The encyclopedia of technical market indicators

What this book actually teaches

Robert Colby's book is exactly what its title says — a reference work, not a narrative. The 2003 second edition runs to roughly 800 pages and catalogs more than 100 technical indicators, oscillators, and market-breadth measures, with each entry describing the indicator's construction, its historical use, and — critically — Colby's backtested results against decades of market data. The book's distinctive contribution is that it doesn't just describe indicators; it ranks them by measured performance.

The organization is encyclopedic. Each indicator gets a standardized treatment: definition, calculation formula, historical context, signal-generation rules, and Colby's empirical backtest results (typically against the Dow Jones Industrial Average across multiple decades). The indicators span the full technical universe: moving averages and crossover systems, momentum oscillators (RSI, stochastics, MACD), volatility measures (Bollinger Bands, ATR), volume-based indicators (on-balance volume, accumulation/distribution), market-breadth indicators (advance/decline lines, McClellan oscillator), sentiment measures, and lesser-known constructions from across the technical-analysis literature.

The analytical centerpiece is the comparative backtesting. Colby applies a consistent methodology to all indicators and ranks them by risk-adjusted performance. The findings are sobering for technical-analysis enthusiasts: many widely cited indicators fail to beat buy-and-hold after transaction costs, and the ones that do tend to be simpler than the literature gives them credit for. Some breadth indicators and basic trend-following moving-average systems hold up; many oscillators do not.

Who this is for: serious technical traders, quantitative researchers, and anyone building a systematic strategy who needs a reference for what indicators actually are and how they have historically performed. Not for casual readers — this is a desk reference, not a sit-down read.

Weaknesses are real. The 2003 backtests predate the post-2008 market regime, the rise of high-frequency trading, the decimalization aftermath, and the algorithmic dominance that has thinned many edges Colby's results identified. Some indicators that worked when his data ended have since been arbitraged away or have failed in regime changes. The methodology — backtesting on the DJIA — is also a single index with survivorship and composition effects that may not generalize cleanly. Critics note that the book provides no theoretical framework for WHY some indicators work; it is empirical-only, which leaves readers without guidance for adapting the indicators to new market regimes. And the encyclopedic structure means there is no narrative arc — readers must do the synthesis work themselves.

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About Robert W Colby

Read more from Robert W Colby and explore the full bibliography on ClearValue Books.