If you are looking for a book about off the shelf tech patterns then do not bother reading this review (but then perhaps also consider if you are in the correct profession because markets simply don't work by off the shelf tech patterns).
Trading is extremely difficult and markets are much more random than people think.
This book is about understanding the building blocks of a random market, finding an edge and creating methodologies to plan and manage risk in such environment.
The concepts presented here are profound and practical sophisticated yet simple.
A truly ETERNAL book. Must read for every trader. Enjoy‼!
This book contains a lot of information that's helpful for traders--if you've ever bought a house, this book is like the realtor taking you on an area tour. Ok, now I know the neighborhood. It will not, and can not, make you a profitable trader, nor can any book. Believe me.
I trade for a living, which to me is the most amazing thing ever. I started trading towards the end of 2003, in the midst of the recovery from the dot com crash. I started out by going over and over the Investor's Business Daily top 100 stock list, thinking I was so very smart, as if no one had ever thought to do that, LOL. I lost 17% of my account in the first 2-3 weeks. Welcome to trading!
Over the next nearly 10 years I tried every indicator I could get my hands on. I was constantly looking through Stocks and Commodities magazine looking for that new indicator that would give me the edge I felt I lacked. I have about 40 indicators coded into Excel at this point. I tried the simple ones, and I tried the Big Math indicators that took me three months to figure out how to translate into Excel. You would be hard pressed to come up with an indicator I don't know about.
I tried longer term trading, swing trading, and a little day trading. I lost money at every turn. I subscribed to a ton of different services, and, while I use none of them now, they all helped me (very slowly) understand how markets work. Still, I was a loser. I even tried trading penny stocks (ugh). I was a trend trader, a contrarian, a fundamental trader, a momentum trader.
It took me until about two years ago to find the market that matches my time frame, style, and the way I think, for lack of a better term. I instantly had considerably more success, but my net was still negative over time. It got to the point where I was so frustrated and angry after a particularly big loss that I deleted every bookmark and email remotely related to markets. even to finance. For one weekend, I was done.
So, what did I do? Did I finally find that magic methodology or indicator that made it all come together? Not really, although I did find some tools that are very helpful. More than anything, though, I just really, really wanted to be a trader more than anything, and I stuck to it through all of the losses and disappointment. I was there at 9:15am (Eastern) ready to go day after day after day. I reviewed my trades after hours, and if I didn't trade I still reviewed the market. I went over my losing trades again and again. I looked at price action I should have traded. I compiled as many statistics as I could think of--do I tend to make money going long? Short? Early in the day? Midday? End of day? When the market was long term trending? In a long term trading range? And so on.
More than anything, I just watched the market move, for hours every day. Time passed, and I came to a point where I was profitable four out of five days, but that fifth day I would give it all back and then some. I was in that mode for about a year, but I kept at it. Then, after my requisite 10,000 hours of structured practice, I put it all together, finally. A good thing, too, because I was almost out of money. The American football quarterback Steve Young once said that after being in the NFL for several years, he could see the field much better, and things seemed to slow down for him. It almost became easy. I can now relate to that a bit.
I now day trade e-mini index futures, and make good money almost every day. The only price based indicators I use are a couple of simple moving averages and stochastics, and they're only of marginal use--just confirmation. The market doesn't care that the fast MACD line crossed above the slow one. These price charts we use can give us the impression that trading is some sort of mathematical game, and yes, ok, it's expressed in numbers, but really it's a daily competition, a fight between you and the other market participants. For every winner there is a corresponding loser, by definition. And, more importantly, not only can some of the competitors (the professionals--market makers, floor traders, banks, etc.) crush us little guys, but it's their job to do just that. This is the truth--the job of pro traders is to take retail traders' money, and they have a repertoire of jukes, fakes and other dirty tricks to try to shake us out of our positions for losses.
So, if you want to survive in the markets, learn things like the price levels where the buy/sell struggle is taking place. Learn to identify when the big guns are making their moves, and ride along with them.
One other important thing...there was another reviewer who mentioned that the markets are definitely efficient. Let me say I know through experience that this is simply not true. Efficient means that for any "market" (meaning, stock, bond, futures contract, property for sale, etc.), all possible information that can be known about that market is reflected in its price, and therefore, that market is priced absolutely correctly and fairly at all times. Although this is true most of the time, history tells us that this is nowhere near true all of the time. If it were true, bubbles like 2001 and 2007 could not have happened. In fact, I would still be working my 9-5 job if the market was efficient. I make my money when the market's price becoems slightly out of whack. The best description I've seen of all markets was by C.K. Chesterson, who was actually describing life in general:
Life is not an illogicality; yet it is a trap for logicians. It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.
So, summing up, this is a good book, a good way to get necessary basic information about markets. But--and this is a very important but--what is necessary is usually not sufficient. For example, to be a cardiac surgeon, it's necessary to have a scalpel and a person who needs cardiac surgery. But this, of course, while necessary, is not sufficient to get the job done. Understanding what's in this book will only be the beginning of the journey. My best advice would be to open up an account with a good online broker who offers paper trading (trading with a fake account). At the same time, read everything you can about trading. Paper trade until you're sick of it and you think you should be trading for real, then paper trade for another couple of months. Then, trade real money with very small size. I can't emphasize enough, very small size. Keep a diary of your trades, and when you can say that you've been a winner over a six month period, start to gradually increase your size. And never, ever trade so large that you can lose more than 2% of your total account on any one trade.
Yikes, didn't mean to go on for so long.
After having read quite a few books on trading, I highly recommend this book. It should belong to both the beginner and the experienced trader.
The opens up thoughts for various possibilities one should be open to in trading. It provides frameworks that make sense and they work. A great read.
After reading over 300 books on trading (a conservative guess) I can honestly say that the Art and Science of Technical Analysis is one of the absolute best and destined to become an instant classic. In fact, I enjoyed this book so much, I bought both hard cover and Kindle version so that I would always have it at the ready. This book is extremely well organized and covers the entire spectrum of investing. Grimes conveys his thoughts very clearly and completely. Unlike many other books on trading, Grimes doesn't sugarcoat the fact that trading is hard; really hard. He also is very clear in his assertion that trading is complex. Fortunately, he outlines a complete plan that covers market cycles and structure, trading strategies (with-trend, countertrend, and mean reversion trades are all given equal weight) risk management, and finally, the psychological aspects of trading. Weighing in at over 450 pages, this is a dense read, and many of the messages within are only grasped after multiple readings, but it's journey that I'm sure will benefit both beginners and professionals alike.
If you are beginner or even an experienced fund manager, this book is a must read. What Edward's and Magee had done years and years ago with Technical Analysis of Stock Trends, Adam has taken it a step further and created the esential research book for every trader. The book is very well written and really lays the ground work for everything from breakouts to pullbacks to the most important rules of money management. This book will really teach you how markets work and teach you about market structure and capital flows. This book is a must read for every trader of all levels and help to put the odds in your favor as you travel the trading journey. Great read!
Undoubtedly, human-powered, individual technical trading, as the author introduces The Art and Science, is hard. Take this review with that in mind - I expect no significant expertise in the field to come or be easy and this is not a critique on literary excellence or factual depth.
What bothers me about the book is that paring back the nearly infinite number of variables that is the aggregate of instantaneous market action and the resultant seas of technical stock data to say, a purely arbitrary and relatively paltry fifteen hundred or five hundred or one hundred (insert your own number here; it matters little), and then expecting to apply even half a hundred technical analysis tools to that insurmountable data on Grime's other early stated basis - which is to spend a little over a second for each chart view across 500 stocks in a single sitting - is simply mathematically impossible.
I'm 100 pages deep in the book and already I find a baffling number of technical advice hedges and counter-advice, which tells me what I as a novice trader already knew: There is such a sizable degree of complexity in what portends to be predictive trading that really the only way to make money is to climb aboard the overall market's trend, assuming it has one at any one instant, and get in either long as it rises or short as it trends down. Again, assuming even that's possible outside of guessing.
From Grimes website, quoting the book:
"It is critical that traders understand the subtleties of every tool they use. They should know how they react in every possible market environment, and furthermore, must understand the complex interactions between multiple tools. This may lead to an approach that disregards a lot of information that many traders assume to be useful, but, for instance, why would you use indicators that do not add to your analysis? Why would you listen to news that is old news and is already fully priced into the market? Why would you try to guess how complex fundamental factors might influence the price if you do not have the skills to fully understand those fundamentals?"
After you've used every tool you can, and after knowing how to react to every possible market environment, and after grasping every complex interaction between those multiple tools, how can you possibly BUT find all that information already priced into the market, I ask.
Like the book, this appears to be useful-appearing advice...but only theoretically. You cannot employ thirty or a hundred trading tools across those theoretical fifteen hundred candlesticks and trend variables - or five hundred or whatever number of them you care to use - and then compare to even five of Grime's innumerable observations and do it either efficiently or with some reasonable degree of success. All that data takes all day to examine but a portion of and you're still back to that slim percentage of daily or hourly winners versus losers.
Therefore what Grimes has done in The Art and Science is indeed to compile a comprehensive view of so-called technical analysis, but it is not, in sum, anything approaching a knowledge set that lends to it use as anything other than an encyclopedia of rather unassociated raw observations, each hedged against the other such that no real patternability is ever proved except by relative chance. Less than an encyclopedia, it is like "analyzing" the weather to find it comprised of chaotic "patterns" from which you can divine scant order and from scant order, virtually no predictability, and then writing the points down, each more or less notated as a rough guess.
Unless you are a weather supercomputer, or in the markets an algorithm, it's impossible. I look at the calendar to more or less know that on average it'll be warmer in summer. I look at the DOW and S&P now to know I'll lose money when I'm in at the wrong time and place.
Art and Science is an exhaustive reference work to allow you to use hindsight to perhaps label what just happened with a term that will just as likely fail to apply the next time that phenomenon appears to prepare to occur again. It could be an different "pattern" emerging entirely, one that undoubtedly Grime's book will, in some other of its many chapters, elaborate upon.
A few things are certain: Chaotic systems occur, markets are indeed efficient, and stock traders eventually end up writing books for a reason. Kudos to Grimes for a comprehensive work, one written pleasantly and readably. (Kudos too for his not stooping to Phil Grande's level by going to the other extreme and insisting that two or three isolated signals, typically used in hindsight, mean big money. They do not; they mean a poor radio show.)
The Art and Science has a use. I just can't figure out what it might be. Have I just called technical trading impossible? I suppose I have and that's not Grime's fault; it's mine. It's just that below a certain point you can't call diced onion, diced onion anymore. You have to demonstrate some degree of feasibility to call anything art and science instead of a thousand ways to throw darts at the board.
Product Details :
Hardcover: 480 pages
Publisher: Wiley; 1 edition (July 3, 2012)
Language: English
ISBN-10: 1118115120
ISBN-13: 978-1118115121
Product Dimensions: 7 x 1.7 x 10 inches
More Details about The Art & Science of Technical Analysis: Market Structure, Price Action & Trading Strategies 1st edition
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