XL-entLady
02-03-2009, 05:53 PM
I’m just a fledgling investor, but I already have several books in my financial library because I collect books like a miser does gold. However, if I had to choose just one financial book, so far it would be Technical Analysis Using Multiple Timeframes, by Brian Shannon. It was a Christmas gift to myself and it was a good one. The book isn’t cheap, in fact at around $80 it is the most expensive I’ve purchased so far. But I figure that if it keeps me from making even one big mistake in today’s volatile markets it will have paid for itself.
The book dwells heavily on the concept of stage analysis, as popularized by Stan Weinstein in his book Secrets for Profiting in Bull and Bear Markets (another one of my favorites). The first part of Shannon’s book is spent discussing the four market stages in detail, including ways to identify when each stage may be coming to an end. The book then goes into detail about such vital information as support and resistance, trends, volume, and moving averages. Next are chapters describing how and when to buy, to sell, and to sell short. He then describes risk management techniques, his basic trading rules, and how to put it all together.
One of my favorite concepts in the book is the idea that a person should choose a primary, secondary and minor timeframe based on the type of trader he or she is. Then the primary timeframe is used for idea generation, the secondary trend is used to establish support and resistance lines for risk/reward analysis, and the minor trend is used for fine-tuning and to establish entry and exit points.
For example, if a person is a swing trader, it is suggested that he use the daily timeframe to get trading ideas, the 60 or 30 minute timeframe to establish risk/rewards, and the 10 minute timeframe for entry and exit points.
Shannon’s trading rules are no-nonsense and easily grasped. For example:
· Trade in the direction of the primary trend, as determined by the 50 DMA.
· Be aware of overall trends as well as key support and resistance levels.
· Define your risk based on support and resistance levels rather than percentages or other random methods.
· Buy as a stock breaks out past short-term levels of resistance.
· Cut losses as soon as your stops are violated.
And as Shannon says almost nightly in his Alphatrends.com technical analysis videos, “The market does not care what you think a stock should do. Remember, only price pays!”
Lady
The book dwells heavily on the concept of stage analysis, as popularized by Stan Weinstein in his book Secrets for Profiting in Bull and Bear Markets (another one of my favorites). The first part of Shannon’s book is spent discussing the four market stages in detail, including ways to identify when each stage may be coming to an end. The book then goes into detail about such vital information as support and resistance, trends, volume, and moving averages. Next are chapters describing how and when to buy, to sell, and to sell short. He then describes risk management techniques, his basic trading rules, and how to put it all together.
One of my favorite concepts in the book is the idea that a person should choose a primary, secondary and minor timeframe based on the type of trader he or she is. Then the primary timeframe is used for idea generation, the secondary trend is used to establish support and resistance lines for risk/reward analysis, and the minor trend is used for fine-tuning and to establish entry and exit points.
For example, if a person is a swing trader, it is suggested that he use the daily timeframe to get trading ideas, the 60 or 30 minute timeframe to establish risk/rewards, and the 10 minute timeframe for entry and exit points.
Shannon’s trading rules are no-nonsense and easily grasped. For example:
· Trade in the direction of the primary trend, as determined by the 50 DMA.
· Be aware of overall trends as well as key support and resistance levels.
· Define your risk based on support and resistance levels rather than percentages or other random methods.
· Buy as a stock breaks out past short-term levels of resistance.
· Cut losses as soon as your stops are violated.
And as Shannon says almost nightly in his Alphatrends.com technical analysis videos, “The market does not care what you think a stock should do. Remember, only price pays!”
Lady