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Behavioural Technical Analysis

An introduction to behavioural finance and its role in technical analysis

By Paul V. Azzopardi

Paperback £34.99 / $70.00
eBook £30.99 / $36.99
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Behavioural Technical Analysis

An introduction to behavioural finance and its role in technical analysis

By Paul V. Azzopardi

Jacket text

‘Behavioural Technical Analysis’ is an accessible introductory guide to how human nature impacts the markets and those who trade in them.

At its core, trading is a decision-making process based on the analysis of data and a judgement on risk and uncertainty. When humans make trading decisions their emotions, physiology and the natural qualities of the brain automatically and subconsciously play a role. Therefore, to better understand the financial markets we need to better understand the behaviour of individual investors within those markets.

Behavioural finance – the study of how human sentiment and emotion affects financial decision-making – is a means for achieving this better understanding and it is already revolutionising investment and trading. In particular, it is becoming clear that behavioural finance can help evaluate various aspects of technical analysis – and this is the unique focus of ‘Behavioural Technical Analysis’.

This book provides an introduction to the six main areas of behavioural finance: dealing with complexity; how humans perceive what is around them; sense of self; aversion to risk; the impact of society and crowds; and gender. An overview is given in each case and for each key concept details are provided about how it can affect the work of technical analysts.

The author then builds on these early chapters by applying the concepts of behavioural finance to three key technical analysis techniques: study of extremes, study of trends, and support and resistance. It is shown how behavioural finance can help illuminate long observed technical price patterns and thus serve as a foundation for profitable investment and trading strategies.

This book does not presuppose any knowledge of behavioural finance or psychology, skills in mathematics or detailed trading techniques, but instead provides an outline of the key features of behavioural finance that are relevant to technical analysis and advances a new and exciting way of thinking about trading.

‘Behavioural Technical Analysis’ is a lucid and practical read for all those who want to understand what happens when human nature and financial markets collide – and, most importantly, how to profit from it.

About the author

Paul V. Azzopardi has decades of experience in investment.

He trained and worked as a certified public accountant and then obtained an MBA from the University of British Columbia, now Sauder School of Business, concentrating in finance and investments.

He then worked in the securities industry for the last twenty years in various roles but principally as a manager of private client accounts. In this role he invested in securities around the world on behalf of his private clients.

He now concentrates on managing a private fund and on his lifelong passion of writing about investments and finance. His blog can be found at www.etfinvestmentsnewsletter.com.

Paul's first book, 'Investment and Finance: A Common Sense Approach', an investment primer, was published in 2004 by Progress Press.

Paul can be contacted at email@paulvazzopardi.com

Reviews

“This book is not merely a boring reiteration of the necessary fundamentals, but contains a combination of facts that show weakness of MPT and original ideas. The book contains inconvenient author findings of good stock picking skills of fund managers and obstacles that prevent good fund performance. Although financial gains through common stocks are possible for any investor, the author shows that consistent investment strategy allows increase probability to achieve good results. IMO some author’s ideas are still not proven adequately but I think it will be fruitful to read this book not only for CFAs (prime audience) but also for amateur investors.”

Media coverage

From The Walta Business Weekly:

The English version of the book was first published by Harriman House of the UK, a specialist publisher. The book’s title has become a frequently used term in investment analysis and in other book titles to describe the fusion and mutual pollination of the exciting new discoveries in behavioral finance.

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From Traders Day Trading:

Behavioural finance is primarily based on observing human beings make financial decisions. These decisions are often based on what?s called a heuristic, or ?rule of thumb?, and may therefore be biased or even illogical. Unlike modern finance, behavioural finance does not start with a theoretical construct of man, as in the hypothetical, perfectly logical and… Read more »

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From Canadian Financial DIY:

This book is a rationalist’s attempt to make sense and investing use, through technical analysis, of the often irrational behaviour documented in the field of behavioural finance. Two-thirds of this book is brilliant and the other third is disappointing. The brilliant part: Azzopardi provides the best explanation and summary of behavioural finance concepts that I… Read more »

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From SFO Magazine:

Author of ‘Behavioural Technical Analysis’ Paul V. Azzopardi has an 8 page article in the November edition of SFO Magazine – http://www.sfomag.com/eSFO/eSFO2010_11.aspx

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From Seeking Alpha:

Behavioural Technical Analysis: An introduction to behavioural finance and its role in technical analysis By Paul V. Azzopardi Trading is driven by cognitive and emotional factors that more often than not conspire against us. Anyone who plays the market knows that expectations are one thing and reality is another. The divergence of course is the… Read more »

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From Your Trading Edge Magazine:

In ‘Behavioural Technical Analysis’, author Paul Azzopardi first explains the field of behavioural finance and then applies some of his findings to technical analysis in an attempt to explain how the two are compatible. Behavioural finance is essentially the study of how human sentiment and emotions affect financial decision-making, and the subsequent effect of this… Read more »

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From Seeking Alpha:

When it comes to investing or trading, the most important insight for any individual is how psychology and emotion are affecting their buy and sell decisions. This helps explain why two people with access to the same information and applying the same investing techniques can have widely variable returns. For those not familiar with this… Read more »

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From financial-trader-online.tradersdaytrading.com:

The Behavioural Finance of Trends – Traders Day Trading10th October 2011

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From Media Review:

Paul V. Azzopardi – Behavioural Technical Analysis – ViewPoints, University of British ColumbiaSpring 2011

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From canadianfinancialdiy.blogspot.com:

“Azzopardi provides the best explanation and summary of behavioural finance concepts that I have come across to date…the book is a better and more satisfying read than more famous books in the behavioural finance pop charts…worth buying for the excellent first part.”- Canadian Financial DIY9th November 2010

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From forexgrind.com:

Review – Behavioural Technical Analysis- Forex Grind3rd November 2010

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From sfomag.com:

Where Economics, Psychology and Statistics Intersect- Stocks, Futures and Options Magazine2nd November 2010

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From seekingalpha.com:

“A wonderful introduction to the subject of behavioural finance and its role in technical analysis…If you want to become a better trader and a student of behavioural finance I highly recommend this book. It’s a superb introductory guide.”- Seeking Alpha20th September 2010

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From ytemagazine.com:

“Concise and easy to read…serves as a solid introduction to the world of behavioural finance for those using technical analysis.”- Your Trading Edge Magazine1st September 2010

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From Media Review:

Unravelling the investor’s subconsciousThe Sunday Times1st August 2010

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From seekingalpha.com:

“Paul Azzopardi provides readers with an excellent introduction…those who are looking for a clear, easy to understand introductory book on behavioral finance should take a look…it provides a number of key insights that could potentially improve your trading or investing significantly.”- Seeking Alpha23rd July 2010

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Contents

Acknowledgements
Preface

PART ONE - BACKGROUND
1. The Behavioural Finance Revolution
2. People Acting Strange: Emotion In Decision

PART TWO - BEHAVIOURAL FINANCE
3. Complexity: Trying To Keep Things Simple
4. Perception: What You See Is Not Always What You Get
5. The Self: Tuum Est
6. Aversion: Pursuing Pleasure And Avoiding Pain
7. Society: What A Lovely Crowd
8. Gender

PART THREE - BEHAVIOURAL FINANCE AND TECHNICAL ANALYSIS
9. Behavioural Aspects Of Technical Analysis
10. New Horizons

Appendices
Appendix One - Rational Economic Man
Appendix Two - Table Of Biases
Appendix Three - MTP Checklist

References
Index



Published: 28/06/2010
Edition: 1st
Pages: 216
Formats: paperback - ISBN 9781905641413
ebook - ISBN 9780857190680
Media enquiries

If you’d like to get in touch with the author for interview or comment, or you’d like a review copy of this book, please contact us at pr@harriman-house.com or call +44 (0)1730 233870.

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