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New Thinking in Technical Analysis

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New Thinking in Technical Analysis

Trading Models from the Masters

Bloomberg Press,

15 min read
10 take-aways
Text available

What's inside?

Tools of the techs: Candle charts, Elliott Wave, retracements, tests and breakouts.

Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

In this compilation edited by Morgan Stanley Dean Witter technical strategist Rick Bensignor, a dozen financial experts discuss their individual approaches to technical analysis of the stock market. In the first chapter, equities, options and futures trader Linda Bradford Rasche explains swing trading and the underlying principles of technical analysis, thus providing an important primer for understanding the theories in the rest of the book. This is a complex read, since technical analysis involves using various mathematical systems to examine market trends and swings. Those who follow the market closely will find this engrossing, but amateurs could be daunted. getabstract recommends the book to serious students of the markets - It’s not for the casual browser or those who are not mathematically inclined, but its targeted readers will be quite satisfied.

Summary

Swing Trading and Technical Analysis

Equities, options and futures trader Linda Bradford Rasche explains that the two major methods of forecasting stock market movements are the fundamental method and the technical method. When you study the market based on fundamental factors, you analyze long-term business cycles and consider extremes in securities prices and public attitudes. By contrast, as a short-swing or swing trader conducting technical analysis, you are looking at short and intermediate price fluctuations or waves inside of longer major trends.

To be a swing trader, you have to study price behavior technically. This includes assessing the stock’s price in terms of its strength or weakness relative to the overall market. To do so, compare the length and amplitude of the current swing with those of prior swings to assess whether the market is showing strength or weakness. Technical analysts try to forecast the next swing up or down, based on probabilities or reasonable risk and reward ratios. According to Rasche, if you use this swing trading approach, you will ultimately select more winners than losers as you make frequent trades and hold stocks only for limited...

About the Author

Editor Rick Bensignor is a vice president and senior technical strategist at Morgan Stanley Dean Witter. He is also an adjunct professor at New York University’s School of Continuing and Professional Studies, where he teaches technical analysis. For 14 years, he worked as a floor trader on several New York futures exchanges. Subsequently, he served as Bloomberg LP’s senior product specialist for technical analysis, futures and commodities.

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