Book Review; Rajiv Khalwawala's A beginner's guide: How to Profit from TA


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A Beginners Guide: How to Profit from Technical Analysis
Authored by: Rajiv D. Khatlawala
Price: ` 250
Publishers: Vision Books
Paper back 184 pages 2008,2009

On the cover:
 No prior knowledge needed
 Real-life Indian examples
 Nearly 100 charts with explanations

On the back cover:
How to profit from technical analysis?
Confused by all the talk of charts, trends, breakouts, etc. in the media? Beset by the nagging feeling you might be missing out on something useful for your investing and trading success? Worried that TA may be too difficult and technical for you? That its only for the experts or professionals?
Indeed you can profit from TA whether you are a trader or an investor. And, the basic principles and techniques are easy enough to understand and apply as this book shows you:
 How to determine whether the market is in an up trend or down trend or if the ongoing trend might be about to change
 Price patterns that indicate the continuation of a trend and those which signify and impending trend reversal
 How to profitably trade and invest using the basic techniques and tools of TA
 Step-by-step application of TA explained through detailed examples of stocks, derivatives, commodities and indices
 How long term investor can profit from TA.
TA holds that the market is always right. This clearly written beginners guide shows how you can profit from what the market is telling you.

Contents (The sub chapters which Ive outlined here are just a few of the important ones. The book has got a few more of them)
1. Introduction to TA
2. Trend Analysis
Trends and trend reversal Drawing trend lines, Support and Resistance lines Dow Theory
3. Price patterns
Why they occur continuation and reversal patterns Briefly about Gaps Stop Loss
4. Moving Averages
Types of MA How can they be used for trading and investing Bollinger bands
5. The Fibonacci Relevance
Using Fibo numbers for defining MA Periods using Fibo ratios in Retracement theory and EW theory
6. Technical Indicators The Tools of the trade
Use of TI Concept of Divergence Signal lines of TI
7. The basic indicators
The Stochastic RSI MACD
8. Combining the Technical Tools
Analysis of TISCO
Analysis of Arvind Mills
9. Application of TA to Stocks, Commodities and Indices
Analysis of Infosys
Analysis of God Futures on Nymex
Analysis of Nasdaq Index
10. TA for the Long Term Investor
Trend analysis on a Higher time frame 200 DMA, the trend decider Long Term MA crossovers 50 DMA x 200 DMA Monthly RSI as a Long term trend identifier
11. Introduction to Japanese candlesticks (very brief only)
Basic patterns
12. The importance of emotional maturity.

The author begins with Anons Mr. Market is always right in the preface. The language is easy to understand as this book is for beginners. The chart examples are of Indian scrips only except where he analyses the Gold Futures and Nasdaq Index. As this book is meant for the beginners, its language is simple and straight forward with the examples aptly supporting the sub chapters in discussion.
The Moving Averages chapter is clearly written with practical hints on how to look for the crossovers for the trade signals. The author has taken only 3 indicators for the study on Technical Indicators. What I like are the Chapters 8 and 9 wherein he teaches the methodology (with five examples) of how to approach a price chart. The step by step procedure includes
1. defining the basic trend of the security
2. drawing trend line with important support and resistance levels
3. incorporating short, medium and long term MA on a price chart to get proper perspective of price behaviour
4. determining the price levels using the retracement theory ( and comparing it with the Support and Resistance drawn earlier on step 2)
5. Adding indicators to look for the signals.

The only concern is that the author could have thrown in a couple of more examples on chapter 8, regarding how to trade the gaps as the gaps occur quite often in the market. Apart from this, Money management could have been included as well. May be, these two might have been meant for intermediate level.
On the whole, this book will provide with enough details to a beginner on what to look for in a price chart. Kudos to the author for providing the examples with Indian market scrips.

Reviewed by Babu Kothandaraman on 2010-08-06.

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