals deserve that right. Littles concepts, approach and techniques, as well as his depth of trading experience and knowledge, is openly shared with his reader. He shares everything, from the words within the text to the words between the text. Thats why this book is on my shelf. Buy it.
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on May 8, 2011
Trend Qualification & Trading is a must read for all traders that take technical analysis seriously. Little has taken the core trend theory crafted by Dow and Hamilton and added a crucial element, qualifying it. This method of qualification has helped me better analyze and understand trends, which in turn have made my trades much more profitable.

I first encountered Little's work while visiting Thestreet.com's technical analysis videos. Interested in his work and these new concepts I had never seen written or talked about elsewhere, I set out to learn more and subscribed to his site at Tatoday.com; reading each of his articles daily where he explained these concepts as applied to live trades that were
present at the time.

For me, the book has been a blessing as now I have the opportunity to understand his system completely rather than trying to learn it piecemeal through the daily articles and videos. With this new way of defining trend and with the trade implementation ideas like anchored support and resistance bars and zones I have achieved tremendous trading results. I am mostly a day trader (not something he talks about much in his book although he clearly describes how this works on all time frames including day trades) and these ideas have produced huge results allowing me to grow my portfolio by
approximately 200% in under a year.

These concepts do work and this book is a must read. Little's thorough explanation of his systematic approach has me looking forward to even greater gains in the coming months and years now that I have a more comprehensive resource in my hands.

If you are serious about trading, then read this book. In fact, I'm am in the midst of re-reading it because one read simply isn't enough. This book is a resource - not just a read.
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on December 23, 2011
As someone who has read too many books on Technical Analysis, it's rare to come across one that makes new contributions to the field and is so well written.

Starting with new contributions. The idea of using volume in Technical Analysis is probably almost as old as Technical Analysis itself. But where Little forges new ground is in the use of volume to mark significance in trend. This isn't the simple price trend diverging against volume trend analysis that is most common, but a deeper and more thorough analysis of volume of a single bar against other bars. Conceptually simple, but at the same time quite new in its approach. In addition, there are some very good ideas relating to the use of significant price zones instead of pure pivot points, and sound ideas on using these zones and volume in trade and money management.

In addition to making new and thoughtful contributions, the author has put together a book that has to be one of the most well written Technical Analysis works out there. It is evident that much thought and care was put into making the book organized and tight. The explanations of the many example charts are thorough and clear, and the book thoroughly explains each topic before moving to the next.

I purchased the book as a kindle edition, but quickly found myself wishing I had purchased a hardbound copy. I pulled out a notebook and made a lot of notations, and then went back and covered many sections again. As another reviewer commented, this is a book that, although quite simple in concept, needs to be read a couple times to fully comprehend. Even a once over will give the reader some actionable ideas, but a thorough understanding of the concepts will leave the reader well-armed to do battle in the markets.

Lastly, it's rare nowadays to read a book on any technical analysis topic without being constantly sold the author's paid subscription site. I actually had to search around a bit to find the author's site, and it wasn't until about 50% of the way into the book that the author even made mention of his site, and only a passing mention at that. There are a few other references later in the book, but at that point the site becomes a useful tool for helping the reader comprehend everything that the author has put together.

In short, I highly recommend this book for traders looking for ways to take a fresh look at a seemingly old topic. There are many new and actionable ideas for those willing to put in an honest effort.
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on October 2, 2012
I first want to say that I love L.A. Little's trading methodology outlined in this book. The concepts of swing points and anchor bars denoting areas of significance on a chart make perfect sense to me. The use of volume to qualify reactions at these natural support and resistance levels ties it together nicely. While not ideal for very short term traders in my opinion, neoclassical charting is great for swing traders and position players. I've grown tired of rsi, macd and stochastics and the constant confusion of mixed and false signals they create. This method is much more specific when it counts. And when trends are 'suspect' so should your willingness to put on big positions. Increase your risk when the conviction grows.

However, this book is not without it's flaws. Firstly, it is not an easy read. Some authors of trading books create a very easy flow to their methodology and message such as Miner & Carter. L.A. Little has a more difficult style of writing. This is very much like a text book but with more redundancy. I realize L.A. is attempting to drive certain points home, but some of the allegory and explanation drones on. It needs more steps for execution (possibly in the form of cleaner summaries) and less overall text. L.A. has a technical background and it shows in his very technical writing style...I sympathize, I'm a very technical writer myself. Also, the fact that swing points require 6 bars between them feels arbitrary. Why 6?

Overall, I like this book and this method...I liked it so much, that I just bought L.A.'s followup "Trend Trading Setups".
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on September 5, 2011
Trend Qualification and Trading: Techniques To Identify the Best Trends to Trade (Wiley Trading) Unlike the flamboyant pitchman on CNBC who boasts of trend trading his way off a park bench in Central Park to make millions and now offers an exclusive program on TV, L. A. Little offers a comprehensive 298 page volume (chapters 1 - 5 covering definitions, classical & neoclassical theory & qualifiers applying to any stock and/or ETF; chapters 6 - 11 covering applications) that is extremely intelligent and well-crafted.
There may be a temptation to skip to the application which highlight Little's Trade Trend Matrix & Trading Cube (no free lunches here, hands on involvement by the reader is required) but this reader highly recommends a review of the theoretical chapters to grasp the fundamentals of key terms & their meanings as well as getting a firm grasp on the good, the bad and the ugly of classical & neoclassical trend models as Little sees them.
Thank you Mr. Little for a much-needed, and dare I say classic, body of literature on how to make intelligent and profitable gains in investing/ trading.

David Kirby kirbside@dslextreme.com
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on June 15, 2011
You may have to read this book more than once and come back to it often but chances are, if you're serious about trading, it will take pride of place on your bookshelf.

No empty promises here but instead a systematic way of aligning price action and volume at key points in time to help you recognize the price trend as well as assign a measure of confidence to it indicative of how likely it is to continue. It then combines this with the use of anchored support and resistance zones to identify when you should look for changes to the trend.

It is extremely thorough with a detailed and exhaustive list of examples and also does an excellent job on timeframe analysis. In particular, it introduces the trading cube that provides you with a one-stop view of the prevailing trend across multiple timeframes for the stock, its sector and the overall market.

All in all a great resource. Read it, re-read it and refer to it often.
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on May 24, 2011
Having read a number of books on technical analysis in an effort to make myself a better investor, I gave "Trend Qualification & Trading" 5 stars. With this book, L. A. Little has made a significant contribution to the practice of technical stock analyis. He presents new thought, built upon classical trend analysis, that you won't find anywhere else.

My personal style is to be more of an investor than a day trader. I prefer to develop investment (as opposed to trading) ideas based on fundamentals and an analysis of value. Like many investors, I have lost faith in the old "Buy and Hold" philosophy and have added various technical analysis techniques to my tool kit in an effort to identify lower risk entry and exit points. The concepts presented in this book are a different way of evaluating the current market risk of broad markets, sectors, and individual stocks. I have applied these concepts to my own trading for around a month now and definitely feel they have improved the quality of my buy/sell decisions. Once you read this book, my bet is you will never look at a stock chart in the same way again.

One of the previous reviewers complained that the second half of the book contained no "well defined rules" for active traders. I am certainly not a day trader, but would suggest that those of you who are may want to check out Little's website, [...], to develop additional understanding of how Little applies the book's principles to his own day trading.
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on May 19, 2011
I give "Trend Qualification & Trading" a top rating due to the author's introduction of new material to the art of technical analysis. LA Little provides very clear definitions and detailed charts to illustrate the original concepts of his trend qualification method and the implications for trading. Also, original material is covered for identifying support and resistance and how it impacts trading. The author's sensible approach to managing risk and evaluating the probabilities of a successful trade using the concepts in the book, demonstrates his respect for his readers. No get rich quick promises here. Just original information clearly explained and illustrated.

I highly recommend this book to anyone who wishes to learn new ways to improve their trading.
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on June 27, 2013
I have read a lot of books on technical analysis some good and some not. L.A. Little offers a comprehensive, well written, and easy to digest way of looking at price volume action without the distracting noise of technical indicators. A pure and systematic way of trying to understand and qualify what the chart is really telling you through an emphasis on price and volume.

The book introduced me to a way of looking at the chart from a slightly different perspective from other material I have read. This has helped add clarity to the picture of the market for me and surprisingly it has even provided me a better understanding of some of the other material I have read. In my case this has complemented and enhanced my trading style rather than completely redefining it.

The book is comprehensive and worth a read and re-read as you contemplate, digest, and actualize this approach. I for one need to assimilate most things by doing so I incorporated some of his ideas into an Excel model for my personal experimentation and felt he provided sufficient detail for the most part to understand and simulate his approach. For those who don't want to experiment on their own or prefer the finished result, he provides the tools on his "TATODAY" site.

In summary, this is one of the few books I refer to often and is always with me because it is part of my Kindle library. I liked it well enough to buy his follow-on book "Trend Trading Set-ups".
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