The Heretics of Finance Conversations with Leading Practitioners of Technical Analysis

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  • Edition: 1st
  • Format: Hardcover
  • Copyright: 2009-01-07
  • Publisher: Bloomberg Press
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The Heretics of Finance provides extraordinary insight into both the art of technical analysis and the character of the successful trader. Distinguished MIT professor Andrew W. Lo and researcher Jasmina Hasahodzic interviewed thirteen highly successful, award-winning market professionals who credit their substantial achievements to technical analysis. The result is the story of technical analysis in the words of the people who know it best; the lively and candid interviews with these gurus of technical analysis. The first half of the book focuses on the technicians' careers: How and why they learned technical analysis What market conditions increase their chances of making mistakes What their average workday is like To what extent trading controls their lives Whether they work on their own or with a team How their style of technical analysis is uniqueThe second half concentrates on technical analysis and addresses questions such as these: Did the lack of validation by academics ever cause you to doubt technical analysis? Can technical analysis be applied to other disciplines? How do you prove the validity of the method? How has computer software influenced the craft? What is the role of luck in technical analysis? Are there laws that underlie market action? What traits characterize a highly successful trader? How do you test patterns before you start using them with real money?Interviewees include: Ralph J. Acampora, Laszlo Birinyi, Walter Deemer, Paul Desmond, Gail Dudack, Robert J. Farrell, Ian McAvity, John Murphy, Robert Prechter, Linda Raschke, Alan R. Shaw, Anthony Tabell, Stan Weinstein.

Author Biography

Andrew W. Lo is the Harris & Harris Group Professor of Finance at the MIT Sloan School of Management and the director of MIT’s Laboratory for Financial Engineering. His previous books include The Econometrics of Financial Markets, A Non-Random Walk Down Wall Street, and Hedge Funds: An Analytic Perspective. He is also the founder and chief scientific officer of AlphaSimplex Group, LLC, a quantitative investment management company based in Cambridge, Massachusetts.  

Jasmina Hasanhodzic is a research scientist at AlphaSimplex Group, LLC, where she develops quantitative investment strategies and benchmarks, including the CS 130/30 Index. She received her PhD from MIT’s Department of Electrical Engineering and Computer Science, where she proposed new methods for automating technical analysis and replicating hedge fund betas. Her work has appeared in the Journal Of Investment Management and Institutional Investor’s Alpha magazine. A summa cum laude graduate of Yale College, Hasanhodzic is a recipient of a number of awards for academic excellence and a member of several honor societies, such as Sigma Xi, the Scientific Research Society.

Table of Contents

Acknowledgmentsp. xi
Introductionp. xiii
Ralph J. Acamporap. 1
Laszlo Birinyi Jr.p. 11
Walter Deemerp. 25
Paul F. Desmondp. 31
Gail M. Dudackp. 39
Robert J. Farrellp. 47
Ian McAvityp. 57
John J. Murphyp. 65
Robert R. Prechter Jr.p. 75
Linda Bradford Raschkep. 81
Alan R. Shawp. 91
Anthony W. Tabellp. 99
Stan Weinsteinp. 105
Conviction: Countering the Skeptics and the Scoundrelsp. 115
The validity of technical analysis
Acceptance by academics
Sustaining confidence while sustaining losses
Literature versus experience
Hard-and-fast rules and proven theories
Wider applications for technical analysis
Proving the validity of technical analysis
The Evolution of Technical Analysisp. 143
Evolution of the craft
New indicators and patterns
Computer software and the craft
Computer-generated signals
Hand-drawn charts
Luck, Astrology, and Other Unsanctioned Signsp. 167
The role of luck in technical analysis
Astrology and the credibility of the craft
Elliott wave, Gann's postulates, and Fibonacci numbers
Creativity, Talent, and the Art of the Craftp. 185
The role of creativity
A talent for technical analysis
Personality traits of the highly successful trader
Hard work and dedication
Analysis as art
The Challenge of Emotionsp. 199
Losing money
Emotional interference
Separating emotions from the work
The Path to Successp. 211
Formal education
Artificial intelligence
The key to success
Favorite Patterns and Indicatorsp. 227
Most and least reliable indicator
The effect of market conditions
Indicative versus descriptive
Referencesp. 249
Indexp. 252
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