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

234 Pages·2012·2.45 MB·English

by  Adam Grimes

Contents
Cover
Series
Title Page
Copyright
Dedication
Preface
Acknowledgments
Part I: The Foundation of Technical Analysis
Chapter 1: The Trader’s Edge
DEFINING A TRADING EDGE
FINDING AND DEVELOPING YOUR EDGE
GENERAL PRINCIPLES OF CHART READING
INDICATORS
THE TWO FORCES: TOWARD A NEW UNDERSTANDING
OF MARKET ACTION
PRICE ACTION AND MARKET STRUCTURE ON CHARTS
CHARTING BY HAND
Chapter 2: The Market Cycle and the Four Trades
WYCKOFF’S MARKET CYCLE
THE FOUR TRADES
SUMMARY
Part II: Market Structure
Chapter 3: On Trends
THE FUNDAMENTAL PATTERN
TREND STRUCTURE
A DEEPER LOOK AT PULLBACKS: THE
QUINTESSENTIAL TREND TRADING PATTERN
TREND ANALYSIS
SUMMARY
Chapter 4: On Trading Ranges
SUPPORT AND RESISTANCE
TRADING RANGES AS FUNCTIONAL STRUCTURES
SUMMARY
Chapter 5: Interfaces between Trends and Ranges
BREAKOUT TRADE: TRADING RANGE TO TREND
TREND TO TRADING RANGE
TREND TO OPPOSITE TREND (TREND REVERSAL)
TREND TO SAME TREND (FAILURE OF TREND
REVERSAL)
SUMMARY
Part III: Trading Strategies
CHAPTER 6: Practical Trading Templates
FAILURE TEST
PULLBACK, BUYING SUPPORT OR SHORTING
RESISTANCE
PULLBACK, ENTERING LOWER TIME FRAME
BREAKOUT
TRADING COMPLEX PULLBACKS
THE ANTI
BREAKOUTS, ENTERING IN THE PRECEDING BASE
BREAKOUTS, ENTERING ON FIRST PULLBACK
FOLLOWING
FAILED BREAKOUTS
SUMMARY
CHAPTER 7: Tools for Confirmation
THE MOVING AVERAGE—THE STILL CENTER
CHANNELS: EMOTIONAL EXTREMES
INDICATORS: MACD
MULTIPLE TIME FRAME ANALYSIS
CHAPTER 8: Trade Management
PLACING THE INITIAL STOP
SETTING PRICE TARGETS
ACTIVE MANAGEMENT
PORTFOLIO CONSIDERATIONS
PRACTICAL ISSUES
CHAPTER 9: Risk Management
RISK AND POSITION SIZING
THEORETICAL PERSPECTIVES ON RISK
MISUNDERSTOOD RISK
PRACTICAL RISKS IN TRADING
SUMMARY
CHAPTER 10: Trade Examples
TREND CONTINUATION
TREND TERMINATION
FAILURE TEST FAILURES
TRADING PARABOLIC CLIMAXES
THE ANTI
TRADING AT SUPPORT AND RESISTANCE
SUMMARY
Part IV: The Individual, Self-Directed Trader
CHAPTER 11: The Trader’s Mind
PSYCHOLOGICAL CHALLENGES OF THE
MARKETPLACE
EVOLUTIONARY ADAPTATIONS
COGNITIVE BIASES
THE RANDOM REINFORCEMENT PROBLEM
EMOTIONS: THE ENEMY WITHIN
INTUITION
FLOW
PRACTICAL PSYCHOLOGY
SUMMARY
CHAPTER 12: Becoming a Trader
THE PROCESS
RECORD KEEPING
STATISTICAL ANALYSIS OF TRADING RESULTS
SUMMARY
Appendix A: Trading Primer
THE SPREAD
TWO TYPES OF ORDERS
CHARTS
Appendix B: A Deeper Look at Moving Averages and the
MACD
MOVING AVERAGES
THE MACD
Appendix C: Sample Trade Data
Glossary
Bibliography
About the Author
Index
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Copyright © 2012 by Adam Grimes. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Grimes, Adam, 1973–
The art and science of technical analysis : market structure, price action, and
trading strategies Adam Grimes.
pages cm. – (Wiley trading series ; 544)
Includes bibliographical references and index.
ISBN 978-1-118-11512-1 (cloth); ISBN 978-1-118-22427-4 (ebk);
ISBN 978-1-118-23814-1 (ebk); ISBN 978-1-118-26247-4 (ebk)
1. Investment analysis. I. Title.
HG4529.G75 2012
332.63′2042–dc23
2012000874