Book Review > Technical Analysis for Dummies

This review is written from the perspective of a “beginner” investor. I compare and rate it against the many other investing books I’ve read over the last two years, the AIA Investing Course delivered by Bill Dodd (it was a great intro to technical analysis), and of course my own experience and knowledge in other areas.

I have found all “Dummies” books I’ve read to be easy to read and a useful introductory reference into a subject area. Technical Analysis for Dummies by Barbara Rockefellar is definitely along those lines, and I found Barbara’s writing full of common sense, concise and to the point and steeped with experience. It gives readers new to investing a good introduction of technical analysis along with some good investing advice... such as how to apply indicators as a practical stop loss. The book provides a broad understanding of the subject and is well organised. This has helped me arrange the bits and pieces in my head, plus in arranging my own study notes using mind maps. Barbara’s views are also balanced and she recommends combining technical analysis with fundamental analysis... much as I have encountered in many other books.

To summarise the general areas the book covers:

• Essence of markets (e.g. why movements occur, sentiments)
• Managing trades (e.g. trading style, stop losses, adjusting positions)
• Reading charts (e.g. timeframes, special bar formations, candlesticks)
• Finding patterns (e.g. double tops, trend lines, support and resistance)
• Further analysis (e.g. moving averages, MACD, RSI, ATR)
• Small part regarding building your trading system

There are also three sections at the end for Top Ten Rules, covering:

• Ten secrets of top technical traders (not really secrets, but classic/common advice)
• Ten rules for working with indicators
• Ten ways the market has changed

Overall I found the book useful in the breadth it covered and in helping me attain and consolidate a broader understanding of technical analysis. The breadth is at the sacrifice of depth though. Most chapters were shallow in details and really only serve to build awareness of the various elements. I will now continue to “drill down” into selected areas by reading further books that provide more depth. As one goes on the journey from novice to expert, different books are more apt at particular points. I struggled to really understand Darryl Guppy’s Trend Trading... but as I digest and understand more then I feel I will get more from his book. So in conclusion, Technical Analysis is the entry point, and suitable for beginning investors. I would recommend it to those starting out in using technical analysis, mostly for the broad understanding it can provide.