Technical analysis. Full course. Jack Schwager

Preface to the Russian edition.
The movement of market prices has a similar nature to many physical processes, whether it be the wandering of a meteorite in the asteroid belt or the movement of plasma particles in magnetic fields. The graph of stochastic changes in the magnetic moment of the ion aroused the liveliest interest in the trading
environment. Experienced traders easily found double tops on it,
head with shoulders, converging triangles and many other elements
technical analysis. Moreover, based on the knowledge of technical analysis, they
not unsuccessfully made forecasts of further changes on the chart. Obviously, the general theory of dynamic chaos extends its influence to market processes. Some concepts of this theory, such as
"attractor" and "fractal" are already reflected in technical analysis.
But the construction of a rigorous physical theory is still very far away. Level
Modern knowledge in this area is still only at the stage of formation of concepts and classification of elementary solutions. not less than
the situation is also complicated with technical analysis itself.
What is technical analysis today? John Murphy gives this
definition: "technical analysis is the study of market dynamics, most often through charts, in order to predict the future direction of price movement." Chart research is just a set of tools, skills and rules for working in the market. It must be admitted that in terms of the level of knowledge, and in spirit, modern technical analysis is very close to medieval alchemy. The same vagueness and vagueness of the wording and a significant proportion
philosophy bordering on mysticism and superstition.
Reasonable questions arise. Is this alchemy necessary? What is the attractiveness of technical analysis for a professional trader? Every
The trader finds answers to these questions for himself. However, it is undeniable that the tools, skills and rules of technical analysis have been filtered by generations of investors. It's material that's been made
experience and polished by the skill of thousands of traders and stock market professionals. But this material is not a frozen dead
form. Its main feature is the continuous
evolution. Tools, skills and rules of technical analysis are constantly changing and transforming in the conditions nonlinear environment
changing market. All this takes technical analysis from the field of mechanical study of charts to the field of art.
Schwager's book is a wonderful symbiosis of the scientific approach and the art of the experimental trader. The main guiding thread of the presentation is a comprehensive discussion of the main
elements of technical analysis with practical refraction to real trading situations. The author picked up a large number of graphicsPreface to the Russian edition 13
technical material from various trading platforms, illustrating
practical use of technical analysis. The first part of the book is devoted
classical elements of chart analysis, their rationale and inner essence. Particular attention is paid to this part
criteria for the applicability of certain tools, a creative approach to their use. A separate chapter in the presentation of Steve Nison presents the technology of market analysis using "Japanese candles". The second part of the book is a practical guide
on the application of the material of the first part. The author examines more
hundreds of specific trading situations. Each of them first in detail
аonлAndзAndруеTсI сreдсTVаmAnd technical analysis. The author explores the possible reasons for entering the market, involving the reader in the decision-making process: buy/sell. Then on the next page there is a discussion
further development of real events and comments on the validity or fallacy of the decisions made. An intriguing presentation
material and the brilliant style of Schwager the teacher transforms this
part of the book into an exciting workshop on trading skills.
The third part of the book is devoted to oscillators and cycles and is written
in collaboration with Thomas Birovsh and Richard Mogi. Indicators
fluctuations or oscillators have long and firmly occupied their niche in the arsenal of technical analysis tools. They have proven their effectiveness in a trendless market. A detailed account of the nature and characteristics of various oscillators in a wonderful way
supplemented with a description of traditional fallacies in their use and practical guidelines for applying in trading. The theme is continued by the theory of cyclical analysis of markets. Schwager practitioner
paints dry theory in "eight practical steps" designing your own cycles.
The fourth part deals with trading systems. Trading systems are no longer just a tool, but a complete mechanism.
And this means more power and performance in the right hands and, accordingly, more risk and danger in the hands of a beginner. Schwager as an experienced professional reveals his secrets of building
trading systems. Their structure, development, testing are discussed
and optimization. AtVOдITсI прAndmерs OрAndгAndonльнsх trading systems.
The fifth and final part of the book deals with questions of strategy and
trading philosophy. It is impossible to pass by 82 (!) rules of trading, crystallized from 22 years of trading experience of the “guru”. These
the rules are the actual quintessence of the entire book. It's a parade of ideas
Schwager the philosopher.
ANDнфOрmаTAndVнOсTь mаTерAndала, IснOсTь And чеTкOсTь AndзлOжenAndI заslужеnnO сTаVIT кнAndгу Джека ШVагера V рIд лучшAndх coVremеnnsх mOнOграфAndй technical analysis.
Shabrov Nikita (www.ofintrade.ru)
Problems arise to make us grow.
If there were no problems in life, we would all become
mediocrity.
Wally ("Famous") Amos
Foreword
Despite the claims of countless books, advertising
advertisements and brochures, stock exchange success cannot be concluded in any indicator, formula or system. This book is written by a trader, from a trader's point of view, and is not a collection of analytical techniques, indicators, or systems using idealized illustrations, but a manual based on real practice.
When explaining a variety of analytical techniques and methods
I tried to keep in the foreground the key questions that
often ignored by technical analysis book authors. How to apply the described methods in real trading? What fits and what
not suitable for the market? What signs indicate the unsuitability of the method? How to design and test a trading system to maximize its past, not retrospective, performance?
This book is based on practical experience. I myself have used many of the methods described in this volume to build very profitable trading systems, on the basis of which I managed multi-million dollar
assets. Then why am I willing to share this information? Because figuratively speaking, I give tools, but not architectural
project - the creation of the latter is left to the reader. I believe that
readers seeking to use technical analysis as a tool
achieve success in trading in the financial markets and are aware of the need for independent work in this field, this book will find a lot of useful.
Jack D. Schwager New York,
October 1995
Words of gratitude
In my early days in the futures markets, I was a pure "fundamentalist" and treated technical analysis with complete disdain - an opinion, I must say, based more on prejudice than on knowledge or experience. At that time I was the director
by research at a large brokerage firm. There was a technical analyst in my department, and I began to notice something strange: he often turned out to be right in his judgments about the behavior of the market. We have become
good friends and he explained the basics of graphical analysis to me.
As I gained experience in the application of technical analysis, my attitude towards it changed to a diametrically opposite one. The technical analyst who first introduced me to the methodology and had such a big impact on my career is named Steve
Kronowitz. Without Steve, this book would probably never have come about.
For the past seven years, I have worked very closely with Louis Lucak, who is my partner in a futures trading consulting firm. Luis is not only an excellent programmer, he also has outstanding
knowledge in the field of building and testing systems. Louis wrote
programs for many of the systems I have developed over the years and
worked with me to integrate these systems into a highly sophisticated computerized trading methodology. If it wasn't for Louis, I would
never got to see my ideas work (and earn) in
the real world.
There were several subject areas that I wanted to include in
this book, but in which I felt I lacked experience. Therefore, to write these chapters, I chose and invited several co-authors. Here are my co-authors and the topics to which they have devoted their work:
Thomas Berowitz wrote about oscillators, Richard Mogi wrote about cycle analysis, and Steve Nison wrote about Japanese candlestick charts. All
the foregoing was important, but most of all I grateful for my
wife Jo Ann. Jo Ann understood my desire, perhaps even an inner need, to write a series of books, of which
this volume is to entrust to paper what was inside me. I thank her for supporting me in this project,
despite her full awareness that these efforts significantly impinge on the time we spend together and our family life. And after that, I thank my children Daniel, Zakhar and Samantha
for how they reacted to the reduction of my presence in their lives.
Unless otherwise noted, charts in this book are reproduced from
courtesy of Prudential Securities Inc.
Jack D. Schwager
Part 1
ANALYSIS
GRAPHICS
1 Graphs: tool
forecasting or
folk art?
Common sense is not for everyone.
Voltaire
There is a parable about a stock trader whose passion to win was only spurred on by yet another loss. In the beginning, he tried to base his trading decisions on fundamental analysis. He built complex models that predicted stock prices based on
from detailed supply and demand statistics. However, these forecasts were invariably upset by some unforeseen event, be it a drought or an unexpected export deal.
In the end, infuriated, he abandoned the fundamental approach and turned to graphical analysis. He carefully
tracked price charts looking for recurring patterns that
reveal the secrets of successful stock trading. He was the first to discover
unusual formations such as shark-tooth daily lows and
peaks of the "tops of the Himalayas". But alas, the models always seemed reliable only until the moment when he