The Encyclopedia of Technical Market Indicators (Second Edition)

by Robert W. Colby, CMT

Overview

Published in 2003 by McGraw-Hill, this 833-page reference work catalogs more than 100 technical market indicators, each rigorously tested against historical data. Robert Colby, a Chartered Market Technician, provides not just descriptions but actual performance statistics showing how each indicator performed with specific buy/sell rules applied to decades of market data.

Structure

Each indicator entry includes: definition and formula, history and originator, construction methodology, clear buy and sell rules, backtested performance results (returns, drawdowns, win rates), strengths and weaknesses, and suggested parameter settings.

Categories of Indicators

The encyclopedia covers: breadth indicators (advance-decline, new highs/new lows), momentum oscillators (RSI, stochastics, MACD, rate of change), moving averages, volume indicators (on-balance volume, accumulation/distribution), sentiment indicators (put/call ratios, advisory service polls, short interest), volatility measures, and composite indicators.

Testing Methodology

Colby used MetaStock software and decades of historical data from UST Securities and Ned Davis Research. Each indicator was tested with specific, objective rules -- no curve-fitting or optimization tricks. This makes the results more robust and practically useful than typical indicator descriptions.

Significance

The book's primary value is its empirical approach. Rather than claiming any indicator is "the best," Colby presents evidence and lets readers draw their own conclusions about which indicators suit their trading approach. The testing framework also serves as a model for how traders should evaluate any indicator or system before committing capital.