The Art and Science of Technical Analysis: Market Structure, Price Action, and Trading 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 book you are holding in your hands is the product of nearly two decades of my study and experience as a trader, covering the full span of actively traded markets and time frames. I owe much to authors and traders who have come before me, for no one produces anything significant in a vacuum.
I would not have been successful without the help and guidance of my mentors, but I learned many of the lessons here from my own mistakes. In some ways, this work represents a radical break from many of the books that have preceded it, and I hope it encourages you to question much of the traditional thinking of technical analysis.
The Art and Science of Technical Analysis does not present a rigid system to be strictly followed, nor a set of setups and patterns that can be assembled at the trader’s whim. Rather, it offers a comprehensive approach to the problems of technically motivated, directional trading.
The Art and Science of Technical Analysis is structured to be read from beginning to end, but individual sections and chapters stand on their own. Through the entire work, deliberate repetition of important concepts helps to build a complete perspective on many of the problems traders face. The tools and techniques must be adapted to the trader’s personality and business situation, but most will find a firm foundation between these covers.
The title of this book is The Art and Science of Technical Analysis. Science deals primarily with elements that are quantifiable and testable. The process of teaching a science usually focuses on the development of a body of knowledge, procedures, and approaches to data—the precise investigation of what is known and knowable.
Art is often seen as more subjective and imprecise, but this is not entirely correct. In reality, neither can exist without the other. Science must deal with the philosophical and epistemological issues of the edges of knowledge, and scientific progress depends on inductive leaps as much as logical steps.
Art rests on a foundation of tools and techniques that can and should be scientifically quantified, but it also points to another mode of knowing that stands somewhat apart from the usual procedures of logic. The two depend on each other: Science without Art is sterile; Art without Science is soft and incomplete. Nowhere is this truer than in the study of modern financial markets.
– PART I : The Foundation of Technical Analysis
- The Trader’s Edge
- The Market Cycle and the Four Trades
– PART II : Market Structure
- On Trend
- On Trading Ranges
- Interfaces between Trends and Ranges
– PART III : Trading Strategies
- Practical Trading Templates
- Tools for Confirmation
- Trade Management
- Risk Management
- Trade Examples
– PART IV : The Individual, Self-Directed Trader
- The Trader’s Mind
- Becoming a Trader