What Trade What You See teaches is a simple, pragmatic approach to pattern recognition. It’s designed to be hands-on and to appeal to new students of technical analysis as well as seasoned traders.
Several hundred years ago, technical analysis began its journey to help investors and traders determine, with reasonable probability, what direction prices might take. Technical analysis allows investors and traders to identify moments of opportunity to profit in the markets.
It does so by identifying and quantifying specific patterns that form and repeat with enough regularity that trading methods and strategies can be developed and implemented with success.
Trade What You See: How to Profit from Pattern Recognition focuses on trading patterns with an underlying root structure based on simple geometric forms and Fibonacci ratios.
The patterns are easily identifiable once the trader has spent some time observing and learning the basic structures. Each of these patterns can be quantified and a sound money management strategy applied.
Writing a book about pattern recognition based on geometric patterns and Fibonacci ratios requires acknowledging the early scholars of geometry, including Pythagoras, Archimedes, and of course the great mathematician Leonardo di Pisa (better known as Fibonacci). These great scholars had all traveled to Egypt during their lifetimes and had studied the Great Pyramids.
Pythagoras, the father of modern geometry, was obsessed by the mathematics of the pyramids. The actual mass of the structure was not as important to him as the fact that all of the angles on all sides were within .01 percent. Part of the mystery of the Great Pyramids is how the mathematics relates to the golden ratio, which is also referred to as the divine proportion, or .618.
It was not so many years ago that a book of this nature, based on technical analysis, would not have been taken seriously by many. We begin with a look at a point in time when technical analysis had begun to take root in the academic community.
This book was written to give the reader a comprehensive view of the specific patterns presented.We use a variety of stocks and markets in the chart examples throughout the book to illustrate that these particular patterns do form in all markets, and in all time frames.
Trade What You See presents patterns derived from some of the classic technical analysis patterns as well as the geometry and Fibonacci-based patterns.
PART ONE – Introduction to Trading with Pattern Recognition
- Opening Thoughts
- Geometry of the Patterns and Fibonacci Ratios
- Harmonic Numbers and How to Use Them
PART TWO – The Price Patterns and How to Trade Them
- The AB=CD Pattern
- The Gartley “222” Pattern
- The Butterfly Pattern
- The Three Drives Pattern
- 8 Retracement Entries and Multiple Time Frames
- Classical Technical Analysis Patterns
- Learning to Recognize Trend Days
PART THREE – Essential Elements of Trading
- Trade Management
- Using Options with the Fibonacci Ratios and Patterns
- Building a Trading Plan
- Daily Routines