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Getting Started in Technical Analysis

by Jack D. Schwager (1999)

Quick summary -- an in-depth PhD-level extended summary (10-30 pages) for this book is coming soon.

Getting Started in Technical Analysis

By Jack D. Schwager

Quick Summary

Jack D. Schwager, legendary author of the Market Wizards series, provides a comprehensive beginner's guide to technical analysis covering chart construction, trend identification, trading ranges, chart patterns, oscillators, and the practical application of technical tools.

Executive Summary

"Getting Started in Technical Analysis" serves as an accessible introduction to the field by one of its most respected practitioners and authors. Schwager brings his extensive experience interviewing the world's greatest traders (documented in his Market Wizards books) to bear on teaching the fundamentals of technical analysis. The book covers chart types and construction, trend analysis, support and resistance, chart patterns (both continuation and reversal), technical indicators and oscillators, and the practical challenges of applying technical analysis in real trading.

Core Thesis

Technical analysis is a practical skill that can be learned systematically. While no single technical tool provides a guaranteed edge, the combination of multiple approaches -- chart patterns, trend analysis, and mathematical indicators -- provides a framework for making better-informed trading decisions. The key is understanding what each tool does well and where it fails.

Key Concepts and Frameworks

  1. Chart Types -- Bar charts, candlestick charts, point-and-figure charts.
  2. Trend Analysis -- Identifying uptrends, downtrends, and trading ranges using trendlines and channels.
  3. Support and Resistance -- Key price levels where buying or selling pressure concentrates.
  4. Chart Patterns -- Head and shoulders, double tops/bottoms, triangles, flags, and other formations.
  5. Oscillators -- RSI, stochastics, MACD, and other momentum indicators.
  6. Trading Systems -- Introduction to systematic approaches using technical tools.

Practical Applications for Traders

  1. Learn to construct and read multiple chart types.
  2. Identify the prevailing trend before placing trades.
  3. Use support and resistance levels for entry and exit planning.
  4. Combine chart patterns with oscillator signals for confirmation.
  5. Apply position sizing and risk management to every trade.

Critical Assessment

Strengths

  • Written by one of the most respected names in trading education
  • Clear, systematic presentation suitable for beginners
  • Heavily illustrated with real chart examples
  • Balanced perspective that acknowledges limitations of technical analysis

Limitations

  • Introductory level may be too basic for experienced traders
  • Some chart examples may be dated
  • Limited coverage of advanced quantitative techniques

Conclusion

"Getting Started in Technical Analysis" is an excellent entry point for anyone new to technical analysis, written by an author whose interviews with top traders give him unique insight into what actually works in practice.