The Logical Trader [Hardcover]

Mark B. Fisher (Author)

Book Description

Publication Date: July 2002 | ISBN-10: 0471215511 | ISBN-13: 978-0471215516 | Edition: 1

An in-depth look at the trading system that anyone can use
The Logical Trader presents a highly effective, yet simple trading methodology that any trader anywhere can use to trade almost anything. The "ACD Method" developed and refined by Mark Fisher after many years of successful trading, provides price points at which to buy and sell as determined by the opening range of virtually any stock or commodity. This comprehensive guide details a widely used system that is profitably implemented by many computer and floor traders at major New York exchanges. The author's highly accessible teaching style provides readers of The Logical Trader with a full examination of the theory behind the ACD Method and the examples and real-world trading stories involving it.
Mark B. Fisher (New York, NY), an independent trader, is founder of MBF Clearing Corp., the largest clearing firm on the NYMEX. Founded in 1988, MBF Clearing has grown from handling under one percent of the volume on the NYMEX to nearly twenty percent of the trades today. A 1982 summa cum laude graduate from the Wharton School of Business, University of Pennsylvania, Fisher also received his master's degree in finance and accounting from Wharton.
New technology and the advent of around the clock trading have opened the floodgates to both foreign and domestic markets. Traders need the wisdom of industry veterans and the vision of innovators in today's volatile financial marketplace. The Wiley Trading series features books by traders who have survived the market's ever changing temperament and have prospered-some by reinventing systems, others by getting back to basics. Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future.

Editorial Reviews

From the Inside Flap

For over fifteen years, Mark Fisher has taught thousands of people-from traders on the floors of major exchanges to individual investors in front of computer screens-how to trade stocks, commodities, even currencies, using his highly successful and innovative ACD method. Now, in The Logical Trader: Applying a Method to the Madness, Fisher will teach you how to use the ACD method to trade more effectively and profitably than ever before.

The Logical Trader opens with an in-depth discussion that outlines the basics of the ACD method-plotting particular price points in relation to the opening range-and shows you how this method allows you to gain reference points against which to trade the "A" and "C" points for entry and the "B" and "D" points as stops. You'll also learn about pivot ranges and how you can combine them with ACD to maximize position size while minimizing your risk.

Along the way, Fisher discusses some very important psychological issues-No Ego, Gaming Theory, and The Concept of "Next!"-that, when combined with ACD, can be adapted to any trading style or methodology. After a question-and-answer section designed to assess what you've learned in the first half of the book, The Logical Trader continues to show you how to use the ACD method in tandem with other trading tools by:
* Exploring strategies using pivot moving averages, such as moving average fake-out (MAF) and moving average divergence trades (MAD)
* Discussing various trading strategies that allow you to exit trades at the optimal time
* Highlighting trading stories that involve risk management strategies

Step by step, The Logical Trader will show you how to use the ACD method to calculate the prices above which you'd want to be long and the prices below which you'd want to be short. Using other indicators and measures, which are layered on top of the ACD base, you'll also learn how to construct a trading plan based upon prevailing prices and market activity.

As long as the market you are trading has sufficient volatility and liquidity, you can use the ACD method for everything from ultra-short-term day trading to longer-term position trading. Whether you're a novice trader or you've been at it for years, you'll find that the ACD system has something to offer you and your style of trading. Filled with real-world stories, accessible examples, and anecdotes of traders who have successfully used this method, The Logical Trader fully explains the ACD method and shows you how to get the most out of it.

From the Back Cover

Praise for The Logical Trader
Applying a Method to the Madness

"Fisher's messianic willingness to share with the public the successful system he has developed is an opportunity to be exploited."
-from the Foreword by Paul Tudor Jones
Chairman and CEO, Tudor Investment Corp.

"Mark takes the same mental approach to trading that professional athletes and coaches use to succeed on the court. He has taken several college and pro athletes and provided them a game plan for life after basketball."
-John Calipari, Head Basketball Coach, Memphis University
Former NBA Head Coach, New Jersey Nets

"I have been actively involved in the markets (foreign exchange, equities, derivatives) since the early 1970s-as a trader on the CBOT floor in the bond and note 'pits,' as a foreign exchange dealer at a large multinational bank, as the head of a bank's futures brokering operation, as a reasonably widely known analyst of the world capital markets writing a daily commentary on these markets, and as a trader on my own. I've read a myriad number of 'how to' books on trading, most of which have proven to be of little merit, if any. However, from the outset, reading and understanding Mark's insights into his ACD system in The Logical Trader, I've learned methods of trading that I probably understood intuitively but now understand logically and with almost numerical rationality. The reading may be difficult for the beginning trader, but the lessons learned will be immediately beneficial; of that I am certain. I strongly endorse this book for the beginner and professional trader alike."
-Dennis Gartman, Editor/Publisher, The Gartman Letter, LC

In trading, as in life, you need a plan. In The Logical Trader: Applying a Method to the Madness, expert trader Mark Fisher reveals a plan and a method that he has used for over twenty years to successfully trade.

Mark Fisher has taught thousands of people-from traders on the floors of major exchanges to individual investors in front of computer screens-how to trade stocks, commodities, even currencies, using his highly successful and innovative ACD method. Now, in The Logical Trader, Fisher will teach you how to use the ACD method to trade more effectively and profitably than ever before.

See all Editorial Reviews

Product Details

• Hardcover: 272 pages
• Publisher: John Wiley & Sons; 1 edition (July 2002)
• Language: English
• ISBN-10: 0471215511
• ISBN-13: 978-0471215516
• Product Dimensions: 6.4 x 1 x 9.2 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Average Customer Review: 3.9 out of 5 stars  See all reviews (38 customer reviews)
• Amazon Best Sellers Rank: #66,631 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

82 of 91 people found the following review helpful

5.0 out of 5 stars Proven Trading Approach for Serious Traders August 18, 2002

By L. Masonson

Format:Hardcover

The Logical Trader is not a "fluff" book on trading. Quite the contrary, it requires the reader to spend considerable time and effort to absorb and learn the methodology and principles provided by Mark Fisher, a master trader and teacher.

Over the last 15 years, Fisher, an independent trader, has taught his trading approach dubbed the "ACD" system to over 4,000 individuals including members of his clearing firm - which is the largest clearing firm for the NY Mercantile Exchange. Of the 1,000 traders who use Fisher's methodology, 10% make over $750,000 a year, according to Fisher. This is certainly a testament to the soundness of Fisher's methodology. Fisher emphasizes that is method can be used to trade commodities, currencies, or stocks either at a trading firm, on the exchange floor, or at home. Traders taught by Fisher have had a 40 - 50% success rate compared to around 10 - 15% for the average trader using different techniques/

Fisher peppers his books with examples, anecdotes and stories. However, the main thrust is focused on explaining his ACD system in excruciating detail with numerous chart examples, detailed explanations of the key terms and trading parameters.

The ACD system - plotting price points in relation to the opening range - requires no expensive software. The method provides reference points for trading - A and C points are for entry and B and D are stops. Using the system the trader can calculate when to go long or short. Coupled with additional indicator and measurements, layered on top of the ACD system, the trader will be able to develop a trading plan.

To use the ACD system -which is based on simple math - the trader must have certain abilities including collect and analyze information, make and implement decisions, be good with numbers, be disciplined to follow the system. Fisher describes pivot points, the daily pivot price (high+low+close)/3), daily pivot range, 3-day rolling pivot, etc. The last 30 days data are viewed to obtain the big picture of the vehicle being traded. He calls this his Macro ACD. He provides 25 chart examples to illustrate how to score each day.

After the first four chapters, Fisher has an exam with answers to make sure that the reader understands all the key concepts and calculations.

Fisher adds more meat to the ACD system by introducing the use of pivot moving average (using daily pivot price as opposes to the day's close) to determine the current trend (up, down or flat). He uses three pivot point moving averages (14 day, 30 day and 50 day) and focuses on looking at the slope of the moving average line to determine the existing trend or rate of change in the trend. Then Fisher covers exit strategies. He explains the rolling pivot range (RPR) which typically spans 3 to 6 trading days. This is the reference point for entry of the trade. The RPR let's you keep your winning position longer and gets you out of your losing positions in a more profitable manner. Fisher also calculates the price momentum of today's close compared to 8 days ago to determine the trend. He then discusses his use of the "reversal" trade set-up to exploit the market failures. Other subjects covered include the two-way swing, trend reversal trade and sushi roll (change in the direction of the market), and outside reversal week.

Fisher illustrates the effectiveness of using the ACD system using charts from the 1929 crash. It would have worked well in 1929 at the top and in 1932 at the market bottom in keeping the trader on the right side of the market.

Fisher devotes on 27-page chapter to real person trading stories focusing on risk management. Lastly, Fisher interviews seven traders that have successfully used his system with their personal perspectives.

The book contains a 10-page glossary of relevant terms, a table of 20 simple trading rules, and a 27-page compilation of sample data gathering for the ACD system.

In summary, this book requires a lot of time and study from the reader, but the potential rewards could be substantial

28 of 29 people found the following review helpful

4.0 out of 5 stars A Word of Caution January 13, 2006

By Gerado Botello

Format:Hardcover

I mostly agree with every one of the comments written above and I would highly recommend this book. There are very few trading books out there that actually discuss complete trading setups and this is one of them. However, be prepared to do your own research because contrary to the book's claim, "Fish's messianic willingness to share with the public the successful system he has developed is an opportunity to be exploited," at face value. While he does give you most of the rules he does not discuss how he calculated the "A" and "C" values for his system. They are given in the appendix in the back of the book. If you know how to use TradeStation or Metastock, then you could probably come up with something you can back-test.

For example, the values for the S&P may work fine now when the 14 day average true range is between 9 and 15 but what if it ever gets to 45 or 50? The "A" and "C" values in the appendix are going to be meaningless. Just something to think about before you spend you hard-earned money on this book.

49 of 55 people found the following review helpful

2.0 out of 5 stars Missing essential info December 29, 2002

By bobby

Format:Hardcover

At first glance it seems like a great book. The author early on tells you the ACD methodology is the basis of the system. The A and C values determine the trade entries in relation to the opening range and the pivot range. The B and d values determine your stop. It all seems so nice. Guess What? The calculation of the A and C numbers is proprietary and changes with the market's daily movements. You can get these if you subscribe to the author's research material for a fee. The values for December 2001 are given in the appendix, but don't reflect today's numbers. If you use those values you will lose your money. The book is expensive, so you would expect to be given a method to at least ascertain rudimentary values. It would be an awesome book otherwise. I guess if you want to subscribe to the service all will be well.