Technical Market Indicators: Analysis & Performance (Hardcover)

by Richard J. Bauer (Author), Julie R. Dahlquist (Author) "The weekly meeting of the investment committee for a large life insurance company was in progress..." (more)
Key Phrases: average daily stock return, wrong cash, relative terminal wealth, Cash Avg Ret, Hold Terminal Wealth Relative Terminal Wealth, Terminal Wealth Buy (more...)

Editorial Reviews

Product Description
The use of technical market indicators has long been a controversial subject, highly regarded by some and treated with great skepticism by others. Yet, the number of indicators—and the number of individual investors and finance professionals using them—continues to grow. Now, more than ever, there is an urgent need for objective testing to determine the validity of these indicators.

Technical Market Indicators is a unique study of the performance of many of the most widely used technical analysis indicators. The authors explore in an unbiased, rigorous manner whether these indicators consistently perform well or fail to do the job. They explain which indicators work best and why, providing a clear picture of what the investor is likely to experience when using technical analysis.

Unlike other books on the subject, Technical Market Indicators provides a comprehensive testing of indicators that uses a large sample of stocks over a twelve-year time period, encompassing varying market conditions. Instead of using the traditional technical analysis charts, this detailed analysis takes a different approach, calculating numbers based on various relationships and letting the numbers dictate the decisions. This allows the investor to use technical methods without ever consulting a chart.

From an objective standpoint, the authors address both the pro and con arguments of using technical analysis and attempt to shed additional light onto the controversy through their systematic testing. They also alert the investor to the many different issues that must be addressed when using technical indicators, including performance measurement criteria, consistency of results, combining indicators, portfolio considerations, and leveraging.

This indispensable resource features:

• Comprehensive testing of sixty different technical indicators, fully described, including Trading Band Crossover, Relative Strength Peaks, Random Walk Breakout, Candle Belt Hold, and Volume Trend
• An explanation of the underlying concepts behind the indicators and their methods of calculation
• In-depth results of tests on each individual indicator, with over 250 pages of detailed tables
• An examination of trading rules that combine two or more indicators and a report of a sampling of the best combinations
• An annotated bibliography.

For those new to technical analysis or for the experienced analyst looking for some fresh angles on the subject, this one-of-a-kind resource is the only one you'll need to navigate the increasingly complex maze of technical market indicators.

Can technical analysis be used as an effective tool to enhance investment performance?

This question is currently on the minds of many investors and traders. The answer can be found in this invaluable, comprehensive resource, which provides a detailed analysis of the most commonly used indicators, explaining in detail which indicators seem to work best, why, under what conditions, and with which kinds of financial instruments.

"Do technical market indicators provide useful information to the stock trader or is it impossible to beat a buy and hold strategy? Bauer and Dahlquist tackle this controversy by rigorously testing 60 indicators on 878 stocks over a 12-year period. Their explanations of the indicators, the testing process, and the results are clear and concise. The 12 major conclusions based on this extensive research will provide the reader with plenty of opportunities to follow Bauer and Dahlquist's final advice: 'Keep learning and keep thinking. '" — Tom Bierovic Manager, System Trading & Development Education Omega Research, Inc.

"Who says a technician has to use charts? Here is a book that sidesteps traditional technical analysis and describes how tabular data can be more informative." — Ralph Acampora Managing Director Prudential Securities.

From the Publisher
In an effort to forecast trends, traders have devised hundreds of technical market indicators that dictate when to buy or sell. This comprehensive resource provides a clear, straightforward picture of these invaluable tools, analyzing which indicators seem to work best, why, under what conditions, and with which kinds of financial instruments.

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Product Details

• Hardcover: 426 pages
• Publisher: Wiley; annotated edition edition (November 1998)
• Language: English
• ISBN-10: 0471197211
• ISBN-13: 978-0471197218
• Product Dimensions: 10 x 7.3 x 1.4 inches
• Shipping Weight: 2.2 pounds (View shipping rates and policies)
• Average Customer Review: 2.4 out of 5 stars See all reviews (10 customer reviews)
• Amazon.com Sales Rank: #1,136,621 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

16 of 17 people found the following review helpful:

2.0 out of 5 stars Disappointing - Not Rooted in Real-World Trading, October 23, 1999

By	Michael W. Barrow (Lakewood, CO) - See all my reviews (REAL NAME)

The authors are both academics, and it shows. This book seems to be just another one trying to answer the age-old (and, at this point, boring) question as to whether or not technical analysis really works. I was attracted to this book for 2 reasons: 1) The authors present an incredible depth of analytical results, at least on the surface, and, 2) they cover a wide range of indicators and show how most of them are calculated. Their basic thesis, however, is quite flawed. They seem to want to compare the results of trading each technical indicator individually (as an island unto itself) with the results of a buy-and-hold strategy. In my mind, the power of each technical indicator is in its ability to filter out the "dead wood" and help you focus on the stocks that have the most current short-term potential. However, anyone who trades for a living knows that it would be foolish to rely on one indicator to determine when to make a trade. The power of indicators lies in their intelligent combination. The authors hardly go anywhere at all with this concept. Furthermore, anyone who makes a living trading will also tell you that it's your entry and exit strategy, as well as sound money management, that makes or breaks you. This book is not for traders - it's for academics who like to keep asking themselves the same boring question about whether or not technical analysis works. There are also better books out there that will teach you about technical indicators and how to use them correctly.

8 of 9 people found the following review helpful:

1.0 out of 5 stars save your money, April 11, 2000

By A Customer

There are several problems with this book. First, it is clear that the authors know next to nothing about trading. One of the purposes of using technical analysis avoid the volatility of a buy and hold strategy, so unless you are comparing on a risk adjusted basis, the conclusion is meaningless. Secondly, the authors don't reveal the values they plugged into the indicators. Did they test a 5 and 10 day moving averages, or was it some other value? How did they arrive at the values they used? And the way they constructed their database was totally biased.

8 of 9 people found the following review helpful:

1.0 out of 5 stars What a regal waste of time, November 16, 1999

By A Customer

What a monumental waste of paper! The writers are academics, and it shows. Their analysis has fatal flaws from a practical standpoint, and their conlusions are irrelevant. An example - they say that all short sale indicator are losers (they looked at a bull market). They dont even look at how the indicator did relative to the market. What's the point? Steer clear.