From the September 01, 2011 issue of Futures Magazine • Subscribe!

Mastering Trade Selection and Management

Book Review

Mastering Trade Selection and Management:
Advanced Strategies for Long-Term Profitability
By Jay Norris with Al Gaskill
McGraw-Hill Companies, Inc.
$55; 230 pages

“Mastering Trade Selection and Management” is divided into two parts. The first part deals with market analysis encompassing trade preparation, market overview, identifying strengths and weaknesses, risk and price movement, and market framework. The second part focuses on trading with a discussion of the trade set up, entering the trade and trigger points, trade management and exiting, and trading examples with trading plans.

According to the author, “Your only job as a trader is to execute your trading plan error-free with the goal of obtaining a steady rate of return on your account balances.” Slow and steady wins the race.

Norris defines and distinguishes between position, swing and day trading and the different holding periods. He firmly believes that a trader needs to have a qualified trade set-up that includes not risking more than 2.5% of trading capital on any one position. Moreover, he points out that using stop orders to protect account equity is essential.

Most of the charting examples in the book are forex related. In the preface, Norris says that his co-authored book “Mastering the Currency Market” is a prerequisite for this book. Therefore, the reader should not be surprised that the book’s overall focus is on trading forex using a combination of fundamental and technical strategies. Of the 94 charts, 87 are forex charts and the rest are stock charts.

Surprisingly, no where on the book’s back or front cover, side flaps or table of contents is a mention of the book’s forex focus. However, under the author’s name on the cover is a blurb mentioning his prior book’s title. The author does provide his website blog which contains over 200 trading articles and commentaries.

Norris does provide a useful forex pre-trade checklist where a specific currency’s upcoming calendar events, trend for key periods (monthly, weekly, daily, 240-minute and 60-minute), patterns and structure (support and resistance) can be tracked. He believes that a successful trader needs to complete this checklist for all trading vehicles. He focuses on daily charts for an eight- to 10-month period to search for the overall price patterns and to look for high and low points. Charts are one-half page in size and very easy to read.

He suggests that a horizontal line be placed on a chart pinpointing the monthly high and low of the highest closing candle in an uptrend and vice versa. In addition, Norris uses directional lines to determine the market’s current trend. The directional line also is a horizontal line, but it is drawn for different time frames such as daily, weekly, monthly, 60-minutes and 240-minutes depending on the trader’s preference. He says that trend lines are the key internal structures – supply and demand – that can be used to trade profitably in all markets. There is also a chapter on Elliott Wave, but no bibliography is provided.

In summary, this book provides a straightforward, basic approach to trading forex using charts and fundamental analysis, although there is no other discussion of forex, per se. Readers easily can apply the technical analysis principles to other instruments. The use of a detailed trading plan with trading examples, and the focus on trend-following with the author’s specific weekly and monthly directional approach are the most useful aspects of the book.

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

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