Product Description

Harness the power of technical analysis for trading success

Technical analysis is a powerful trading tool, but for maximum success and profit it must be skillfully integrated with other key trading tools. Technical Analysis and the Active Trader explains how to seamlessly combine technical analysis with other elements to help you understand the context of price moves, eliminate representative bias, and more.

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Product Details

• Amazon Sales Rank: #1189185 in Books
• Published on: 2005-11-22
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 256 pages

From the Back Cover

Go beyond the tired rules of technical analysis to uncover a wider range of profitable opportunities

Technical analysis can be dangerously unreliable, as most technicians will reluctantly attest. Technical Analysis and the Active Trader presents an entirely new approach to the markets, one that combines traditional technical tools with fundamental analysis, behavioral finance, and more to help you understand what makes prices move.

Author Gary Norden is a veteran professional trader, as opposed to a theory-driven mathematician. In Technical Analysis and the Active Trader, Norden examines technical analysis from a trader's perspective to reveal:

• Flaws in bedrock assumptions that form the basis of technical analysis, and strategies you can follow to overcome those flaws
• Findings of modern behavioral finance, and how to use them to gain valuable insights into the decision-making patterns of other traders
• Two trading techniques that will consistently signal when you are about to make a bad decision-and what you need to know to implement each

Decades-old technical analysis strategies are no match for increasingly complex markets and traders. Technical Analysis and the Active Trader shows you how to bolster your program by integrating technical, fundamental, and psychological analysis into a well-rounded investment approach that plays off the strengths of contemporary markets, as opposed to the wishful thinking of obsolete technical analysis.

Improve your trading with this dynamic combination of fundamentals, technicals, behavioral finance, and commonsense

Veteran traders know the perils of relying on easy answers. They know that technical, chart-based indicators and unproven rules of thumb might lead to the occasional lucky call--but they will never lead to long-term market success.

Technical Analysis and the Active Trader introduces you to a powerful trading approach that integrates knowledge of fundamentals and trader psychology with specific technical indicators for a sensible, structurally sound trading program. This eye-opening book breaks through the numerous fallacies of technical analysis to show you how to truly understand markets, companies, and other traders, limiting your risks while giving you a broader sense of which direction markets and traders are likely to head next.

This straightforward rulebook will give you the knowledge you need to uncover lower-risk opportunities and get the most from those opportunities. It reveals strategies that savvy traders use to:

• Scalp or flow trade business entering the market, behaving less like a gambler and more like the “house”
• Use the biases and heuristics of behavioral finance to understand trader psychology and improve your own decision making
• Determine why traders are forecasting a certain outcome, and trade against them if the facts warrant
• Track bond market performance to either support or disconfirm stock market trends
• Determine when good or bad news has already been priced in by traders, and go long or short based on facts instead of hunches
• Link stop loss levels to your preset profit targets as opposed to irrelevant past performance numbers
• Weigh up possible outcomes of a trade, then chose your positions on the side that offers the least resistance to a positive outcome

The majority of technical trading instructors and guides would have you believe that trading is a clear-cut process of unswervingly adhering to rote charts and signals. If that ever worked, it certainly doesn't anymore. Technical Analysis and the Active Trader adapts the traditional claims of chartists and technical analysts to new research and changing realities, showing you how to use all available market data to make informed, intelligent, and profitable trading decisions.

About the Author

Gary Norden is owner and director of Marketwise Trading & Consulting, a provider of training materials on trading strategies, risk management, and techniques for successfully trading various financial products. Norden began his full-time trading career at the age of 18, and at the age of 23 was asked by NatWest Markets to run its options trading desk on the London International Financial Futures and Options Exchange (LIFFE). A regular contributor to professional periodicals including Technical Analysis of Stocks & Commodities and Your Trading Edge, he has taught graduate trainees and junior traders at major investment banks and worked as a consultant to investment banks and trading software developers.

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Customer Reviews

An end to trading BS
Gary Norden describes trading how it actually is - hard work. So many people get involved in trading thinking it's an easy way to make money, and many techinical trading systems lead them to think this way. Most of these people ultimately lose money. Those that succeed develop a deep understanding of their markets, understanding that requires time, hard work, and intelligence.

Although Mr. Norden claims he didn't intend to write a "how to trade profitably" book (and it probably isn't possible to write such a book) I found his general advice excellent: understand the context of price moves, weigh possible outcomes and expected returns, and look for disconfirmation in other markets.

Don't bet the bank on TA!
Let me start by saying that I know Gary personally and he has told me to be completely honest about his first book. Firstly, this book is not positioned as a "How To" book. It would possibly sell more if it were because Gary is a successful trader in his own right. The book is primarily an in depth look into how markets REALLY work and how viable is technical analysis in its ability to react appropriately to market information. He lays some compelling evidence to suggest that technical analysis alone is grossly inadequate as a tool for trading the markets. The price alone is not the sole arbiter of market direction and in fact can be led by market information. He debunks popular assumptions made by technical analysts and challenges us to think more systematically when making our trading decisions (ie not just using TA but analysing other pieces of information). Even if you don't agree with his findings, it is important to read this so that discussion can be promoted without making assumptions that could well prove to be costly. The emperor has no clothes, and Norden is pointing at him and telling you that. He doesn't just do that though but also points you in the general direction of where to start looking for a better way to trade. It is his desire not to become a market guru but to treat us as intelligent people who have a choice not to become fodder for the markets. Essential reading before you spend thousands on another TA book and blackbox trading system.

Had to Sit On This Review
I had to sit on this review a while and let it simmer. This book is five star material no doubt. It is a 4.5 star because there is one thing that bothers me. The author spent half the book ragging on the faults of TA.

I happen to agree with some aspects of TA and a simple chapter with a problem would have sufficed. In fact I (as a published author) would have started the book with the Nokia and Motoral divergence case that was presented near the end of the book. That simple illustration shows the fault of TA without much further discussion needed.

For those readers wondering what the author is complaining about, he is complaining about comments like the following: (Trading Markets.com)

As Goes the Rest of this Week, So Goes the Second Half of the Year

"As the last few days of the first half of 2006 come upon us and the S&P 500 is trading near break-even, we asked, "How does the market perform the second half of the year after it has risen the first half of the year?" And, "How has it performed the rest of the year after it has declined the first half of the year?""

The answer is that the market will decline, but you have to ask yourself why? What says that the market will decline, from a purely TA perspective? Sure it might, but it also might go up.

I am not going to give an answer which way the market will go because the second half of this book does give a generalized answer. I find the second half of this book brilliant, and if there ever is a second edition of the book (and there should be) the author needs to focus on expanding the materials in the second half.