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Fibonacci ratios are a powerful tool for chartists. They can give us critical information such as likely price targets and also levels that may prop up or impede the market. However, a lot of traders do not use them correctly, or do not get the most out of them. A lack of accessible written material on the subject is one problem, but Carolyn Boroden's new work goes a long way toward correcting this.
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In a simple but lively way the author shows how traders can use this 'mystical' series of numbers to inspire their buying and selling decisions. Starting from zero, the Fibonacci sequence is generated by adding the previous number to each consecutive digit. The first number of the sequence is 0, the second 1, each subsequent number is equal to the sum of the previous two numbers of the sequence itself, yielding: 0, 1, 1, 2, 3, 5, 8 and so on.
In addition to highlighting a number of important price set-ups, Ms Boroden applies the Fibonacci ratios to the calendar, in order to identify potential future turning-points in markets. Despite the esoteric nature of Fibonacci analysis, this book strikes a very practical note, with lots of real-life examples.
Although you'll be able to put a lot of this book's ideas to use with any decent charting-software package, the more advanced stuff might be time-consuming to deploy unless you have specialist kit. Still, you should have no difficulty grasping the concepts involved: the book is stuffed with generously-sized charts in pinpoint definition. If you're already dabbling in Fibonacci, this book will take your knowhow to the next level.
Fibonacci Trading - how to master the price & time advantage by Carolyn Boroden. McGraw Hill, 2008. 303 pages. Available through the IC bookshop at a 25 per cent discount: £28.49.
As a trader, you've always got to look beneath the surface of the market. A price may be moving the way you expected, but movement alone doesn't mean there's real conviction driving it. Looking at trading volumes is a great way to determine whether a price-change has genuine power behind it. And Richard Arms' equivolume charts provide the clearest depiction of how price and volume interact.
In his latest book, Mr Arms demonstrates how to spot the signals that really matter using the equivolume technique that he developed. By combining these with ordinary technical-analysis features - like moving averages, trendlines and price-patterns - traders get more insightful messages from the charts. Mr Arms also provides some valuable tips on a subject that often frustrates novice traders: where to place stop-loss orders.
As well as equivolume charting, the author also invented the famous "TRIN" indicator (aka the Arms Index), which assesses volume patterns across rising and falling members of an index. While the Arms index constitutes the subject of another entire book, a handy chapter is also included in this volume. The only let-down in Stop and make money is the quality of the charts, whose size and resolution makes them tricky at times. In this respect, publisher John Wiley ought to have taken a leaf out of rival McGraw Hill's book - see review above.
Stop and make money - how to profit in the stock market using volume and stop orders by Richard Arms. John Wiley, 2008. 185 pages. Available through the IC bookshop at a 34 per cent discount: £33.
Largely unknown in the West two decades ago, Japanese candlestick charts are now the price-tracking method of choice for traders everywhere. However, a lot of us don't exploit this ingenious, at-a-glance method of showing price relationships to its full potential.
Learning candlesticks from a specialist book - rather than from a chapter within a more general guide to charting - is one way of getting off on the right foot.
I instantly warmed to Clive Lambert's new, elementary guide to candlesticks. In fact, I probably prefer it to the authoritative Western tome on the subject, Steve Nison's Japanese Candlestick Charting Techniques.
The use of full colour really brings the amply-sized charts and diagrams to life, while the explanations are nicely sliced and diced into boxes and sub-sections that make the book easy to dip into casually.
Whereas some candlestick guides are quite dry and academic, Mr Lambert's effort has a much more practical bent. Real-life examples are given throughout, with lively discussions of how these situations played out.
While the book covers 20 of the main candlestick patterns, that still ignores 50 or so others, albeit many of them fairly trivial. Given the author's talent for straightforward communication, a future edition could easily include more patterns without unnecessarily complicating matters.
Candlestick Charts - An introduction to using candlestick charts by Clive Lambert. Harriman House. 166 pages. Available through the IC bookshop at a 34 per cent discount: £16.49.
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