Ordinary People, Extraordinary Profits

08/01/2006 12:00 am EST

Focus:

David Nassar

Founder and CEO, Crosswinds Capital LLC

In his new book, Ordinary People, Extraordinary Profits, David Nassar sets an ambitious goal: to give the reader the background and strategies needed to make consistently large profits without undue risk. I found this intriguing, since many traders would be happy with merely consistent profits without undue risk.

In his introductory chapters, he covers some of the basic types of analysis and the tools that many traders use. He discusses–The Four Stage Theory–in some detail, a theory which I first read about in Stan Weinstein's "Professional Tape Reader" over 20 years ago. This does not mean, however, that the theory is any less valid now; in fact, it is an interesting way to look at a market or a stock's reoccurring pattern. Though I have found the stages often easy to see on monthly, weekly, or daily charts, I have not found them to be readily visible on intra-day charts.

My favorite chapter deals with risk management, where David gives some very solid advice. He outlines the pitfalls that many novice traders endure, and explains why calculating the risk/reward on every trade is so important. He also cautions against trading with "scared money," which is money you can't afford to lose, because this increases your odds of failure, adding undue psychological pressure?its not that trading isn't difficult enough. He also provides a good summary of the common chart patterns and emphasizes the importance of looking at multiple time frames.

There is also plenty of practical information for the trader, as Nassar discusses selling short, monitoring your margin account, as well as some good information on other trading vehicles, ranging from mini futures to options. In fact there are quite a few pages about some of the various option strategies as well as some basic option pricing information. David discusses in some detail how his software, found on his marketwise.com site, can help you select trades by identifying the stage of a market and help you gauge the risk/reward of a given trade. There is also trade monitoring software called The Trade Evaluator that will objectively analyze your trading results, which I feel is essential in improving one?s performance. The chapter on Pivot Analysis, if you are not familiar with this technique, is worth the price of the book, since it has not been that long since this simple but extremely useful formula was sold for a lot more. Specifically, he discusses the importance of applying the pivot analysis to multiple time frames, such as daily, weekly, and monthly data. It is when these levels line up on all time frames, a situation David refers to as "confluence" occurs, and the support and resistance levels from the pivot analysis become even more important.

The book also includes a DVD which contains a fairly lengthy presentation that emphasizes some of the concepts detailed in the book. Additionally, it provides a link to a site where you can sign up for a free two-week trial to sample his software and other information about the products that you can find at marketwise.com.

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