The Art and Science of Technical Analysis: Market Structure, Price Action, and Trading Strategies 1st Edition

I liked this book a lot. I have followed the author's writings since his days at "SMB Capital". His new work is at adamgrimes.com/blog. In my opinion, all of the author's work is worth reading. The book, "The Art and Science of Technical Analysis", is pretty hefty at over 400 pages. For me, there is a TON of relevant information within this book, so much that it's difficult to review, but I'll try.The author starts right in with an explanation of "Expectancy" and "Market Edge". What, in the author's opinion, defines a "trader's edge"? It's made clear in the book that the opinion is that market's, MOST of the time, are very efficient. The reason I emphasize "most" is because it's the opinion of the book that edge is defined as being aware of the moments when the market is NOT efficient and in that zone is where trading edge exist. This concept is covered in the first 5 pages and the remaining 400+ pages the attempt is made to present or make clear when markets are not being efficient. The author states early on that psychology is important and critical, but one can have the best mental attitude and emotional discipline and yet, without an edge, he/she will lose. The bottom line, as stated directly in the book, is that one MUST have edge, a clear statistical edge, and if this doesn't exist, everything else is futile. This entire book is about creating that edge.Charts are broken down at first by showing simply swing pivot points. Then the moves within the swing are broken apart. Then the author gets into multiple time frame trading. How the higher time frame "controls" the lower time frame. I do a LOT of this in my own trading and it's very interesting. None of this is new per se, it's the author's approach that is new. I think what I'm trying to say is that we might know about multiple time frame trading, but if someone enables us to see something we haven't seen before then I think this is worth the time.The author then gets into the "Wykcoff Market Cycle". There are 4 parts to this cycle and most traders I'm sure are aware of "Accumulation", "Markup", "Distribution" and "Markdown". Most traders are aware of this but it's the interface between the end of one cycle and the beginning of another on which the book concentrates. The author states that it's the miscalculation of these phases where losses and dangerous trading situations exist. A considerable amount of time is spent on deciphering these transition modes. These insights, for me, were new, interesting and seem valid.The next part of the book is on "Market Structure". The first stop within this section is "trends". The author talks about what defines a trend and talks at length about trend trading, but also in this section "range trading" is discussed. The author states that failed breakouts are one of the most common patterns in trading. How to determine a failed breakout from a "legitimate" breakout is very difficult but I really believe that the author's insights into this area of trading can be very helpful.As you go deeper into the book you see, and the author explains, there are 4 types of trades. There is trend continuation, trend termination, support and resistance holding and support and resistance failing. Now, these are the 4 types of basic trades but there are countless permutations of these formations. Each of these 4 types of trades is more appropriate during one market cycle then another. It can get confusing. This book does a more than adequate job at clarifying these trades.The next part of the book gets into "Practical Trading Templates". In this chapter/section the author list trading patterns, or rather potential trading patterns. There's a lot here, but essentially there are Primary and Secondary patterns. The Primary trades are breakouts, pullbacks and trades from "failures".The author then devotes a chapter to "Tools For Confirmation". This chapter I liked a lot since one of my several weaknesses as a trader is staying with the trade to fruition. I especially like his analysis of multiple time frame confirmations. I like the concept of paying attention to the highest time frame and then going down from the top.There is an entire chapter on Risk Management.In the appendix the author analyzes certain indicators, one of them being the MACD. He states that any trader should know his tools inside and out. They should know how the tool was designed and exactly what it is and what it's intended to be. I use MACD in my trading and I'm guilty of the exact type of ignorance about which the author speaks. I read this segment many times and I think it's excellent.All in all, this is a meaty book and I read it twice. I'm still re-reading certain parts and I took a lot of notes and underlined a lot of points. I don't write many reviews and as far as trading books go my feeling is that they are long on price and short on relevance. I don't feel that about this book at all. The points are presented in a unique way and I like that. It makes me think about trading differently and enables me to see something I've looked at many times in a different way. That is certainly worth the price of a book. I'm working with some of the points and it will take some practice. In my opinion, this is definitely a worthwhile read. The author's blog is also a worthwhile read. Hope this helps.

Grimes' work, and make no mistake, this IS a "work", is as close to as good as it can honestly get in this genre. While written in simple accessible style, this is no breezy weekend read. One of the most sage bits of advice comes right at the start: when finished, go back and study certain chapters again.The reader that will get the MOST out of this contribution, in my view, is someone who already has a bit of mud on their boots from the trenches. In the appendix he provides a "Primer" aimed at the novice. But it is SO basic (how to place an order) that the gesture seems more to mollify an anxious publisher's jacket writer than serve the book's main audience. If you just now got the "what are orders" part down, the take-homes of the book will be pretty fuzzy for awile. And the extra burdens of interpretation and active management a bit much to expect. There are other more full length primers out there. A (precious) few quite good.This book is different. And that is what makes it special. While it IS a fairly comprehensive trading overview, the FOCUS of the book is interpreting and acting on largly uncluttered price action. Few books, even on technical analysis, narrow in on such a basic start point. And Grimes does so with organized, well expressed, non-contradictory prose. In other words, a treat.Rather than remain safely high on cliche and low of detail, the book is rich with specific set-ups and engaging commentary.Grounded in evidence based, probability founded science, it emphasizes the ART of making sense of it all. Of reasoned interpretation and discretionary decisions. This is refreshing. Many of the best books out there, as cognizant as Grimes of the disastrous effect of human nature, emotion and misjudgment, stress the opposite tact. The only hope is creating an "objective" testable system that marginalizes faulty judgment and emotion. The fact of the matter is, subjective opinion's effects are STILL and always, everywhere. The day that ends - no more market. Yet each tiny choice changes each participant's outcome. Gaining a lasting TRUE edge is key. Yet, given the high degree of randomness, this is extraordinarily illusive and very hard work.Faced with this sober reality, his own approach is that of a swing trader. But in the more accurate, not popular sense. I recently put down Dave Landry's Layman's Guide. Both look at simplified price action and quite similar initial set-ups. Both advocate swing trading expectation (at least initially) and grabbing partial profit quite early. Where they DIVERGE in goals and trade management I find quite stimulating. Read!I will just say Landry's hybrid swing-trend blend SEEMS the more logical. A great compromise. The purer swing style coached by Grimes however is certainly more instinctual. More importantly it SEEMS the more realistic and prudent. Grimes makes you ask yourself how time-LIMITED a given entry set-up or bullish chart pattern is likely valid for. Dispite popular mantras, the more "miss than hit" challenge of PURE long term trend trading (enduring deep drawdowns that MUST be made up by sufficient extraordinary runs), is easier said than done. Especially in our times. Grimes' insight, no, the very market structure he helps YOU see evolving, is like having a probability gauge, however slight, as you navigate your OWN way through the wall of fog known as the right margin.Reviewers offering NOTHING but accolades can be suspected (sometimes with reason) to be the author's mom or of his/her customer fan base. So here are two knocks. Sorry son: First. He suggests short and long versions of much of the book's preferred patterns would basically be mirror images. Flip them and away you go. Really? Sometimes no doubt. But the implications and thus psychology can be dramaticaly different. Affecting the volatility and compression of the action. And therefore "how it go'na look". Especially around possible signifigant tops and bottoms.2nd "beef": Record such a detailed personal Trading Diary that you include EVERYTHING right down to "what you had for breakfast"?? For future result analysis? I nearly choked on my cheerios, blurting: "Give me a break Adam!" Indeed elsewhere he echoes Nassim Taleb about the tendency of humans to see correlations and patterns where there are none. Such a tendency provides an endless boon for "the industry" and an ever present risk for traders. In equal measure. Yes yes his POINT is okay: As we are the main part of our trading equation: know thy state and self (warily).Truly digesting THIS WORK, a diary can expect to show not only improved performance correlation but whetted appetite for MORE such nourishing fare. As the author would agree, no book is "all you need". It never is. But for this one's refreshingly GROUNDED discussions on SEEING risk and recognizing possibley superior set-ups at that hard right edge: My first 5 stars. Sail On!