tradersams blog

The following are book reviews I have done of texts in my trading library.

“Getting Started in Chart Patterns“ by Thomas Bulkowski.  (Originally from June 23, 2009)

The title suggests ‘Getting started’… this book can be picked up by a beginner who has an interest in the art of reading charts.  Don’t confuse this comment as one that suggests the book is for a beginner – many beginner books talk about how to place trades, differences between types of instruments and so on – this book assumes you know that.

The book specifically talks about chart trading of equities, however the concepts are obviously portable to other markets – with some care, due to his use of probabilities as they relate to his research against equity charts.  Thomas’ books are valuable to me because he has done A LOT of work analysing charts and quantifying what he sees.  When he talks about (for example) a Head and Shoulders pattern, he talks about the expected profit, as well as the percentage chance of getting that profit in bull and bear markets – great information!  Further to that, he gives a point form list of ‘requirements’ that a chart pattern must exhibit to be classifed correctly in a particular manner.

The author remains focused throughout the text on his trading via the use of charts.  A couple of times he may mention an MACD divergence or other indicator related metric – but then suggest the reader refer to other books to follow that idea through – the book remains firmly focussed on charts.

The book is written a bit conversationally in places, as the author uses simulated discussions between two traders as a tool to convey points regarding trades.  Looking at the price, I must say its one of the less expensive books of its type.  Whilst not to the detail of his other texts (which I’ll review at some later date) this is an excellent beginner to intermediate text.

The best thing I learnt from this text?  I’ve got to say looking at ‘busted patterns’.  Whilst I have been aware of them for some time, looks at the statistics – I’ll be looking for ‘busted head and shoulders’ more often!

“The Bear Book – Survive and Profit in Ferocious Markets“ by John Rothchild.  (Originally from June 16, 2009)

The linked version is newer than mine – I have an old (well 9 years old) hardcover version which I lend to friends occasionally who think that the bear market we have now is the end of finance as we know it (and I am assuming they’re wrong!).  The book is relatively easy to read, talking about recognising bear markets and dealing with them.  Understanding the players in the bear market, and where to invest.  Whilst this text had not specifically addressed my trading methods, it has factored strongly into my view of the longer term phases of the markets.  It reminds me why I construct a plan.  If reminds me about cycles, and it reminds me why I seek to manage risk.  I have enjoyed this book.

Further reading:

I found this list here interesting, and I struggle to disagree with any of his descriptions – for the books I have read.  I’ve now ordered a copy of “Basic Economics – A Common Sense Guide to the Economy” basd on that list.