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The Logical Trader by Mark Fisher

Review of The Logical Trader

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The Logical Trader by Mark Fisher
Mark Fisher is no doubt a successful commodities trader. In fact, he began working at a commodity exchange at the age of 13, he graduated summa cum laude with an MBA from the Wharton School / University of Pennsylvania, he taught many aspiring and professional commodity traders his trading system and built one of the largest futures clearing firms in the industry. Fisher has outlined his trading system in The Logical Trader: Applying a Method to the Madness and now many small traders have access to the same methods many of the professional traders are using.

The ACD Method

Mark Fisher and his traders have been and currently are some of the largest traders in the energy pits. Many of the trading examples in the book are based on the energy commodities, but Fisher explains that you can use these methods on any timeframe and any markets as long as they are volatile and trending.

The premise of his system is based on the daily opening trading ranges and pivot ranges for commodities or stocks. When a market breaks a pre-determined level above or below the days opening range, you will take a position in that direction. Your stop-loss will then be placed at the other end of the opening range.

The pivot range is used to find areas of support and resistance. The calculations for the pivots are clearly explained in the book. You can use the pivots as areas to buy at support levels or sell at resistance levels. However, the underlying theory states that breakouts of pivot ranges are likely to continue in that direction.

More Components of the ACD Methods

Mark Fisher explains numerous ways to use the ACD Methods, which are far too many to cover in this article. What I got out of this book is that you can use this system strictly as he outlines, but you are more likely to adapt pieces of it to suit your own trading style.

Fisher does stress that you need to be consistent when using the system. Trade the same timeframes, cut your losses short, don’t risk too much on any trade and over time, you’ll be successful.

You also have to use some judgment when trading the system. It was meant for volatile markets that are trending. If you get caught in a market that gets stuck in a range, you can reverse the system. Instead of following the breakout levels, you can fade them.

A Trading System and an Understanding of Trading

The Logical Trader: Applying a Method to the Madness is packed full of very useful trading tips and a sound trading system. Most traders use this system for day trading, but it can be used on longer term trading. This book, or system, is more of a way of trading than an absolute cut-and-dry trading plan. A few of Fisher’s traders have their testimonials in the book on how they trade the ACD Method. Surprisingly, they all use just a small variety of the methods to suit their trading style.

New traders may be a bit lost when reading the book and it might take several reads and studying to fully comprehend what Fisher is saying. He does not give a good summary of the whole plan, but he spreads it throughout the book. Therefore, I suggest taking notes and writing your own summary of the trading methods. From there, take the pieces that best suit your trading style.

The most important aspect of this book is that you need to trade with a disciplined approach. The ACD Method gives you trade entries, rigid places for to put your stop losses and you trade with the trends. That alone greatly increases you chances for success.

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