The ART of Trading- Combining the Science of Technical Analysis with the Art of Reality-Based Trading
T his is not your ordinary “get rich quick” book about trading the stock market. Rather, it is a guide to a multimedia approach to learning and trading, using the Applied Reality TradingR (ARTR ) method of trading. This book and the accompanying DVD explain the concepts and methodology. In addition, the purchase of this book includes a one-month time frame in which to actually learn to trade the system and apply it in real time.
This is done by including the ART software for one month, including access to live streaming data and access to a few, designated brokerage firms that can trade directly through the software. In essence, everything that the reader needs—for learning and for seeing how the system works in actual markets—is included with this book.
The ART trading methodology is built on software recognition of several time-tested patterns that can be easily identified for the user. While they are called specific names in the software, these are essentially breakouts and reversals—the meat and potatoes of technical trading. The chart patterns identified can be applied to any type of bar chart—daily, fiveminute, weekly, and so on. Moreover, they can be applied to stocks, futures, indices, and forex—or any other market that can be charted.
What separates this methodology from many other computergenerated trading systems is that this is not a 100 percent mechanical “black box” system. Rather, this book (and the multimedia associated with it) teach the individual how to apply the various trading signals to the style of trading with which he feels most comfortable. Position traders can trade the trend signals from the software, while short-term swing traders may prefer to take minor signals generated along the way—even trading within a trend, if desired. If you are uncertain which trading style might best suit you, the “ART Profile” exercise in this book will aid you in determining the style best suited to your personality.
Contents
Foreword ix
Preface xi
Acknowledgments xiii
Diclaimer xv
Introduction xvii
PART I Reality 1
CHAPTER 1 It’s All About Reality 3
CHAPTER 2 The Reality of Price and Volume 7
CHAPTER 3 Managing Risk: Always Set a Stop-Loss Exit 13
CHAPTER 4 If It Sounds Too Good to Be True . . . 19
CHAPTER 5 Personal Methods to Increase Trading
Success 23
CHAPTER 6 Identify Your Personal ART Profile 27
PART II Art 39
CHAPTER 7 Design Your Business Plan 41
CHAPTER 8 Selecting a Financial Market 47
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vi CONTENTS
CHAPTER 9 Selecting a Time Frame 55
CHAPTER 10 Selecting an ART Platform, Broker, and
Data Feed 59
CHAPTER 11 Psychology and the Trader’s Mind-Set 63
CHAPTER 12 Artistic Simplicity 67
CHAPTER 13 The Art of Paper-Trading 71
PART III Science and Math 75
CHAPTER 14 Calculating Proper Trade Size 77
CHAPTER 15 Other Formulas and Recipes 83
CHAPTER 16 The Human Brain 87
PART IV ART System Basics 91
CHAPTER 17 ART Is the Total Solution 93
CHAPTER 18 Pyramid Trading Points (P and MP) 97
CHAPTER 19 Market Truths: Price Bars and Volume 115
CHAPTER 20 ART Reversal Bar Signals (1B and 2B) 121
CHAPTER 21 Trend-Trading Rules 135
CHAPTER 22 Countertrend-Trading Rules 141
CHAPTER 23 Scalping Rules 147
PART V Advanced Techniques 155
CHAPTER 24 When to Use Advanced Techniques 157
CHAPTER 25 Scaling Out and Scaling In 161
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Contents vii
CHAPTER 26 How to Trade Bracketed Markets 167
CHAPTER 27 Software Optimization and Average True
Range (ATR) 179
CHAPTER 28 Stop and Reverse (SAR) 183
CHAPTER 29 Higher-Time-Frame Filter 187
CHAPTER 30 Other Filter Techniques 205
CHAPTER 31 Elliott Wave—Ungrounded Assessment 215
CHAPTER 32 Other Ungrounded Assessments 223
Epilogue 231
About the DVD 233
APPENDIX A ART Software Quick-Start 237
APPENDIX B ART Tips 241
APPENDIX C ART Software Technical Support 243
APPENDIX D Resources 247
Glossary 263
About the Author 285
Index 287
