Reviewed by Ed Dobson, President, Traders Press, Inc.
Richard Arms occupies a well-deserved place in the annals of legendary market technicians. Anything written by him should be considered a top priority addition to the library of any serious technical trader. His work in the field of volume analysis, an area about which precious little is written, is second to none. Arms is, perhaps, best known as the originator and developer of TRIN, the short-term trading index, also widely known as the Arms Index, which is constantly displayed on the ticker flowing on financial channels.
This book is hot off the “Wiley press”. I had eagerly awaited its arrival because I had been alerted to its content some months ago by my good friend, the author. I was not disappointed, and the wait was well worth it.
The subtitle of this book is descriptive of the main theme: How to Profit in the Stock Market Using Volume and Stop Orders. Arms developed a simple, straightforward approach to trading in this book that anyone can use and understand. For the uninitiated, he clearly delineates the difference between fundamental and technical analysis and makes a strong case for the use of the technical approach, which is the basis of the method he teaches herein.
Arms has developed and employs a unique charting method, equivolume charting, which is covered in more depth in his earlier works…but which is succinctly explained in this work. The prominent feature of this method is that the width of each price bar is determined by the trading volume that took place during that time period.
Arms developed a most interesting concept he dubs the “Power Box” and teaches the reader how to recognize it when one occurs on the price chart…and how to profit from the trading approach he espouses. He wisely counsels the reader to time his or her entry and exit from trades carefully according to well-reasoned and developed rules that constitute the Power Box concept.
Rather than just entering trades long or short on a “hunch”, he advocates doing so through the judicious placement of stop orders, which put one into a position only when the market proves itself by moving in the anticipated direction and keeps one out of trades that never conform to expectations…a wise approach from a trader with decades of experience and wisdom derived from real-life participation in the market.
Little is written about the analysis of volume or the use of stops, and this book is replete with valuable information about both. On that basis alone, one will want to add this title to his or her trading library because it provides a wealth of coverage and insight into these neglected topics. Arms’ writing style is thoroughly enjoyable. It is entertaining, as well as enlightening and educational…a feat accomplished by few authors in trading literature.
Arms adds valuable insight to an extensive list of topics, including:
- Analysis of gaps
- Analysis of trendlines
- Chart formations
- The use of stops to enter and exit positions
- Support and resistance
- The use of TRIN (short-term trading index) and ease of movement
- Innovative approaches, such as volume-adjusted moving averages
There is no shortage of good things I could say about this book, and in the short space allotted here, I cannot begin to do justice to all that it covers.
This book was a delightful read and an educational experience. It was time and money well spent. It receives my highest recommendation for new or experienced traders alike.
Review by
Edward Dobson, President
Traders Press, Inc.
Greenville SC
Full table of contents and additional information may be located on http://www.traderspress.com
