Art and Science of Technical Analysis Market Structure, Price Action, and Trading Strategies
Produktdetaljer
Biografisk notat
ADAM GRIMES is the CIO of Waverly Advisors, an asset management and risk advisory firm headquartered in New York. He began his career as an independent trader focused on agricultural and currency futures, and moved on to manage a successful private investment partnership. Grimes's experience as a trader covers futures, equities, currencies, and derivatives, in time frames ranging from intraday to multi-month swings. Though he is primarily a discretionary swing trader, his methodology rests on a firm foundation of statistical and quantitative research. Grimes holds an MBA with an emphasis in finance and market microstructure, and has worked for a number of private investment firms, as well as having spent several years at the New York Mercantile Exchange.
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.
Preface xi
Acknowledgments xv
Part I The Foundation of Technical Analysis
Chapter 1 The Trader’s Edge 3
Defining a Trading Edge 4
Finding and Developing Your Edge 7
General Principles of Chart Reading 8
Indicators 12
The Two Forces: Toward a New Understanding of Market Action 13
Price Action and Market Structure on Charts 15
Charting by Hand 28
Chapter 2 The Market Cycle and the Four Trades 31
Wyckoff’s Market Cycle 32
The Four Trades 40
Summary 45
Part II Market Structure
Chapter 3 On Trends 49
The Fundamental Pattern 49
Trend Structure 51
A Deeper Look at Pullbacks: The Quintessential Trend Trading Pattern 65
Trend Analysis 77
Summary 95
Chapter 4 On Trading Ranges 97
Support and Resistance 97
Trading Ranges as Functional Structures 113
Summary 120
Chapter 5 Interfaces between Trends and Ranges 121
Breakout Trade: Trading Range to Trend 122
Trend to Trading Range 134
Trend to Opposite Trend (Trend Reversal) 137
Trend to Same Trend (Failure of Trend Reversal) 143
Summary 145
Part III Trading Strategies
Chapter 6 Practical Trading Templates 149
Failure Test 150
Pullback, Buying Support or Shorting Resistance 154
Pullback, Entering Lower Time Frame Breakout 162
Trading Complex Pullbacks 165
The Anti 170
Breakouts, Entering in the Preceding Base 174
Breakouts, Entering on First Pullback Following 181
Failed Breakouts 183
Summary 186
Chapter 7 Tools for Confirmation 189
The Moving Average—The Still Center 190
Channels: Emotional Extremes 195
Indicators: MACD 202
Multiple Time Frame Analysis 213
Chapter 8 Trade Management 231
Placing the Initial Stop 232
Setting Price Targets 235
Active Management 240
Portfolio Considerations 251
Practical Issues 253
Chapter 9 Risk Management 263
Risk and Position Sizing 263
Theoretical Perspectives on Risk 279
Misunderstood Risk 282
Practical Risks in Trading 283
Summary 290
Chapter 10 Trade Examples 291
Trend Continuation 293
Trend Termination 313
Failure Test Failures 319
Trading Parabolic Climaxes 323
The Anti 327
Trading at Support and Resistance 336
Summary 343
Part IV The Individual, Self-Directed Trader
Chapter 11 The Trader’s Mind 347
Psychological Challenges of the Marketplace 348
Evolutionary Adaptations 349
Cognitive Biases 353
The Random Reinforcement Problem 356
Emotions: The Enemy Within 357
Intuition 360
Flow 364
Practical Psychology 367
Summary 372
Chapter 12 Becoming a Trader 375
The Process 376
Record Keeping 385
Statistical Analysis of Trading Results 388
Summary 397
Appendix A Trading Primer 399
Appendix B A Deeper Look at Moving Averages and the MACD 409
Appendix C Sample Trade Data 425
Glossary 427
Bibliography 443
About the Author 447
Index 449
THE ART AND SCIENCE OF TECHNICAL ANALYSIS
This book, written for both the self-directed and institutional trader, explores the tools and techniques of discretionary tradingthe art of trading. Not just a collection of trading patterns and ideas, this is a book that looks deeply into the art of technical analysis, and gives traders the tools and techniques they need to profit in today's competitive marketplace.
Divided into four informative parts, this reliable guide shows traders how to incorporate a rigorously researched trading methodology into a discretionary framework. Along the way, you'll learn a method of looking at charts that focuses on the supply/demand dynamics that move all markets, specific trading patterns the author has used profitably for over a decade, and psychological techniques to deal with the stresses of trading. You will also come to a new understanding of the role risk management and position sizing play in the trading process, and dive into the path of growth and trader development that leads a trader from beginner to professional.
Created with the serious trader in mindwhether individual or institutionalThe Art and Science of Technical Analysis puts the author's approach in perspective and will put you on a path to consistent profits. Topics covered throughout the book include everything from the foundations of technical analysis and market structure to trading strategies, indicators and other confirming factors, sizing trades and managing positions, and tips for evaluating your performance and growth as a trader.
Engaging and accessible, The Art and Science of Technical Analysisalong with its informative appendiceswill give you the edge needed to improve your trading endeavors.
Trading is a tough endeavor. And while it's difficult to derive a method that generates superior risk-adjusted profits in today's extremely competitive markets, it's even harder to successfully apply such a method in actual trading. The approach found in The Art and Science of Technical Analysisone which, in many ways, challenges the traditional thinking of technical analysiscan help you achieve this goal.
Written in a straightforward and accessible style, this book breaks away from many of the standard trading books that have come before it. The Art and Science of Technical Analysis doesn't detail a rigid system to be strictly followed, nor does it present a group of setups and patterns that can be quickly assembled by a trader. Rather, it provides comprehensive coverage of the issues you need to be aware of in order to capture consistent profits from technically motivated, directional trading.
Based on nearly two decades of author Adam Grimes's experience as a trader, analyst, and systems developer, this reliable resource contains valuable insights for both individual and institutional traders, and has been designed with both established and aspiring traders in mind. Divided into four informative parts, it skillfully:
- Explores some of the probability theory supporting the concepts of successful trading, examines a specific approach to chart reading that builds the foundation for a deep intuition about price patterns in markets, and provides an overview of the Wyckoff market cycle
- Offers an in-depth look at the underlying foundation of price movements through coverage of trends, trading ranges, and the transitions from one to the other
- Outlines specific trading patterns and examples of those patterns; advocates a specific way of looking at indicators and other confirming factors; addresses the importance of sizing trades and managing positions; and calls attention to the various risks associated with trading
- Focuses on the elements of trader psychology, from cognitive biases to issues of emotional control, and lays out the challenges that developing traders usually face
Rounding out this discussion are three information-packed appendices. The first is a trading primer that will be useful for developing traders or managers who don't have a familiarity with the language used by traders. The second expands on some specific details and quirks of moving averages, the MACD, which are used extensively in other sections of the book. And the last appendix contains a list of trade data used in the performance analysis found in Part Four.
What you need to succeed in today's markets is a verifiable edge. The Art and Science of Technical Analysis will give you that edge and put you in a better position to improve your overall trading performance.
Produktdetaljer
Biografisk notat
ADAM GRIMES is the CIO of Waverly Advisors, an asset management and risk advisory firm headquartered in New York. He began his career as an independent trader focused on agricultural and currency futures, and moved on to manage a successful private investment partnership. Grimes's experience as a trader covers futures, equities, currencies, and derivatives, in time frames ranging from intraday to multi-month swings. Though he is primarily a discretionary swing trader, his methodology rests on a firm foundation of statistical and quantitative research. Grimes holds an MBA with an emphasis in finance and market microstructure, and has worked for a number of private investment firms, as well as having spent several years at the New York Mercantile Exchange.