Brown, Technical Analysis for the Trading Professional, 2d ed.

When I requested a review copy of this book, I forgot how much I disliked the first edition. Either I’m getting soft or Constance M. Brown has substantially improved the second edition. Probably a little bit of both. By the way, for those aspiring to be certified in the Chartered Market Technician program it is required reading.

Technical Analysis for the Trading Professional: Strategies and Techniques for Today’s Turbulent Global Financial Markets (McGraw-Hill, 2012) is still not a book that I would turn to for core trading strategies. On the fringes, however, it can be useful. And this is important because, as I have argued before on this blog, it is often by making even minor changes at the periphery that returns are substantially improved.

Brown relies primarily on Fibonacci projections, Gann analysis, and the Elliott Wave Principle for her trading. She also adds a couple of oscillators to her charts, including her Composite Index, for which she now provides the formula.

At practically every turn Brown offers a twist on commonly accepted tenets of technical analysis. Take something as seemingly simple as trend lines. She devotes an entire chapter to the argument that dominant trend lines are not always from extreme price highs or lows. Her trend lines sometimes look like the ones I draw (which, of course, make them ever so smart). At other times it’s difficult to follow her logic; the choice of pivot points seems idiosyncratic.

Or, to offer another example, she wrote in the first edition and quotes the passage here: “By the end of Part 3, you will feel certain that no conventional indicator is safe in my hands. I will invert it, smooth it, compound it, disassemble it, superimpose it, and even imbed it—all in an effort to understand it.” (p. 357)

Brown’s book is definitely not for the novice trader. Without a solid foundation in classical technical analysis (and here I include Fibonacci, Gann, and Elliott) the reader would be utterly lost in the twists and turns of Brown’s original work.

The author’s earlier writings were often shrouded in mystery, aka “teasers.” In this book, by contrast, Brown makes an honest effort to share the ideas she has honed over the years. I always figure that if I get one good idea from a book it was worth the read. Technical Analysis for the Trading Professional over-performed.