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 difference between winning and losing. Those who cannot accept this truth pay a heavy price. But the field of behavioral finance remains a mystery for many novice and intermediate traders. The fact is, the field itself is just starting to gain a wide following in the mainstream investing universe. Perhaps it was the financial meltdown of 2008, or the pervasive media coverage that ensued that made behavioral finance a popular subject, but whatever the reason, having a good foundation requires an excellent guide. And that's precisely what Paul Azzopardi has achieved with this book. "Behavioral Technical Analysis" is a wonderful introduction to the subject of behavioral finance and its role in technical analysis.
Azzopardi has done a great job outlining the key concepts into six main topics, among them complexity, humans perception, risk aversion, crowd behavior, and gender. Furthermore, the book is filled with entertaining and practical case studies that make the concepts easy to understand. You don't really need a strong foundation in finance to get something out of this book and that's its strength. Even Soros's theory of reflexivity is explained with such clarity and elegance that you wonder why there is so much misconception and misunderstanding around it. If you want to become a better trader and a student of behavioral finance I highly recommend this book. It's a superb introductory guide.