Technical Analysis Plain and Simple - Michael N. Kahn

Had been dabbling in stocks for more than a year now, after the financial crisis in 2008 (I started only a while after the crisis hit as I took time to build up some basic capital). Wished I had started earlier and had more capital! This was a period where the stock market really grew by leaps and bounds, and it was a shame that I also lacked the skills and tools to make full use of the recovery.

Many times, I sold things too early, or bought things too late. At the start, I was also plagued by quite some emotions when I tried to make sound decisions about what to do with my stocks. While I might have gotten a bit wiser over the months, there are so many things I don't understand (and so many mistakes which I made!) that compelled me to make a decision to improve my skills. I was initially also intending to hold all my stocks for the long, long term. However, there's been so much volatility in the recent months that I felt it a waste to not make use of the volatility to optimise my returns. Which was what brought me to this book.

This book is really about the basics. I think the world of technical analysis is much deeper than what this book is offering, but it is definitely a good start. Key learning points, based on my humble interpretations:

1. I think the crux of technical analysis is that it essentially goes for pragmatism over "truisms". There are scores of texts on "truisms" such as stock prices being in sync with underlying fundamentals, investors being rationale, that historical prices have no bearing on future ones, etc. However, the reality of the stock market is that it is a complex mish-mash of different investors behaving in ways that are often-times better explained by behavioural science than economics. Technical analysis attempts to look for patterns in past behaviours and trends to predict the future.
2. However, the book is careful to not discount fundamental analysis, which I do think is critical to understand which stocks are good to buy and hold in the long term. As such, I think it will be the successful application of fundamental analysis and technical analysis (the latter telling me when to buy and sell) that will increase the odds of successful investing.
3. Trendlines, support and resistance lines are historical indicators that may impact future behaviours of stocks. I'm trying to apply this to the stocks I track now, but I think I lack the experience to draw proper lines - I see 2-3 ways of drawing lines almost all the time and each one of them leads me to a different conclusion. However, as a small retail investor, I think it is very important that I'm able to read where the larger masses are going. No matter how I interpret the news and market information, the numbers and indicators on the stock charts tell me how the larger group of investors are perceiving these information, which is is much more important than my own. (UNLESS they are missing a significant opportunity that I'm able to foresee.)
   
4. I think the momentum of the market is very key. I'm using these indicators alot more to help me decide whether the sentiments are changing. Even then, I'm still wrong 80% of the time.
5. I think the main difficulty now is that I don't have all the time in the world to monitor all my stocks very closely. As such, there are often intra-day opportunities that go past.
   

I think the next step is to understand the techniques alot more - both through experience (learning and failing and failing and failing!) and reading more about this. All in all, a good start and this is really an interesting and intellectually stimulating area!