I did tons of study on stochastic because the first TA guy I ever got to cross examine was a stochastic freak.
That's how I eventually ended up studying RSI. I purposefully did not read books that gave analysis of the oscillator filters because I wanted to see things without some advanced bias on what was "good" and "bad". Consequently, it took literally two years! And, I formed some solid opinions that years later turned out to be completely bogus.
After I had made some basic decisions about what I personally liked, I then read the "how to" TA books, and continue to do so. It's a lot easier to just ignore the junk. Almost every book has good stuff and junk. I have a rather jaundiced view of most of these books because many of the authors seem to think that their way is the "only" way.
For RSI, I didn't take anything for granted, I studied every period from 3 up to about 28. It took a while. I looked for all kinds of patterns, and the only one I ever found that I could use consistently was the one I've described. Elder's book, for example, has three different patterns (the one I 'figured out' is one of the three) and I'm sure there are other books with patterns that work for people.
Murphy's book is a good one because he shows a lot of different stuff and isn't biased on one thing over something else. Great first book for people who are interested in TA. I'm actually re-reading it right now!
Everyone is different, everyone has different strong and weak points as far as their own personal regimen. That's why no specific kind of TA works for "everybody". It's easy for someone who wants to learn about TA to become overwhelmed with Murphy's book.
Interestingly, after 14 years of study, (and ignoring it for 13 years due to some bad PR that I believed) it appears to me that Point and Figure (specifically Tom Dorsey's first book) comes closest to an all-around good way to examine price movement and make accurate and educated judgements about the future of same. I think there are two reasons for this; the first, and most important, is that it discounts the factor of time. Trying to understand time can be a very, very distracting thing to most people. The second is the underlying philosophy, supply and demand, which is a really good way to look at the overall picture...and one that is completely ignored by almost all TA. P&F is really sensible IMHO.
Not counting P&F, the single best book I have ever read on TA is "The New Science of Technical Analysis" by Thomas R. DeMark. I got interested in DeMark from articles he wrote for a commodities TA magazine. There is some real, real good stuff in that book. DeMark is a very, very smart dude.
When all is said and done, I'm convinced it boils down to 'what works for me'. I got flamed royally on SI about a year ago by some bonehead that thought I was a moron for basing my TA analysis on linear charts rather than log charts. I mean, this dude thought I was a total fool for even thinking that a linear chart could give me a clue. I didn't get into it with him, because that kind of attitude is exactly what gives TA a bad rep. Somebody that goes on TV and says that moving averages are "it" and candlesticks blow (for example) is just a pompous dillweed. Who cares?
I mean, I know somebody that found a killer Bollinger Band pattern, because it reminded her of an outline of an animal! She makes good calls! She found a little thing that helps her make money! Now, it may not work for anyone else, but it works for her, and that's the most important thing.
It's not the specific brand of TA that's important, it's whatever works for you.
The most annoying people are the ones that contend that all TA is ca-ca. I don't even bother discussing it with them, because they have already formed a rock solid opinion, and anything I might say just reinforces their opinion that I am insane.
I do, however, regularly take their money in the market.
Works for me. <G> |
