Dear Fut - As an engineer myself, permit me to point out a fallacy that technical people understandably fall into when they start to trade. We treat the market as if it were a physical phenomenon and apply time series analysis, Fourier analysis, optimal estimation theory, conditional statistics, Kalman filtering, etc. ad nauseam. The reality of the market is that it is an insider-manipulated, semi-chaotic, totally psychological phenomenon. We buy a shelf full of TA books and lose money playing textbook setups until we wise up to reality (perhaps through the medium of this thread). That reality is fully laid out in
Schabacker - Stock Market Profits, for understanding insider manipulation
Plummer - The Psychology of Technical Analysis, for what charts really mean
Douglas - The Disciplined Trader, and Trading in the Zone, for understanding that the game is played totally in your own head
Mamis - The Nature of Risk, for understanding the relationship between information and risk
Tharp - Trade Your Way to Financial Freedom, for understanding probabilistic profit expectancy.
TA is a fabulous tool to determine what NOT to buy after you possess the above understandings. It's like a map of a mine field.
Good luck on your journey. |
