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The Three Best Books To Get Started Trading And Understanding The Stock Market Charts

Become A Better Trader And More Informed Investor

I’m more excited about the markets now than I have been in years, because I believe sectors that I’m most knowledgeable about are poised to do very well now going forward. A few months ago I was about 14% invested in them and boosted that position to 50%.

The opportunities are so exciting, that I even considered trading more aggressively in them. There was a time I did, there was a time I traded huge, but as time goes on a person’s trading and investing methods can evolve. It is easier to take a big risk with a few thousand than a few million. But it got me going back to some of the old school traders I turn to from time to time that were big in the 1920’s and 1930’s, using some very advanced techniques that carry with them high risk.

I’ll write about them in a later post.

My goal is to make you a better trader and more informed investor in everything I do and taking big risks isn’t necessary to do that.

It is reading books that got me started, in the markets, and helped me to learn and win.

Back when I started Youtube didn’t exist and neither did social media.

But, honestly, I think books are still superior to both if you want to learn and win at something like trading.

Really, they are necessary.

This is a big game, and so much of what is driven on the internet is pure hype that doesn’t really help you learn how to win at the trading game.

You can jump start your trading with my book Strategic Stock Trading, but let me share with you today three key books that helped me get going in these markets that I recommend everyone read.

There is nothing like this book and way back when I co-managed a hedge fund we were fortunate to get copies of his newsletter.

At the time it cost $25,000 a year and was geared for high net worth or institutional traders.

His book introduced me to the concept of “stage analysis,” which is a simple way to integrate market cycles into your thinking and identify when they change. It’s so simple, it sounds like common sense, but so few do it, as so many are driven by hype and chasing price action, and it is hype that floods the internet and big moves that make the news.

But how about getting in before the big moves?

You want to buy and hold during bull markets, be careful when markets appear to be topping, and avoid doing much of anything during a bear market, except if you want to be an aggressive trader, then you make bearish bets.

You identify what stage a market, stock, or a sector is in by seeing where it’s price is relative to it’s long-term moving averages and the optimal buy point is at the start of a stage two bull market.

Weinstein’s book also has ideas on refining entry points and using stop loss orders.

Weinstein retired years ago, his book was written in the 1980’s, and he only has ever made a few appearances on the internet.

Here is one of them, where it looks like someone talked him into making a course with them.

William O’Neill was the founder of Investors Business Daily, which was once one of the biggest financial print newspapers in the country.

But, hey, who reads print newspapers anymore?

Well, his book remains a classic to me and lays out his “CANSLIM” buying system.

It teaches some similar chart price patterns and trend philosophies that Stan Weinstein does, so helps reinforce his ideas, but combines them with some fundamental and earnings growth metrics in stock picking.

More importantly, it also advocates sector trading.

Somewhere in the book, O’Neill argues that almost all of the action in an individual stock is correlated with the specific sector that it is in.

The book really drove home the point to me that sector investing is the key to buying stocks, and I embraced that more and more over the years of my trading in the markets, to the point where I care 99% about sectors and 1% about the individual stocks when it comes to determining what I want to trade and invest in.

3) Martin Pring’s Technical Analysis Explained

I use charts to figure out what is going on in the markets and charts are on all the apps and financial websites that you use, but how do you read them?

Pring’s book is like a little textbook into what all of those indicators you see on a chart mean and how to use them.

A lot of people go into what I call “indicator overload” by trying to find some magic combination of indicators that can predict the future.

That doesn’t really happen, what is important, though, is to use a few indicators that you really understand how they work, and then they help you understand what is happening with the trends and the chart.

I really only use a few. The ones I use the most are moving averages, stochastics, and Bollinger Bands, and with the latter I like to use 200-day Bollinger Bands. That’s something I learned from listening to or reading a market technician named Frank Barbera.

But, it’s good to read this whole book.

It also talks about the importance of sectors too and sector rotation patterns and how they connect to the big stage cycle trends.

The markets are fun, because they keep your brain going and learning no matter how young or old you are.

And money won is more fun than money earned, so someone said, lol.

These books are a good start, for anyone getting into the markets, and I will introduce more specific trading tactics and educational type content in my emails and posts for you going forward.

It’s all about making you a better trader and more informed investor.

And if you haven’t done it yet, you should read my Two Fold Formula Ebook PDF.

And if you really want to level up your trading, and have not yet done so, you should upgrade your subscription to this newsletter by going here:

-Mike Swanson

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