Rosenbloom, The Complete Trading Course

Corey Rosenbloom’s The Complete Trading Course: Price Patterns, Strategies, Setups, and Execution Tactics (Wiley, 2011) is an excellent introduction for the beginning trader. Unfortunately it has little to offer the more advanced trader that isn’t readily available elsewhere. But as a Trading 101 course, it succeeds in synthesizing a great deal of material into a coherent, easy-to-follow text.

We read about foundational principles (trend, momentum, price contraction and expansion), strategies and tools (candlestick charts, price patterns, Fibonacci tools, Elliott wave theory), and finally execution and trade setups (including two that the author developed). For those who want more, there’s an extensive bibliography. And, of course, the author’s popular blog Afraid to Trade.

The couple of points I’m extracting from the book for this post are both historically based. First, from an SMB Capital training blog comes the recognition of “two radically different schools of traditional technical analysis,” one stemming from the work of Richard Schabacker and the other from the writings of Richard Wyckoff, both dating to the early 1930s. Schabacker believed that one could learn to trade by studying thousands of patterns and their variations. Wyckoff, by contrast, focused on understanding “why the market was doing what it was doing, … how the motivation of buyers and sellers showed itself in the patterns of price and volume.” Not surprisingly, Rosenbloom comes down on the side of Wyckoff, writing that “We as traders must realize that price patterns are not magic, and what’s important is supply/demand factors, as well as the underlying context in which the pattern forms.” (p. 114)

The author also appeals to Wyckoff in discussing the life cycle of a price move. Wyckoff recognized four stages: accumulation, mark up, distribution, and mark down. In transitioning to an explanation of Elliott wave theory Rosenbloom overlays Elliott’s waves on the Wyckoff stages. The result: “In simplest comparison, Elliott’s Waves 1 and 2 represent [the] Accumulation stage, Wage 3 represents the … Mark-up stage, and Waves 4 and 5 mark the start of the Distribution stage.” The A-B-C pattern represents the Mark-down stage. (p. 177)

The Complete Trading Course provides a solid foundation for the aspiring trader. It covers not only basic techniques of technical analysis and position management but also issues of matching trading style to personality. Those new to trading would do well to read it.