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Table of Contents

Fooled by Technical Analysis: The perils of charting, backtesting and data-mining

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PART I – Basic Concepts

Chapter 1. Levels of Technical Analysis
Level I Naive chart analysis
Level II Expert chart analysis
Level III Naive quant analysis
Level IV Expert quant analysis

Chapter 2. Trading Expectation
The need for large trade samples
The trading system inversion paradox

Chapter 3. Risk of Ruin and Trading Capital Requirements
Risk of ruin due to undercapitalization
Risk of ruin and win rate
Low win rate impact on trend-following system performance
Determining initial capital requirements 

Chapter 4. Trading Timeframes and the Impact of Trading Friction
Trading Timeframes
Trading Styles
Trading methods
The Negative-Sum Game of Futures and Forex Trading
Daily E-mini trading
Intraday E-mini trading
Daily Forex trading     
The impact of a long-term market bias

Part II. Fooled by Technical Analysis

Chapter 5. Naive and Expert Chartists
Fooled by random chart patterns
Use of chart patterns defies logic
Chart patterns and self-fulfilling prophecies
Chart Patterns are mostly flukes
Claims of Chartists debunked with simple math
Fooled by random indicator patterns
Indicator patterns and self-fulfilling prophecies
Indicators and wishful thinking
Chart analysis and cognitive biases
Expert chart analysis

Chapter 6. Naive and Expert Quants
What is Backtesting?
Pitfalls of backtesting
Methods for discovering a trading edge
Fooled by hypothesis testing
Fooled by validation tests
Fooled by Monte Carlo Simulations
Expert quant analysis
Minimizing the impact of data-mining bias
Classification of trading systems
Selection of systems
Data snooping bias
Myths about data-mining bias
Pitfalls of validation methods
Quant discretionary trading

Fooled by momentum strategies
Putting it all together

Chapter 7. Position Size Determination Methods
Basic types of trading systems
Systems with stops-loss
Fooled by optimal methods
Systems without stops-loss

Chapter 8. Alternatives to Technical Analysis and Conclusion
Trading the news
Social media sentiment and trends
Esoteric trading methods

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