Book Review > Chart Trading

The author of this book, Darryl Guppy, lives in Katherine, N.T. � as he puts it, far from the sea, on the edge of the desert. Yet he draws on the sea in making an analogy between a ships voyage and trading. A chart is needed for both a successful ship�s voyage and a successful trade. A cautionary note is sounded: as with ships, big is not always safe when it comes to companies.
The stated aim of the book is to explain how to use charts to make better trading and investing decisions. Trading skills are dealt with only briefly. These are covered more completely in another of Guppy's books, Share Trading. The author emphasises that chart analysis is not predicting or forecasting the market - no-one can do that. Rather, trading, and investing too, should be all about identifying high probability outcomes in order to aggressively manage risk to protect capital and grow profits. The management of risk is at the core of a trader's relationship with the market. Even for the investor, the advantages of buying and selling at appropriate times, compared with following broker's recommendations and buying and holding, are demonstrated.
The book is divided into three main parts: firstly, the various types of charts are identified and discussed. The second and central part of the book is called improving the chart and is devoted to such topics as the use of technical indicators derived from the charts, recognising and acting on chart patterns, and understanding crowd thinking. The market is the product of crowd reactions and the author discusses what each pattern means in terms of what "the crowd" is doing. Part three deals with risk and fear and how to manage them. How to manage risk by selecting only high probability trades, and money management, are important topics.
Finally the book concludes with a discussion of the various software products available on the market, and how to select the most appropriate one.
Other books and their authors are referred to throughout the text, but there is no bibliography, a surprising omission in a technical book of this nature. Apart from this minor quibble, this is an easy to read book that will appeal at all levels. Although it starts with the basics, making it suitable for the novice, it moves to more advanced techniques that are of interest to the more advanced trader. I have been trading part- time for three to four years and after reading this book, realise that I still have a long way to go on the learning curve.