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The Visual Investor: How to Spot Market Trends, Second Edition by JOHN J. MURPHY

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SECTION ONE
Introduction
Traders and investors have been using a visual approach to investing for over a century. Up until the past decade, the use of visual analysis as a serious method of trading and investing was pretty much limited to professionals and full-time traders. Most successful traders would never think of making a trade without first consulting the pictures on their charts. Even the Federal Reserve Board now uses price charts.

WHAT HAS CHANGED?

For the average investor, however, the world of visual trading had been largely closed. The intimidating jargon and complicated formulas were beyond the reach and, indeed, the interest of the nonprofessional investor. A couple of important factors have changed that in the past decade. The most important is the availability of inexpensive computers and Internet charting services. The investing public now has an impressive array of technological and visual tools that weren’t available to the professional community 30 years ago.
The second development has been the dramatic expansion of the mutual fund industry to the point where more mutual funds exist than stocks now traded on the New York Stock Exchange. This phenomenal growth has produced both benefits and challenges for the average investor. The challenge lies in the fact that the job of choosing among mutual funds has been greatly complicated. In a very real sense, the mutual fund growth has made the task of the individual investor more difficult. The original purpose ...

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