Why I Wrote This Book

Most traders read one chart as if it were the whole market. This book shows how every chart sits inside a larger one, and how a single range, measured by a handful of ratios, tells you what the smaller boxes inside it are likely to do. It is a way of reading markets, not a promise about them, and every rule in it is one you can test yourself.

That paragraph is the purpose of the book. The rest of this preface explains where it came from.

Where It Started

I did not come to trading from finance. Most of my working life has been spent as a UNIX and Linux systems administrator. In that work you learn quickly that a system is never what one screen says it is. A server can look healthy on its own dashboard while the network around it is failing. You only see the real state of things when you look at how the parts are connected, and you only trust a fix after you have measured it.

My interest in quantitative analytics began about twelve years ago. In 2014 I started writing ThinkScript, and for several years I paper traded before I put real currency on the line. Those years taught me the same lesson the server room had. Every time I lost track of the larger picture, the market reminded me it was there.

What I Kept Seeing

The trades that went wrong had something in common. I was right about the chart in front of me and wrong about the chart above it. A setup that looked clean on the hourly chart was a small move inside a daily range that was pushing the other way. The smaller chart was never really in charge.

Over time I started to see the market as boxes inside boxes. A candle is a box: its high and low are the edges, and everything smaller forms between them. The monthly candle holds the weekly candles, the weekly holds the daily, and the daily holds the intraday. The outer box rules, because it contains the most trading data. The smaller boxes are its building blocks.

Once I saw it that way, the range of the outer box became the most important thing on my screen. Its high and its low, from a known period, gave me a ladder: the center, the inner thresholds, the breakout levels, and the extensions beyond them. Because those levels are proportions of the range, they read the same on any timeframe and in any market. The same ladder can be drawn on a currency pair, a stock index, a futures contract, or a cryptocurrency.

What This Book Is, and What It Is Not

This book is a framework for reading charts. It gives you one repeatable way to answer three questions before every trade: which box am I standing in, which box is in charge, and where is price likely to react?

It is not a system that predicts the future, and it does not promise results. I have backed the ideas with published research where research exists, and I have marked my own observations as observations. Chapter 22 shows you how to test every rule against your own charts and against a random baseline. I would rather you check the method than believe it.

Who This Book Is For

The book is written in layers. If you are new to trading, Part I builds the picture from the ground up, starting with a single candle. If you already trade, Parts II through IV give you the full ladder, the reasoning behind the ratios, and a routine you can use every day. The method does not depend on any platform or indicator. All you need is a chart that shows highs and lows.

How to Read It

Read the four parts in order the first time. Part I, The Nested Market, explains why the outer box rules. Part II, The Range, turns any box into a measured ladder. Part III, The Ratio, explains why the ladder holds across timeframes and instruments. Part IV, Application, puts it to work in a daily reading routine, in trades, and in testing.

After that, keep the glossary close and use the reading routine in Chapter 19 until it becomes habit. The goal is simple. When you open a chart, you should always know which box you are in, and which box is in charge.

— Pkale S. Robinson
Atlanta, Georgia