Book Review: Technical Analysis Using Multiple Timeframes
This is one I have recommended many times over. Written by Brian Shannon (@alphatrends on Twitter), Technical Analysis Using Multiple Timeframes is somewhat of a tactical handbook for any level of trader, regardless of strategy. Primarily focusing on practical tools, the strategies discussed in the book are able to be used in both shorter and longer term trading. While the book certainly doesn’t offer a complete trading system, it instead provides an analytical lens along with quite a few specific tactics to help understand the markets. The book’s overall approach can be summarized as so:
- Stocks cycle through four identifiable stages, of which only two are ideal for trading
- Trade with the trend for best results, and verify that trend utilizing multiple timeframes
- Maximize your profit and reduce your risk through position sizing, price analysis, using different types of stop orders, and so on…
The book is logically organized, touching on important topics like volume, moving averages, and trends. Several chapters are essentially a “how-to” on how and when to enter trades, exit trades, sell short, etc. The sections regarding short squeezes and how to factor in news/fundamentals while still keeping a technical approach stuck out to me, as did the sections where Brian breaks down the meaning behind several indicators. There’s even some little tidbits in there about how to read Level II and ways to avoid getting ripped off by your broker with hidden fees. All of which helped me quite a bit when I was first learning about the market.
It’s printed in a hardcover, with charts printed in color, which is rare with finance books. Seems like every trading book I read is printed in black and white only, even the charts. While roughly only about 200 pages, the book is written in a direct and concise method, avoiding filler paragraphs and appendices. While I enjoy the read, the only occasional thing I get frustrated with is that the charts and corresponding explanations seemed to be printed on different pages, making you flip between the explanation and the chart. Additionally, the book makes the argument that any moving average crossover signals market indecision, meaning you should avoid trading the stock. One of the only statements in the book that I disagree with, but to each their own.
Position sizing is also a topic that is discussed, in that the case is made that one shouldn’t choose random position sizing, such as 100 or 500 shares, but rather advocate an increase or decrease in your size based on opportunity, volatility of the stock, and risk. The book encourages scaling in and out of positions, rather than going “all in” and “all out” with an entry and/or exit.
Good book for anybody? Yes and no. If you consider yourself an advanced trader who has experience and proven technical analysis strategies, you might not get as much value as someone who is still learning the market. It would still be a great go-to reference or T/A handbook, just not an eye opener. However, if you’re a beginner who is still finding their groove or someone who is struggling consistently, this could be a game changer. Also a great read for any veteran looking to get back to the basics.
The book is priced at $75 on Amazon. Honestly, the price made me hesitate when it was first recommended to me. Seems high compared to the typical cost of books on finance and markets. On the flip side, there are other well-known traders who charge much more for their books, DVDs, and access to their websites.
Worth the price and time that it takes to read, and you’ll likely read it more than once.