There are hundreds of way to make money in the stock market, but the one which has the largest following is technical analysis. If you search Amazon database on investing, you will notice more books on technical analysis that any other topic. There are hundreds of newsletters dedicated to the art of technical analysis and chart reading. Most of them offer a very simple way to interpret the market and offer promises of riches.
Most traders and especially beginner traders are completely lost in the technical analysis jungle. It is difficult for them to accept any other interpretation of market. I know of people who everyday evening go through over 2000 charts or more in search of their esoteric patterns. Most beginner traders get hijacked by technical analyst and some of them are lost forever to the dark arts of technical analysis.
If you have noticed much of the Wall Street big money houses have over last 5-6 years retired or sacked their technical analyst heads. Much of the work is being now done by quantitative tools. But the cult of technical analysis continues to grow.
If you want to escape that trap look at some of the quantitative approaches to making money. Even if you have to follow technical analysis, use a quantitative method to select stocks and then apply your chart reading patterns.
Now if you want to understand technical analysis there is no shortage of books on it. I have read most of them. I can identify most of the common and some very esoteric patterns but I seldom use them in my trading. If I have to recommend only one book on technical analysis, I would recommend, How Charts Can Help You in the Stock Market by William L. Jiler. One of my very profitable quantitative scan idea is based on one of the ideas in that book.
I will also talk about a entire trading and scanning approach in my next post in the series on How to narrow the number of breakouts. It is a completely quantitative approach to trading and uses quantitative scans to find good patterns and if you trade it you might beat the best trained technician by a wide margin. But for that you will have to find your way out of the technical analysis jungle first.