Technical Analysis Using Multiple Timeframes

I’ve been meaning to post up my review of Brian Shannon’s new book, Technical Analysis Using Multiple Timeframes, for quite some time but as I have already mentioned, my schedule has been crazy. Well, I was able to sit down and write a brief but hopefully a helpful review.

The book starts with a chapter on technical analysis which I recently listed as one of the 10 steps to profitable trading. I agree with Brian 100% that any person that wishes to become a successful trader must learn and start to master some aspect of technical analysis. He clearly identifies that technical analysis is not about memorizing chart patterns or funky images but about understanding the motivations of participants which may help in anticipating future moves. This is a game of anticipation more so than speculation if you play by a set of rules and attempt to do it professionally. Overall, Brain nails the point that technical analysis allows a trader to view the market with some type of clarity (this may differ from one person to another – especially in multiple time frames).

He says: “price is the only thing that pays”. Very simple but true. All the tools and gadgets in the world can’t and won’t help you trade more efficiently than using simple price action which can be monitored through charts or technical analysis. He says, in other words of course, that technical analysis is not an exact science and will not predict every move but it should allow an experienced trader make sense of the movement(s) they are viewing.

I loved the first chapter because I felt I was reading my own thoughts (almost word for word).

The next four chapters focus on the four stages of a stock’s cycle or movement (in Brian’s opinion and I don’t disagree):

  • Accumulation
  • Markup
  • Distribution
  • Decline

This portion of the book reminded me of the analysis done by Stan Weinstein in his book, Secrets For Profiting in Bull and Bear Markets. There were some differences in explanation but I agree when Brian states that these four stages appear in every timeframe of every stock. Later on in the book, he talks about how and when to buy with focus on stage two and four stocks for trend traders (that would include me). Within these chapters, Brian says:

“Successful trading is all about finding an edge and exploiting it for your gain. If we cannot find such an advantage, there is no reason to be involved”.

From here, the book talks about support and resistance, trends, volume and moving averages; all things I continuously write about here on the blog because I use them and view them everyday on daily and weekly charts (support and resistance on point and figure charts). Once again, I felt I was reading my own thoughts in chapters seven through ten.

Reading along, we get introduced to chapters on How and When to Sell Short, News and Fundamentals and Short Squeezes. These chapters contain solid material but not as strong as the previous chapters or the final chapters on Risk Management, Rules and Insight and Putting it all Together. In my opinion of course.

The final chapters allow the book to close strong with focus on risk management which is one of the most important items on my list of steps to becoming a profitable trader. This chapter explores:

Market risk, time, risk/ reward (entry, stop and profit objective – which I use in every case study on the blog), trade size or position sizing, stops and other exit strategies.

This is one of the best chapters in the book and is a must read for any investor because the material can not be covered enough.

Finally, Brian covers trading tips, rules and truisms to think about and a few pages about putting it all together.

Overall, this is an excellent book, one that I recommend to any trader that is interested in technical analysis. I endorse the book enough so that I have joined the affiliate program and have placed image ads on my blog. I don’t promote too many items on this blog other than books from Amazon but this is surely a product I feel comfortable recommending. Most importantly, the book is not filled with fluff or any unnecessary fat which I believe is its best feature.

Do I have any reservations about the book?
Of course but not many that matter (as far as content is concerened), here is a short list to be fair.

  • The idea of trading in such short time frames is not my forte but the point is the same regardless of the timeframe.
  • The physical size of the book is larger than I would prefer but this is minor. I am not talking page count or content but actual size is not standard.
  • The cover of the book is bland but I come from a design background so I will always have some constructive criticism. I never purchased a book due to its cover but I know many people do. It’s the content that counts, not the cover of the book.
  • Finally we come to price. I questioned Brian about the price and he gave me the perfect answer. The book may cost more than others but you pay for what you get. The content is premium, it’s to the point and will help make you a better trader; therefore, can you really put a price on education that should repay you in the future? Personally, I would have started at a lower price point but again, that’s my own opinion.

In any case, I highly recommend the book as it is just as good, if not better than the daily stock videos Brian produces at his excellent blog AlphaTrends. I am a subscriber to his videos which download free into my iTunes program and then upload onto my iTouch every day.

Enjoy!

Comments

  1. Steven Place says:

    This book turned on the light bulb for me. Highly recommend it.

    BTW, you need to cloak your aff link.

  2. Thanks for the comment Steven. No need to hide my affliliate link – I openly talk about it in the review.

  3. Brian Shannon says:

    Chris,
    Thanks for the nice review! You do a great job with everything on this site.
    Brian

  4. Jon Tait says:

    Chris,

    I bought the book based on both your positive review and that the description of the content strikes a chord with how I view markets. Thanks for showing me a resource I might not have otherwise come across.

    -Jon

  5. So Chris,
    what did this book say about using multi-time frames?

  6. chris wright says:

    I am also one of the many happy people that have made brians book part of my collection. Although I am new to trading I found brians book something that you could use and profit from as it makes the most sense.
    Please don’t let the price put you off !

  7. Jon,
    Great to hear from you – its been a while since we last touched base. Enjoy the book, I am sure it is up your alley.

  8. Coby,
    The entire book maintains focus on multiple timeframes while relating them to the subjects in the chapters I mention. Click through to read some sample pages on Brian’s site.

  9. Dave Stouhk says:

    sorry , I didn´t like the book. Not many new things,
    just a summary of a lot of old themes from other books written 5-10 years ago.

  10. oh Chris,

    thanks for the coverage on VISN! It was a real winner for me this past week.

  11. John Egan says:

    Well.. Read your review and Googled the book. Found nothing but praise on various sites aside from yours.. All from pro traders. I’m about 1/4 the way through now (got to read it at my son’s enrollment as a Frosh in HS…).. So far I can’t say that there is lots of new stuff, but it sure is nicely put together and the approach to explaining why the market moves beats most of the ‘Just follow my instructions blindly’ type of books that I’ve got. Also, it seems quite comprehensive. Thanks for the tip…

    jegan 😉

  12. Great review!
    Thanks for the recommendation.

  13. I think it is important to look at multiple time frames. There are potentially conflicting trends in the market at same time which can have a negative affect on your trading.

  14. Good review. As a trader you need to be flexible and being able to trade over mulitple time frames allows you to do that.

Trackbacks

  1. […] Chris Perruna reviews Brian Shannon’s text on technical analysis across multiple […]

  2. […] Chris Perruna reviews Brian Shannon’s text on technical analysis across multiple […]

Speak Your Mind

*