The Logical Trader (Hardcover)

by Mark B. Fisher (Author) "When you go in for your annual physical, the doctor takes your blood pressure, listens to your heart and lungs, draws some blood, etc. Based..." (more)
Key Phrases: pivot range, pivot moving averages, logical trader, New York, The Logical Trader, Averages Slope (more...)

Editorial Reviews

Product Description
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.

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.

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Product Details

• Hardcover: 256 pages
• Publisher: Wiley; 1st edition (July 2002)
• Language: English
• ISBN-10: 0471215511
• ISBN-13: 978-0471215516
• Product Dimensions: 9 x 6.1 x 1 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Average Customer Review: 3.7 out of 5 stars See all reviews (30 customer reviews)
• Amazon.com Sales Rank: #57,684 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

67 of 73 people found the following review helpful:

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

By	L. Masonson (Monroe, New York USA) - See all my reviews (REAL NAME)

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

18 of 19 people found the following review helpful:

4.0 out of 5 stars Hard gained experience from the trading trenches..., March 28, 2004

By	P. Matt Blackman "Matt Blackman" (Vancouver) - See all my reviews (REAL NAME)

It is interesting reading the various reviews on this book. Most users love it, and a few don't. It is probably safe to say that those who didn't were looking for a single book about how to trade. If that is the case, I wish them luck. Please let me know when (or should I say if) you find it.

For the rest of us looking for greater insight and input from those who have gone before us, The Logical Trader is highly worthwhile. Only when you consider that Fisher runs a trading company in New York that employs 75+ traders who rely on his ACD system to make their daily bread, can its full value be appreciated.

I have had a ball with this book and have just finished my third article in which I test a few of the ideas he discusses. I have found that with a little work and using some common sense that his techniques work quite well indeed. But like any good indicator or system, it is a pipe dream to think that it will work on any and every equity. It takes time to find those on which it works best. Fisher's ACD system is no exception. The payoff comes when the reader takes the time to search out volatile candidates and then finds them.

The book is straight forward and a relatively easy read. The proprietary A and C point values that he discusses can be more or less extrapolated by either eyeballing the security in question or by employing the Average True Range function in your favorite charting program. If you get stuck, he offers book customers a free trail to his website where the values are provided.

Those who are new to trading will find this book a good introduction into what is possible in trading even if the methods may take a while to grasp. Those who are experienced should find the ideas discussed refreshing and very useful if they are looking to employ some new trading ideas.

All in all the book is well worth the money. I have adopted the attitude that if I pick up one good new trading idea, the book is worth the price. This one has given me many so far with more to go. It is a book that should be in the library of every serious trader.

Matt Blackman - Technical Writer/Reviewer
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25 of 28 people found the following review helpful:

4.0 out of 5 stars It works, May 17, 2003

By A Customer

I've read the book, backtested the strategy with Tradesation and concluded: the ACD method works.

For the reviewer Bobby from New Orleans, instead using the proprietary numbers to figure out A and C, use some variables of ATR (Average True Range).

For the reviewer 'The Collector' from Greenwich, CT.: Sorry to burst your bubble, but the markets are not random. Take a look at the Hurst Coefficient for the S&P 500 (it's not 1/2; if the markets were random, it'll be 1/2); take a look at the kurtosis and skewness - it's never zero (if it were random, they would be zero); the market's price distribution does not conform to a normal/Gaussian distribution but to a Stable Pareto-Levy distribution. As a result, the markets are 'predictible' in the short term but not in the long term - that's why Mark Fisher's ACD method works. The math/facts can't lie.