A Short Course in Technical Trading

By Perry J. Kaufman

Quick Summary

A practical, course-format introduction to technical trading by one of the field's most respected quantitative analysts. Perry Kaufman bridges the gap between technical analysis theory and actual trading practice, covering trend identification, breakout systems, channels, event-driven trading, risk management, chart patterns, momentum indicators, and portfolio management, with trading games and review questions designed to build real-world skill.

Executive Summary

"A Short Course in Technical Trading" originated as a graduate course at Baruch College and retains that educational structure. Kaufman, author of the encyclopedic "Trading Systems and Methods," distills his 30+ years of experience into 18 lessons that progressively build trading competence. The book alternates between instruction, "words of wisdom" drawn from experience, and trading games that allow readers to make mistakes without financial consequences. The course philosophy is that technical analysis alone is insufficient -- it must be combined with practical trading skills, risk management, and an understanding of what can go wrong. Topics range from charting and calculating trends through breakout systems, channels, event-driven strategies, one-day patterns, top and bottom formations, Fibonacci and Gann, volume analysis, momentum indicators, entry/exit management, volatility, portfolio management, and Dow Theory.

Key Lessons

1. Markets Change -- Equipment is faster, participants are more knowledgeable, commissions are lower, and globalization has altered market dynamics
2. Trend Following -- Both visual (chart-based) and calculated (moving average-based) trend methods are covered
3. Breakout Systems -- Entry based on price breaking above or below defined levels
4. Risk Control -- Position sizing, stop-losses, and the relationship between risk and expected returns
5. Volatility Management -- Using volatility to size positions and manage portfolio risk

Critical Assessment

Strengths

• Written by one of the most respected quantitative trading researchers
• Course format with games and exercises provides practical learning
• Covers the full spectrum from basic to intermediate concepts
• Emphasis on what can go wrong, not just what should work

Limitations

• Some material may be basic for experienced traders
• The trading games require commitment to complete properly
• Dated market references (2002-2003 era)
• Limited coverage of automated trading systems

Conclusion

Kaufman's short course provides an excellent foundation for anyone moving from theoretical technical analysis to actual trading. The combination of instruction, practical wisdom, and trading games creates a learning experience that most books in the field cannot match.