Behavioural technical analysis : an introduction to behavioural finance and its role in technical analysis / by Paul V. Azzopardi.

Format:

Book

Author/Creator:

Azzopardi, Paul V., author.

Language:

English

Subjects (All):

Investments--Psychological aspects.

Investments.

Investments--Decision making.

Finance--Psychological aspects.

Finance.

Economics--Psychological aspects.

Economics.

Physical Description:

1 online resource (216 p.)

Edition:

1st ed.

Place of Publication:

Petersfield, Hampshire, Great Britain : Harriman House, 2010.

Language Note:

English

Summary:

'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.

Contents:

Intro

Contents

Acknowledgements

Preface

The rise of behavioural finance

The objectives of this book

PART ONE -BACKGROUND

Chapter One -The Behavioural Finance Revolution

What this chapter is about

Why is behavioural finance important for your investments?

The REM

Does REM exist?

The beginnings of behavioural finance

Rational within limits

The six categories of behavioural finance

The categories

The fourth approach

Key concepts in this chapter

Chapter Two -People Acting Strange:Emotion In Decision Making

The unexpected

What makes people irrational?

Biases and heuristics

Biases

Heuristics

How does emotion come into it?

Buridan's ass

Brain damage

The sneaky subconscious

The attraction of money

Sleep

Rationality versus emotion

Key concepts covered in this chapter

PART TWO -BEHAVIOURAL FINANCE

Chapter Three -Complexity: Trying To Keep ThingsSimple

Trying to keep it simple

Tax laws

Coping with complexity

Simplifying by heuristic

Filtering out the noise

Focusing on movement

Financial information

Isolation

Withdrawal

Rejection

The Forer Effect

Barn door closing

Complexity and investing

Chapter Four -Perception: What You See Is Not AlwaysWhat You Get

Cognitive biases

Comparisons are noxious

The representativeness bias

The availability heuristic

The recency bias

Mind held hostage

The framing bias

The mental accounting bias

Anchoring and adjustment

Perception biases and investing

Chapter Five -The Self: Tuum Est

Always be an optimist, never a pessimist

Openness to change

Egocentricity.

Self-attribution bias

Investing and the self

Chapter Six -Aversion: Pursuing Pleasure AndAvoiding Pain

What will the future be?

Risk and uncertainty

Regret aversion

Loss aversion

Get-evenitis

The disposition effect

Prospect theory

The value function

Aversion and investing

Chapter Seven -Society: The Sentiment Of Crowds

Anticipation and sentiment

Emotional contagion

Gustave's crowd

Triangles and broadening formations

Crowds are not always wrong

Information cascades

Soros and reflexivity

Society, crowds and investing

Chapter Eight -Gender

External stimuli on the personal discount rate

Hormones and risk taking

The ultimatum game

The brain's sense of fairness

Male and female attitudes to risk

Gender and technical analysis

PART THREE -BEHAVIOURAL FINANCE ANDTECHNICAL ANALYSIS

Chapter Nine -Behavioural Aspects Of TechnicalAnalysis

A step back from behavioural finance

An approach to market structure

Extremes

Trends

Support and resistance

The investment process

Behavioural models

Analysing the market

Primary observations of this chapter

Chapter Ten -New Horizons

Fundamental, technical and quantitative finance

The technicians

Putting a system together

Appendices

Appendix One -Rational Economic Man

Rational economic man

Appendix Two -Table Of Biases

Appendix Three -MTP Checklist

References

Index.

Notes:

Description based upon print version of record.

Includes bibliographical references and index.

Description based on online resource; title from PDF title page (ebrary, viewed February 16, 2015).

ISBN:

0-85719-068-7