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The Art & Science of Technical Analysis: Market Structure, Price Action & Trading Strategies

Book Description

A breakthrough trading book that provides powerful insights on profitable technical patterns and strategies

The Art and Science of Technical Analysis is a groundbreaking work that bridges the gaps between the academic view of markets, technical analysis, and profitable trading. The book explores why randomness prevails in markets most, but not all, of the time and how technical analysis can be used to capture statistically validated patterns in certain types of market conditions. The belief of the book is that buying and selling pressure causes patterns in prices, but that these technical patterns are only effective in the presence of true buying/selling imbalance.

The Art and Science of Technical Analysis is supported by extensive statistical analysis of the markets, which will debunk some tools and patterns such as Fibonacci analysis, and endorse other tools and trade setups. In addition, this reliable resource discusses trader psychology and trader learning curves based on the author's extensive experience as a trader and trainer of traders.

  • Offers serious traders a way to think about market problems, understand their own performance, and help find a more productive path forward

  • Includes extensive research to validate specific money-making patterns and strategies

  • Written by an experienced market practitioner who has trained and worked with many top traders

Filled with in-depth insights and practical advice, The Art and Science of Technical Analysis will give you a realistic sense of how markets behave, when and how technical analysis works, and what it really takes to trade successfully.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Dedication
  6. Preface
  7. Acknowledgments
  8. Part I: The Foundation of Technical Analysis
    1. Chapter 1: The Trader’s Edge
      1. DEFINING A TRADING EDGE
      2. FINDING AND DEVELOPING YOUR EDGE
      3. GENERAL PRINCIPLES OF CHART READING
      4. INDICATORS
      5. THE TWO FORCES: TOWARD A NEW UNDERSTANDING OF MARKET ACTION
      6. PRICE ACTION AND MARKET STRUCTURE ON CHARTS
      7. CHARTING BY HAND
    2. Chapter 2: The Market Cycle and the Four Trades
      1. WYCKOFF’S MARKET CYCLE
      2. THE FOUR TRADES
      3. SUMMARY
  9. Part II: Market Structure
    1. Chapter 3: On Trends
      1. THE FUNDAMENTAL PATTERN
      2. TREND STRUCTURE
      3. A DEEPER LOOK AT PULLBACKS: THE QUINTESSENTIAL TREND TRADING PATTERN
      4. TREND ANALYSIS
      5. SUMMARY
    2. Chapter 4: On Trading Ranges
      1. SUPPORT AND RESISTANCE
      2. TRADING RANGES AS FUNCTIONAL STRUCTURES
      3. SUMMARY
    3. Chapter 5: Interfaces between Trends and Ranges
      1. BREAKOUT TRADE: TRADING RANGE TO TREND
      2. TREND TO TRADING RANGE
      3. TREND TO OPPOSITE TREND (TREND REVERSAL)
      4. TREND TO SAME TREND (FAILURE OF TREND REVERSAL)
      5. SUMMARY
  10. Part III: Trading Strategies
    1. CHAPTER 6: Practical Trading Templates
      1. FAILURE TEST
      2. PULLBACK, BUYING SUPPORT OR SHORTING RESISTANCE
      3. PULLBACK, ENTERING LOWER TIME FRAME BREAKOUT
      4. TRADING COMPLEX PULLBACKS
      5. THE ANTI
      6. BREAKOUTS, ENTERING IN THE PRECEDING BASE
      7. BREAKOUTS, ENTERING ON FIRST PULLBACK FOLLOWING
      8. FAILED BREAKOUTS
      9. SUMMARY
    2. CHAPTER 7: Tools for Confirmation
      1. THE MOVING AVERAGE—THE STILL CENTER
      2. CHANNELS: EMOTIONAL EXTREMES
      3. INDICATORS: MACD
      4. MULTIPLE TIME FRAME ANALYSIS
    3. CHAPTER 8: Trade Management
      1. PLACING THE INITIAL STOP
      2. SETTING PRICE TARGETS
      3. ACTIVE MANAGEMENT
      4. PORTFOLIO CONSIDERATIONS
      5. PRACTICAL ISSUES
    4. CHAPTER 9: Risk Management
      1. RISK AND POSITION SIZING
      2. THEORETICAL PERSPECTIVES ON RISK
      3. MISUNDERSTOOD RISK
      4. PRACTICAL RISKS IN TRADING
      5. SUMMARY
    5. CHAPTER 10: Trade Examples
      1. TREND CONTINUATION
      2. TREND TERMINATION
      3. FAILURE TEST FAILURES
      4. TRADING PARABOLIC CLIMAXES
      5. THE ANTI
      6. TRADING AT SUPPORT AND RESISTANCE
      7. SUMMARY
  11. Part IV: The Individual, Self-Directed Trader
    1. CHAPTER 11: The Trader’s Mind
      1. PSYCHOLOGICAL CHALLENGES OF THE MARKETPLACE
      2. EVOLUTIONARY ADAPTATIONS
      3. COGNITIVE BIASES
      4. THE RANDOM REINFORCEMENT PROBLEM
      5. EMOTIONS: THE ENEMY WITHIN
      6. INTUITION
      7. FLOW
      8. PRACTICAL PSYCHOLOGY
      9. SUMMARY
    2. CHAPTER 12: Becoming a Trader
      1. THE PROCESS
      2. RECORD KEEPING
      3. STATISTICAL ANALYSIS OF TRADING RESULTS
      4. SUMMARY
  12. Appendix A: Trading Primer
    1. THE SPREAD
    2. TWO TYPES OF ORDERS
    3. CHARTS
  13. Appendix B: A Deeper Look at Moving Averages and the MACD
    1. MOVING AVERAGES
    2. THE MACD
  14. Appendix C: Sample Trade Data
  15. Glossary
  16. Bibliography
  17. About the Author
  18. Index