Fooled by Technical Analysis

This book goes beyond my earlier works, exploring the myths and traps of technical analysis as well as the factors influencing trading profitability, including strategies for addressing these issues. Anyone who has attempted to trade using a system or a technical method, in automated or discretionary mode, will find the material invaluable. More importantly, traders who continue using naïve technical analysis methods may get valuable hints as to why their approach to trading the markets fails or even the reasons that temporary positive results can be mostly attributed to luck. In this book, I also deal with some widely held misconceptions about trading system development; for example, one of them is that out-of-sample testing validation suffices for developing robust systems or that statistical hypothesis testing can be applied to trading system development. I believe that such misconceptions have contributed to trader failures, and I present specific alternatives for dealing with their limitations.

Michael Harris started trading stocks, commodities, and currency futures 30 years ago. Michael is the author of the Price Action Lab Blog website. Michael also develops and sells trading strategies and software designed to empower traders and market professionals.

Michael was a pioneer in developing software for identifying price action anomalies 25 years ago. In the past 10 years, he has worked on the development of DLPAL LS, which is a software program that can identify short-term anomalies in market data for use with rule-based and machine-learning models. Michael has also developed several new technical indicators for the analysis of price action and identification of market regimes, such as the Momersion indicator.

Michael has worked in the past for several financial firms, where he developed a program for optimizing bond portfolios and strategies for trading commodities and equities. He has also worked as a long-short equity and ETF trader for a hedge fund.

In 1999, Michael published his first book, "Short-Term Trading with Price Patterns." He published his books "Stock Trading Techniques with Price Patterns" in 2000 and "Profitability and Systematic Trading" in 2008, respectively. In 2015, he published his most recent book, "Fooled by Technical Analysis: The Perils of Charting, Backtesting, and Data-Mining Bias." He has also published many articles as an invited author.

Michael holds two master's degrees, one in mechanical engineering with an emphasis in control systems and optimization and another in operations research with an emphasis in forecasting and financial engineering.