Book Review: The Art and Science of Technical Analysis
It’s no secret that trading doesn’t come easy. While it can be challenging just to develop a method that produces risk-adjusted profits in the very competitive markets of today, it’s even more challenging to execute such a method in real trading scenarios. Written in a way that is straight to the point, The Art and Science of Technical Analysis won’t produce a rigid strategy for you to specifically follow. Instead, the book covers more of the issues that you should be aware of in order to create profits consistently from technical, directional trading.
Written by Adam Grimes, the 442-page book is split into four different sections that offer insight into the foundations of market structure, strategies, technical analysis, and traders themselves.
It touches on specific approaches to reading charts that helps to create somewhat of an intuition regarding price patterns in markets, and discusses the Wyckoff market cycle. The book addresses the elements of psychology in trading, from cognitive bias to emotional control, and touches on the challenges that developing traders typically face. While (to many) trading might seem like it has more to do with luck than science or methodologies, several methods involved in traditional technical analysis are mentioned in the book that would be helpful to just about any trader.
The book highlights four elements for a good trading plan when defining a trading edge:
- Excellent execution
- Risk management
- Proper psychology
Grimes also touches on topics regarding a solid foundation for a verifiable edge like:
- Range expansion and mean reversion.
- Viewing markets through charts and the four trades. These four trades are detailed as support and resistance holding, support and resistance failing, trend continuation and trend termination.
- Price action and market structure.
The Art and Science of Technical Analysis is packed with charts, definitions, tables and a lot of art and science. One needs a verifiable edge in today’s markets to be successful. The Art and Science of Technical Analysis may help provide such an edge, and help to improve your trading.