Successful forex traders place a lot of emphasis on understanding their craft and developing their skills. While practicing trading and talking to other traders is an important part of learning to interpret charts, it’s a mistake to ignore more formal education and research. One good way to learn how to carry out complex analysis and interpretation of price charts is to buy one or more textbooks on the subject. However, these can vary widely in quality, so it’s important to choose ones that are written by an excellent author.
Here are some of the best Technical Analysis Books:
Thomas Bulkowski is an experienced trader who is an acknowledged expert on chart patterns, particularly on candlesticks. He is the author of numerous articles and books on interpreting charts, including the following important works:
- Encyclopedia of Chart Patterns – this is a comprehensive reference that is considered to be a classic. Last updated in 2005, this looks at a wide range of chart patterns and how they perform statistically, and also provides approaches to trading major market events.
- Trading Classic Chart Patterns – this is a perfect complement to Bulkowski’s encyclopedia, delivering lots of practical advice for both novice traders and experienced ones.
- Encyclopedia of Candlestick Charts – this focuses specifically on candlestick charts, covering more than 100 patterns, as well as providing interesting information about how the field has evolved.
A. W. Cohen
For good information on point and figure charts, take a look at Cohen’s How to Use the Three-Point Reversal Method of Point & Figure Stock Market Trading: a Technical Approach to Stock Market Trading. Although this deals primarily with the stock market and was last updated in 1984, this book nonetheless contains lots of very useful charting information and tools, along with practical information on trend lines and on how to use a wide range of technical indicators.
Many traders struggle to understand Japanese candlestick charts and how to use them, which is unfortunate since they contain more useful information than traditional candlestick charts. Steve Nison is an expert on Japanese candlesticks and has a knack for explaining them in a clear and easily understood way. Two of Nison’s books that provide informative and engaging reading are:
- Japanese Candlestick Charting Techniques – this is a classic, telling the reader everything that they need to know to start interpreting Japanese candlesticks. It covers the use of Japanese candlesticks in several markets, including forex.
- Beyond Candlesticks: More Japanese Charting Techniques Revealed – this picks up where Nison’s first book left off, covering more advanced Japanese charting approaches, such as Three Line Break charts, as well as Kagi and Renko charts. It also looks at a number of uncommon candlestick patterns.
What books have you read that helped with technical analysis? Please share in the comments below.