From the September 01, 2010 issue of Futures Magazine • Subscribe!

Chalk Talks for Traders

Chalk Talks for Traders:
Easy X’s and O’s from a Proven Market Pro
By Phil Storer
Brown Books Publishing Group
$19.95; 110 pages

Phil Storer has been actively trading various markets for more than 40 years using technical indicators to make trading decisions. His objective in this book is to provide a no-nonsense guide to trading for those individuals who want to benefit from his experience and expertise without having to pay the potentially heavy tuition of not getting properly educated before trading. He mentions that many of his own lessons were very costly and he hopes that readers will benefit from his time-tested technical-based methodology and not have to replicate his emotional and financial pain. Another goal is to provide traders with guidance in developing a trading plan without incurring the high cost that discourages many traders.

Storer believes that the first step on the road to successful trading is to build a solid trading plan. He points out that winning comes from within and is based on discipline, desire, consistency of purpose and a positive image. Successful investors have a well-constructed customized trading plan that fits their style and personality.

The three critical elements of a plan include the entry point, protective stop and a realistic profit goal. Storer warns that in many cases, traders avoid using protective stops, which is similar to a driver not using a seat belt.

Unfortunately, most traders fight the trend, therefore it is necessary to include someone else in your trading plan who understands you and your method and the markets, and can keep you on track. He stresses that knowing the market’s (or stock’s) price history is very important, since history tends to repeat itself.

The author spends time pinpointing the most common reasons for bad trades and comes up with the following: revenge (trying to get back to even), frustration from the use of protective stops, compulsive trading, pseudo omniscience (you think you know that the market can’t continue to go in the same direction any more), overconfidence, and impulsive trading. Storer hammers home the point of understanding the risk associated with each trade and then deciding whether or not to take that risk.

In his trading, Storer uses a number of moving averages to assess the market’s trend. They include the three-bar exponential, and the five-bar, eight-bar and 20-bar simple moving averages. To determine support and resistance levels, he uses the 40-, 50-, 100 and 200-period moving averages. In addition, he places Bollinger Bands on his charts with the standard settings.

All the colorful charts are at least one-half page in size, allowing readers to clearly and easily grasp his commentary explaining his charting principles and indicators.

Other topics covered include momentum trading, reversal patterns, swing trading, breakouts and related topics. In each case, annotated chart examples are provided with commentary to illustrate his points. And in most cases, he provides checklists so that readers can develop their own trading plans.

The author provides traders with a time-tested technical trading approach, trading rules, as well as parameters that will lead to better trading results. His examples, writing style, knowledge of the subject matter and numerous illustrative charts all work together to help readers succeed in this challenging arena.

Leslie N. Masonson is the author of “Buy DON’T Hold” and “All About Market Timing.” Reach him at lesmasonson@yahoo.com

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