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In my previous book Stocks and Shares Simplified I just touched on the underlying principles by which the future course of share prices could be estimated by means of boundaries based on long-term moving averages. I then became aware of the work of J. M. Hurst in the United States, and came to realise that we were both heading in the same direction by slightly different routes. These two approaches have been combined in the technique of Channel Analysis, and readers of this book will soon begin to see that this is the most powerful technique available for predicting the direction of share prices over the near future.

The book does not claim 100% success in predicting price movement, since a considerable proportion of price movement is random and therefore not predictable. Where the book does claim success is in determining the status of the various cycles present in share price data. This knowledge is of paramount importance in identifying buying and selling points only a short time after they occur. This reduces the risk to the investor while giving him a large proportion of the subsequent gain made by the share price.

The book also shows that the policy of buying a share and then holding on to it through thick and thin is a flawed one, and that much greater profits can be made by trading on a short-term basis even when dealing costs are taken into account.

Finally the importance of a disciplined approach to investment is stressed, enabling the investor to hold on to the profits which he has made.

October 1989

Brian J. Millard, Bramhall