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I've read a lot of trading books. Probably well over a 100.
None of the TA books I've read have ever had any kind of method,
strategy or system that tested out well except during strong market
trends. Very few of the books have ever included any substantial, or
even much in the way of unsubstantial, test data that is of any
quality or value. I wonder why they left that out since it is critical
to evaluating any trading strategy?
Here are a few books with unbiased test results that will give anyone
a clear understanding of what TA can and won't do for them.
Thomas Stridsman includes comprehensive test results in his books
Trading Systems that Work and Trading Systems and Money Management.
Those are eye opening also. Stridsman tests trading strategies for
hedgefunds so he's no dope.
The Encyclopedia of Technical Market Indicators by Robert Colby has a
lot of long term test results on a variety of indicators and trading
methods. Another eye opening book.
The Encyclopedia of Trading Strategies by Jeffrey Katz and Donna
McCormick is very comprehensive in examining all kinds of trading
methods. This is a good breadth book.
Evidence Based Technical Analysis by David Aronson is tough to read in
places, especially for those who don't understand or like statistical
analysis, but it will disabuse those who think that TA is a magical
method of making money. I've said before my opinion and experience is
TA provides little help in making money unless there is a confirmed
trend in the market. Then TA provides a little assistance.
Here's my opinion on what works on US equities.
Limit your trading to uptrends from Oct 1 to May 30 or some other
market conditions filter that you've tested.
Trade from a list of stocks prescreened by fundamentals and
quantitative methods. I use Valueline but there are other lists that
are also good.
Use a simple trading method.
Keep your portfolio to 25 or so stocks.
Okay, so do I apply the same scrutiny to myself as I do others in
regard to backing up their methods with test results? You bet. I've
tested this stuff and many of the test results were presented in Roy's
newsletter over the last few years.
Sure others will disagree with this method. No problem. Just ask them
for their test data, and if the test results look good, cover a broad
range of market conditions and meet rational testing methods, they've
got something worth looking at.
Super
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