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

<p>Preface xi</p>
<p>Acknowledgments xv</p>
<p>PART I The Foundation of Technical Analysis</p>
<p>CHAPTER 1 The Trader s Edge 3</p>
<p>Defining a Trading Edge 4</p>
<p>Finding and Developing Your Edge 7</p>
<p>General Principles of Chart Reading 8</p>
<p>Indicators 12</p>
<p>The Two Forces: Toward a New Understanding of Market Action 13</p>
<p>Price Action and Market Structure on Charts 15</p>
<p>Charting by Hand 28</p>
<p>CHAPTER 2 The Market Cycle and the Four Trades 31</p>
<p>Wyckoff s Market Cycle 32</p>
<p>The Four Trades 40</p>
<p>Summary 45</p>
<p>PART II Market Structure</p>
<p>CHAPTER 3 On Trends 49</p>
<p>The Fundamental Pattern 49</p>
<p>Trend Structure 51</p>
<p>A Deeper Look at Pullbacks: The Quintessential Trend Trading Pattern 65</p>
<p>Trend Analysis 77</p>
<p>Summary 95</p>
<p>CHAPTER 4 On Trading Ranges 97</p>
<p>Support and Resistance 97</p>
<p>Trading Ranges as Functional Structures 113</p>
<p>Summary 120</p>
<p>CHAPTER 5 Interfaces between Trends and Ranges 121</p>
<p>Breakout Trade: Trading Range to Trend 122</p>
<p>Trend to Trading Range 134</p>
<p>Trend to Opposite Trend (Trend Reversal) 137</p>
<p>Trend to Same Trend (Failure of Trend Reversal) 143</p>
<p>Summary 145</p>
<p>PART III Trading Strategies</p>
<p>CHAPTER 6 Practical Trading Templates 149</p>
<p>Failure Test 150</p>
<p>Pullback, Buying Support or Shorting Resistance 154</p>
<p>Pullback, Entering Lower Time Frame Breakout 162</p>
<p>Trading Complex Pullbacks 165</p>
<p>The Anti 170</p>
<p>Breakouts, Entering in the Preceding Base 174</p>
<p>Breakouts, Entering on First Pullback Following 181</p>
<p>Failed Breakouts 183</p>
<p>Summary 186</p>
<p>CHAPTER 7 Tools for Confirmation 189</p>
<p>The Moving Average The Still Center 190</p>
<p>Channels: Emotional Extremes 195</p>
<p>Indicators: MACD 202</p>
<p>Multiple Time Frame Analysis 213</p>
<p>CHAPTER 8 Trade Management 231</p>
<p>Placing the Initial Stop 232</p>
<p>Setting Price Targets 235</p>
<p>Active Management 240</p>
<p>Portfolio Considerations 251</p>
<p>Practical Issues 253</p>
<p>CHAPTER 9 Risk Management 263</p>
<p>Risk and Position Sizing 263</p>
<p>Theoretical Perspectives on Risk 279</p>
<p>Misunderstood Risk 282</p>
<p>Practical Risks in Trading 283</p>
<p>Summary 290</p>
<p>CHAPTER 10 Trade Examples 291</p>
<p>Trend Continuation 293</p>
<p>Trend Termination 313</p>
<p>Failure Test Failures 319</p>
<p>Trading Parabolic Climaxes 323</p>
<p>The Anti 327</p>
<p>Trading at Support and Resistance 336</p>
<p>Summary 343</p>
<p>PART IV The Individual, Self–Directed Trader</p>
<p>CHAPTER 11 The Trader s Mind 347</p>
<p>Psychological Challenges of the Marketplace 348</p>
<p>Evolutionary Adaptations 349</p>
<p>Cognitive Biases 353</p>
<p>The Random Reinforcement Problem 356</p>
<p>Emotions: The Enemy Within 357</p>
<p>Intuition 360</p>
<p>Flow 364</p>
<p>Practical Psychology 367</p>
<p>Summary 372</p>
<p>CHAPTER 12 Becoming a Trader 375</p>
<p>The Process 376</p>
<p>Record Keeping 385</p>
<p>Statistical Analysis of Trading Results 388</p>
<p>Summary 397</p>
<p>APPENDIX A Trading Primer 399</p>
<p>APPENDIX B A Deeper Look at Moving Averages and the MACD 409</p>
<p>APPENDIX C Sample Trade Data 425</p>
<p>Glossary 427</p>
<p>Bibliography 443</p>
<p>About the Author 447</p>
<p>Index 449</p>