Comments (99)

Sep 28, 2011

High frequency traders do not use technical analysis, but instead focus on pairs trading (PM if you've got some statistical/computing background and are interested in this. It isn't as complicated as it seems for someone who isn't swinging millions), VWAP, TWAP, flash orders etc. Signal based trading is usually termed as systematic trading- you could research into Trend Following and Mean Reversion strategies but do bear in mind that even if a strategy works, it is likely to have a pathetically low Sharpe ratio and as such you are likely to endure significant drawdowns. It's not a bad thing, but it's really easy to lose sight of long run expectancy after experiencing consistent losses.

Regardless, to quote Steve Cohen who pays significant attention to 'the tape' and technicals:
"The old guard wasn't crazy about me, I used to hear it all the time. Most of the old-school had no belief in anything that wasn't based on fundamental analysis. We were trading more than investing, and people frowned on it, they looked at it and didn't want to partake. Finally, they said,'Shoot. He's making money.' And they started copying me."

I've read the Murphy book ('Technical Analysis of the Financial Markets'- borrowed it from a friend) and I'm currently reading 'Technical Analysis' by Charles Kirkpatrick and it is quite clear that the Kirkpatrick book is updated and thus has more recent content than the slightly outdated Murphy book.

Also, I just realized I wasted 5min of my time considering that guys like trade4size have posted some really insightful responses regarding this matter. Please do a search henceforth.

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Sep 28, 2011

If you are more interested in understanding fundamental valuation I would highly recommend http://www.amazon.com/Investment-Analysis-Portfoli...

Sep 28, 2011

^I believe you just re-affirmed Steve Cohen's premise.

Sep 28, 2011

PM me. I have some text books in PDF I can email you.

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Sep 28, 2011

Technical analysis is bullcrap. The library checks out astrology and palm reading books too.

Sep 28, 2011

To each their own I guess

Sep 28, 2011
jhoratio:

Technical analysis is bullcrap. The library checks out astrology and palm reading books too.

QFT.
Trendlines lol http://www.chartingstocks.net/wp-content/uploads/2...

Sep 28, 2011
jhoratio:

Technical analysis is bullcrap. The library checks out astrology and palm reading books too.

Look, from a fundamental standpoint... perhaps correct. However, that's not how markets work. Markets trade on both technicals and fundamentals. Maybe FX Technical Analysis is a load of crap... but every FX trader I know (on sell side) at the very least pays attention to it. Whether it is a self-fulfilling prophecy or not is irrelevant, the reality is that it plays a role.

Sep 28, 2011

One of the best books I have read on the subject:

http://www.amazon.com/Technical-Analysis-Financial...

"I do not think there is any other quality so essential to success of any kind as the quality of perseverance. It overcom

Sep 28, 2011

I second that was just about to recommend that book.

Sep 28, 2011

Technical Analysis of the Financial Markets by Murphy

(The technical analysis bible)

Sep 28, 2011

yeah you've got to combine both technicals and fundamental.. yup but i will recommend books on japanese candlesticks..

Sep 28, 2011

I've heard Technical Analysis of the Financial Markets by Murphy is one of the best books out there

Sep 28, 2011

Murphy is one the best indeed.
If there is some French speaking fella over here: L'analyse technique , Pratiques et methodes - 5eme edition by Thierry Bechu is a good starting point

Sep 28, 2011

john murphys technical anlaysis book is the standard, then its just figuring out what works for you. start at the basics which are a necessity like understanding support and resistance, how moving averages can act as support/resistance, etc. i dont like MACD cause i find its always a bit late. personally i find that fibonaccis and Elliot Waves work for me, but that is subjective at times and can be difficult to pick up initially. definitely read up on those if youre interested though

Sep 28, 2011

Getting Started in Technical Analysis - Jack Schwager
John Murphy & Martin Pring are both very highly regarded
Trader Vic - Victor Sperandeo

I am a avid believer in technical analysis and very interested in the subject in general. I have found the best resources really to be online. I have some websites and a reading list back at home will post them in a couple weeks.

"Oh - the ladies ever tell you that you look like a fucking optical illusion?"

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Sep 28, 2011

The Rosenbaum book was quite good, I thought. It was very clear and the ideas was easy to follow, especially for someone who didn't have a strong grasp on the technical aspects of finance (like I did when I first read it). I've heard a lot of good things about Scoop Books, though I haven't read that series. I like Damodaran and McKinsey's Valuation texts, too. Damodaran also has classes on valuation and other things that you can watch for free through iTunes U and YouTube, which tie in nicely with his books (see: http://pages.stern.nyu.edu/~adamodar/).

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Sep 28, 2011
dcrowoar:

The Rosenbaum book was quite good, I thought. It was very clear and the ideas was easy to follow, especially for someone who didn't have a strong grasp on the technical aspects of finance (like I did when I first read it). I've heard a lot of good things about Scoop Books, though I haven't read that series. I like Damodaran and McKinsey's Valuation texts, too. Damodaran also has classes on valuation and other things that you can watch for free through iTunes U and YouTube, which tie in nicely with his books (see: http://pages.stern.nyu.edu/~adamodar/).

The "Scoop" IB book goes into heavy detail - great if you want to know the entire process inside out from start to finish.

Sep 28, 2011

Would any of these still be valuable for a finance major? Do they teach actionable IB skills, or just the finance background?

Sep 28, 2011
CalvinC:

Would any of these still be valuable for a finance major? Do they teach actionable IB skills, or just the finance background?

Yes. The academic approach to finance taught in school is not always the same as the finance practiced in the real world.

Sep 28, 2011

The new WSO tech guide is pretty good and focused on the questions you get in banking interviews. However, I only know that it covers everything I have seen in ugrad ibanking interviews... can't speak to grad interviews but I assume they are similar. The new guide is pretty extensive. Check it out.

NEVER lose your BlackBerry
www.conveniencesoftware.com

Sep 28, 2011

Thanks. I bought the guide and it's indeed comprehensive. It'd still be nice though to have some book that explains concepts from A to Z in some structured manner.

Sep 28, 2011

Scoopbooks - The Practitioner's guide to IB

http://www.scoopbooks.com/ourbooks_2.php

Sep 28, 2011

For what it's worth, if I were buying a text, this is the one I would get. Mind you I have not read it.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

Sep 28, 2011

I have this. I haven't really read it yet, because I'm still in school and studying for other stuff. But flipping through the pages, it looks solid ;]

Sep 28, 2011

I've heard that is a good one.

http://www.amazon.com/gp/product/0136117015/ref=pd...
This one is pretty good too. And who wouldn't want to read a book by a guy with the last name Titman?

Sep 28, 2011

Assuming your an undergrad (as that's the only level of recruiting I can speak to): I have the Pearl and Rosenbaum book you listed. Definitely a good book for teaching yourself about valuation. Much more in-depth than what you'd need for an interview from a technical stand point. I'd also highly suggest getting the WSO, BIWS, or M&I book for interview technicals as the interview questions are typically tailored toward the general valuation concepts (as well as your FCF, CAPM, WACC, etc. equations) and you won't need to know the details that the Pearl/Rosenbaum book you listed provides.

Sep 28, 2011

The one you mentioned in the OP is the best one I've seen for grasping the basics.

Sep 28, 2011

Well the problem I have with the guides is that the basics aren't covered enough to give you an understanding to be able to apply to info (mainly the Vault guides). Are these other guides more helpful?

Sep 28, 2011

WSO guide is so cheap, just buy it - BIWS is a little pricier. It (WSO) covers a lot.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

Sep 28, 2011

If possible, get a Wall Street Prep or Wall Street Training online course. I think those are pretty solid if you can spend the dough

Sep 28, 2011

Not including price, which guide would you say is the best between WSO, BIWS, and M&I?

Sep 28, 2011

They are both good - for BIWS, there is the guide and there is the course - the WSO and BIWS guides are both good but different.

http://www.wallstreetoasis.com/forums/little-time-...

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

Sep 28, 2011

trading for a iiving by alexander elder is a great book i just finished it and am gonna reread it because it has alot of technical aspects im still unclear on but everything in the book is an A+ and im sure many experienced traders would agree..

Sep 28, 2011

John Murphy, cant remember the title but he is pretty much the standard
Martin Pring

Jack Schwager - Getting Started in Technical Analysis

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Sep 28, 2011

If you are absolute beginner check out the "school" at www.babypips.com

Not a bad cursory intro.

Sep 28, 2011

Technical Analysis of the Financial Markets: A comprehensive guide to trading methods and applications by John J. Murphy. My first TA book...taught me a lot...I'd highly recommend reading it.

Sep 28, 2011

Does anyone here actually trade using TA, not just for entries/exits based on other valuations/factors?
If so, how has it treated u?

"Seeing this house and your fine sword and hearing how you're importing and exporting chinamen, let me guess, you must be fucking rich."
Kenny Powdersss

Sep 28, 2011

I had a project for one of classes where we had to pick a stock and pick up trends using TA. It was pretty cool at first, you would see some clear buying trends and whatnot...but than you would notice that the signals were picked up when the trend was already in motion (moving averages picked up a buy signal well into the upward trend of the stock)...so there is this lag factor...

Sep 28, 2011

lmfao, go read: Aspects in Astrology: A Guide to Understanding Planetary Relationships in the Horoscope

Sep 28, 2011
New Yorker:

lmfao, go read: Aspects in Astrology: A Guide to Understanding Planetary Relationships in the Horoscope

Relax, go back to being a corrections officer, and please stop making new mixtapes. We know you don't like TA. You have only posted that in every TA thread in the past few weeks. Do you even trade?

Sep 28, 2011

Isn't TA like..... complete bullshit? I've been in academia life to date, so I don't really know if it is regarded differently on the streets.

Sep 28, 2011

no its not complete BS, for example, using the MACD indicator with a trend following indicators can tell you wether bulls or bears are winning the fight. Using %R can tell you if the stock is overbought or oversold, there is alot of different indicators but they pretty much tell you the same info in different ways to buy or sell. An experienced trader probably dosent even need indicators because they learned how to trade based on just looking at a chart. But indicators can help confirm a trend or if a trend is over. It tells you whos winning (bulls or brs) but ofcourse nothing is bulletproof which is why you should always limit your risk by placing stops and let you profits run until they reverse. Always have a plan as to when to get in and out. A beginner should not risk more then 5% but books are always saying 2% but i personally risk 10-15% with success so it depends on you and your trading ability really trading like otherthings can be taught you just have to do the hard work... good look

Sep 28, 2011

If you're interested in learning about Point and Figure charting (a little different from the most traditional technical analysis, but follow the same concepts), the Dorsey Wright stuff is great. There's a free trial on the website as well as the book:

http://www.amazon.com/Point-Figure-Charting-Applic...
The free trial also gives you access to their daily market report, which basiclaly uses this strategy to recommend trades/analyze market and sector trends.

Sep 28, 2011

you should look into CMT - Chartered Market Technician certification by MTA (www.mta.org) It's not as popular as a CFA designation but can give you some recognition in the field, IF you decide to pursue it professionally.

I think it's always great to know different methodologies.Whether or not you believe only in semi or strong market efficiency you can always do your fundamental analysis and then use technical analysis to look for good entry points/ warnings signals etc. You can learn a lot about indicators. Whats more, you can apply TA not only in equities but also in FX etc. I learned a lot about reading charts during the process and found it very useful.

Sep 28, 2011

With the exception of intraday trading, technicals are about as useful as pig entrails. Second the astrology suggestion. Pick up a CFA text at half-price books and read the section on weak-form, semi-strong, strong form.

Sep 28, 2011
Cartwright:

With the exception of intraday trading, technicals are about as useful as pig entrails.

Just with that one sentece you proved you have absolutely no idea what you are talking about.

Technical analysis works better on longer term charts because longer term trends are not subject to manipulation. It is with intraday charts that techicals suffer the most because prices are more sensitive to manipulation (big sudden orders) and prices move all over the place.

This, of course, does not mean that it can't be successfully used for intraday trading. But the idea that TA is ONLY useful on intraday, it is the most ignorant thing I have ever heard.

C'mon Cartwright, get out of the closet: you once used TA hoping it would magically make you a lot of money, but ended up losing, therefore you now feel you have authority to opine on the subject.

Sep 28, 2011

So I assume you are all billionaires, then.

Sep 28, 2011
Anonymous1:

So I assume you are all billionaires, then.

I tuck away most of my money offshore.

I win here, I win there...

Sep 28, 2011

To make billions first you need to make millions, to make millions first you need to make thousands.

Time is money, and I am still in my twenties.......you do the math. Having said that, TA has made me very profitable in most of my trading, and that's how I value its use.

Sep 28, 2011

Sure, TA is for the long term. That's why the asset management community values the CMT so highly and people scoff at the CFA. That's how it is right?

It has been empirically proven, via autocorrelation tests, runs tests, filter rules, etc, that technical analysis is bullshit. At the very least, markets are weak-form efficient.

Keep on profitably day trading 100 lots in your basement, but from an institutional/AM perspective that shit will get you laughed out of room.

"investment advisor", huh? That says all I need to know Mr Future. I'll drop my biz card in your fish bowl, let me know when I win my "free" lunch at Jason's Deli.

Sep 28, 2011
Cartwright:

Sure, TA is for the long term. That's why the asset management community values the CMT so highly and people scoff at the CFA. That's how it is right?

It has been empirically proven, via autocorrelation tests, runs tests, filter rules, etc, that technical analysis is bullshit. At the very least, markets are weak-form efficient.

Keep on profitably day trading 100 lots in your basement, but from an institutional/AM perspective that shit will get you laughed out of room.

"investment advisor", huh? That says all I need to know Mr Future. I'll drop my biz card in your fish bowl, let me know when I win my "free" lunch at Jason's Deli.

I have no idea about trading or TA, but any economist can tell you that validity EMH in weak form is very far from proven. Yes there are papers supporting it, and there's an equal amounts of papers disproving it.

Sep 28, 2011
Cartwright:

Sure, TA is for the long term. That's why the asset management community values the CMT so highly and people scoff at the CFA. That's how it is right?

It has been empirically proven, via autocorrelation tests, runs tests, filter rules, etc, that technical analysis is bullshit. At the very least, markets are weak-form efficient.

Keep on profitably day trading 100 lots in your basement, but from an institutional/AM perspective that shit will get you laughed out of room.

"investment advisor", huh? That says all I need to know Mr Future. I'll drop my biz card in your fish bowl, let me know when I win my "free" lunch at Jason's Deli.

You are completely out of touch if you think traders with some of the largest amounts of risk capital don't pay attention to basic support/resistance levels. Although simple, that is still a form of TA.

Sep 28, 2011

so cartwright are you saying Paul Tudor Jones is being laughed at? Steve Cohen? The problem with these empirical tests is they are trying to scientifically test something that is much more of an art than a science. In general I think the academics that do these tests have a heavy bias of their results due to their backgrounds.

So sure these asset managers can have a technician "laughed out of the room" but im pretty sure the technicians were doing a lot of laughing at these fundamental shops that were blowing up in 2008. To totally ignore long term technicals such as breaking a major trendline or support level is just idiotic. Technicals offer a way to be objective about defining your risk besides using some arbitrary valuation ratio or some other price point.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Sep 28, 2011
trade4size:

so cartwright are you saying Paul Tudor Jones is being laughed at? Steve Cohen?

Do you realize the weight those guys swing intraday? Having executed trades on behalf of one of their firms, I do. And in that instance, yes, they do look at technicals. But to think that they see the Virgin Mary on a piece of toast inside a chart and thus buy something to hold for a month, is ridiculous. There is a reason why 8/10 institutions I covered replied (only half-jokingly) with "UNSUBSCRIBE" when one our technical guru decided to start sending out an email full of charts at EOD.

The only value of major breaks in trend lines is at the indices level, and only then bc it becomes self-fulfilling prophecy and morons like Erin Burnett start yapping about it. Chicken/egg.

Sep 28, 2011

Have to agree about the academics being biased towards TA in the first place and believing in EMH, what do u guys think about multi time frame analysis for intraday trading?

"Seeing this house and your fine sword and hearing how you're importing and exporting chinamen, let me guess, you must be fucking rich."
Kenny Powdersss

Sep 28, 2011

I like to see points of confluence over different time frames. Example the 10/30/60min/daily charts are all saying the same thing. When the 10min is bearish but 30 is bullish but 60 is bearish but daily is bullish can create problems.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Sep 28, 2011

technicals are a tool in your tool box use it with discretion, think of it this way would you use a screw driver to hammer a nail?

and finally

How many licks does it take to get to the center of a tootsie pop?

Sep 28, 2011

Can't.....can't we all just get along?

Sep 28, 2011

Cartwright - Yes I do and we excute for the biggest of the big boys too. I have been there to watch traders that are the 800lb gorilla in a name and the ones that are making the support levels. Now you are making fun of the daytraders that are nimble enough to be in and out like they dont matter and at the same time your saying the size players care about technicals because of their market impact sounds like your really contradicting yourself here. I never implied that technicals were the virgin mary I simply said to totally ignore them is foolish. To say that the only reason they work is because they are self fulfilling prophecy does not matter that is like asking what came first the chicken or the egg.

I do not care about why they work, I only care that they do work and even if they are only working temporarily. For example there have been periods where gold rising was bullish for stocks and bearish for stocks right now when gold is rising so are stocks. When this relationship stops to hold up I will pay less attention to it. If people are trading off a certain piece of information I want to know what that piece of information is and what the consensus on expectations are. I dont care if thats GDP, Non farm payrolls, size of QE2, Google earnings, a major technical level, lunar cycles, or elephant migratory patterns in Africa if the key players are trading off it I want to know about it.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Sep 28, 2011

I guess that being Stanley Druckenmiller, returning an average of 30% for God knows how many years, managing billions of dollars, and saying that the pivotal point of his life was when he was introduced to technical analysis, means nothing....right ?

That's what distingueshes the thousands of portfolio mgrs who waste their time on earnings projections and estimates and yet in 10 yrs they are still flat, and those who are actually opportunistic and just ride the markets regardless of its direction.

Just take a look at the fundamentals of companies like ctsh and dlb in 2007, and give me any fundamental logical reason why such great companies with such great balance sheets tanked more than 50%, more than the averages.

The truth is charts would have taken you out of the market before the collapse.

Mark my words, the future of investing will be individuals simply buying averages through etfs and getting in and out based on charts. No single company risks, no fundamental analysis to worry about, no ceo scandals to fear. Pure diversification through averages, that's all you need.

Sep 28, 2011

I may be an idiot, but I would guess that if there were any real technical heuristic that came out money ahead given a fixed risk that black box trading algorithms would already eat this. Not saying that technical analysis is bunk, but can anyone smarter than me tell me why this isn't the case?

Sep 28, 2011
monkeysama:

I may be an idiot, but I would guess that if there were any real technical heuristic that came out money ahead given a fixed risk that black box trading algorithms would already eat this. Not saying that technical analysis is bunk, but can anyone smarter than me tell me why this isn't the case?

Actually most algorithms are heavily based on price action, and price action is exactly what is observed in TA.

But the problem is that people expect TA to be right 100% of the times, but there is no such thing.

I wonder why people do not question fundamental analysis that much. Why are most mutual funds, managed by the brightest and well educated, flat after a decade ? Didn't the almighty fundamnetal analysis and their cfas warn them in advance ? Does not look like it.

How many market crashes do we need to have before people realize that no matter how good the fundamentals of a company, if greece takes a dump everything goes to hell ? This is a new world, news travel in microseconds, people react in the same time, the mafkets are now all connected worldwide, fear and greed are larger than ever before, and technology allows such feelings to dominate price action like never before. Good luck relying only on fundamental analysis trying to deal with that.

Sep 28, 2011

Mrfuture I think what you have to remember is for a market to go down there needs to be sellers. You are implying that fundamental means by and hold which is probably the single most common bashing point that technicians use to laugh at fundamentals. I think its obvious that prices moves before fundamentals change but part of using fundamental analysis is to be able to predict worsening conditions similar to the way technicians rely on charts to see deteriorating conditions. Now just as technicians like to bash the buy and hold approach many pure fundamentalists like to imply that technicians are nothing more than day traders which of course is also a totally unreasonable belief.

Also you must bear in mind that individuals, mutual funds, and pension funds account for 70% of total stock market ownership whos horizons for investing is very long term. If everyone were active every time there was an anticipated a turning point in the market the entire market structure would change dramatically.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Sep 28, 2011

I knew a trader from SAC and he solely used technicals in the currency market to hedge their positions in foreign stocks.

Obviously they look at other things when placing a trade but to discount it entirely is foolish.

Sep 28, 2011

Without bothering to read the entirety of this thread, I will:

(1) Recommend Murphy's "Technical Analysis of Futures Markets"

and

(2) Submit that anybody who dismisses TA entirely (Cartwright) is an idiot who will never make it as a trader....stick with IBD and shitty hours.

Sep 28, 2011

quote=yesman Submit that anybody who dismisses TA entirely (Cartwright) is an idiot who will never make it as a trader....stick with IBD and shitty hours.[/quote]

Now that's what I am talking about ! LOL

Sep 28, 2011

Veronesi's Fixed Income book is superb for bonds/mbs/repos... Also Fabozzi is a bit of a classic

"Every man should lose a battle in his youth, so he does not lose a war when he is old"

Sep 28, 2011

Liar's Poker by Micheal Lewis
It's about the origination of MBSs. Must read.

Sep 28, 2011

@pplstuff: Already read. The Big Short is more applicable it seems. Both are fascinating. Now we're talking about books and other resources that will really help me to do my job well.

@markhobbus: I'm not really sure what you're asking, but I got interviews through networking and reading the WSJ daily, and got job offers through doing my best to be likeable while pulling out useful things from the interview guides found on WSO, M&I, and Vault. That was certainly some preparation, but not nearly enough.

Sep 28, 2011

In before the imminent "Investment Banking" by Rosenbaum post. This is like the 5th post on books in the past 2 weeks.

Here to learn and hopefully pass on some knowledge as well. SB if I helped.

Sep 28, 2011

How do you get such a job without already knowing all this stuff?

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Sep 28, 2011
markhobbus:

How do you get such a job without already knowing all this stuff?

His last name rhymes with banderbilt, shmellon, or jockefeller.

Sep 28, 2011

Graham-Dodd Securities Valuation

Sep 28, 2011

interest rate markets

Sep 28, 2011
couchy:

interest rate markets

I second this one. Great book for ramping up your understanding of MBS, swaps...

http://www.Amazon.com/Interest-Rate-Markets-Practi...

Sep 28, 2011

There are WSO recommended reading lists under the FAQs .

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Sep 28, 2011

Rosenbaum is a staple in investment banking (at least in my opinion)

What concert costs 45 cents? 50 Cent feat. Nickelback.

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Sep 28, 2011
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Absolute truths don't exist... celebrated opinions do.

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Sep 28, 2011
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