Book review: Reading Price Charts Bar by Bar

August 31, 2009 07:00 PM

Reading Price Charts Bar By Bar: The Technical Analysis of Price Action For The Serious Trader
by Al Brooks
Wiley Trading
$75; 402 pages

“Reading Price Charts Bar By Bar” is a solid technical manual presented in near-textbook fashion. It hits the key elements of chart analysis, from the bar size and type to the various classic formations they reveal. The text is expansive, occasionally pithy and not always expected. There are sections, for example, devoted to patterns particular to the Globex pre-session while others enumerate the least reliable, most dangerous scenarios.

Author Al Brooks also makes convincing observations on the fundamentals that drive recurring market behavior. We get a sense that he’s always considering the big picture behind the more immediate time-sensitive strategies. Part of what advances the text beyond the mere primer level is how thoroughly Brooks identifies trading landscapes (trending, trading, prohibitively unpredictable, etc.) Tools are only effective in the context of the underlying environment.

Although Brooks’ writing is mostly clear and concise, I had occasional trouble relating his text to the corresponding illustrative charts. Sometimes even the numbers used to illustrate specific bars seemed confusing if not blatantly incorrect. Other nebulousness stemmed from the author’s assumption that we know something we probably don’t. I’m familiar with exponential moving averages, but it took me a while to figure out his “EMA” shorthand for it. An “ii” pattern is referenced on Page 13, but not explained until page 20. (It’s two successively smaller inside bars.) Such glossing prompted a few too many back and forth trips to other pages including the glossary and index.

Still, there is a logical progression leading to the final “best trades” chapter. You have to work a bit to recognize the setups, but you’re not likely to feel short-changed information-wise. The back bio flap’s assertion that Brooks achieved “consistent success and profitability” through his methodology seems credible. It’s always nice when the mentor actually walks the walk.

Art Collins is the author of “Beating the Financial Futures Market” and co-founder of the Trireme Capital hedge fund.

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