The subtitle, “How Price and Volume Move Markets”, certainly summarizes the main theme of this book: Proper analysis of trading volume, when combined with certain analytical techniques, provides clear trading signals with a high degree of reliability. The book was written to educate the reader in the art of seeking out and executing trades with a high risk-reward ratio and exceptional potential. New traders are provided with clearly illustrated examples of a wide variety of trading and analytical techniques, which comprise O’Brien’s own trading system. Many of these techniques will likely be new to the average trader. However, from my own experience, I know that many of them are valid and useful approaches to successful analysis.
Other sources of information do not emphasize trading volume and its importance in analysis and timing of trades nearly as much as O’Brien does. What he calls seeking “quality volume” is a common theme throughout the book. It is one of his prime determinants of whether a trade should be “fired off” and whether or not one should stay with the trade. Major techniques and subjects discussed include “cause and effect”, which shows the correlation among long periods of price inactivity, subsequent volatility and large price moves. Also covered are Fibonacci expansion and retracement calculations, how to determine “confluence areas”, which purportedly give stronger and more reliable signals, and the use of displaced moving averages to determine trend. (Most of his ideas about the use of Fibonacci are clearly borrowed from the work of Joe DiNapoli.) O’Brien extensively covers protective stop orders and their most effective placement, the analysis of support and resistance areas, gaps, channels, swing points and the use of one of his favorite indicators, MACD. Trading psychology and money management, two areas often neglected in discussions of trading methodology, receive special attention in their own chapters.
After discussing all the components of his own trading approach, O’Brien brings them together in a unified, logical manner in which he shows how to identify potential trades, set them up and manage them properly, once entered. This gives rise to the title of the book, “Timing the Trade” and teaches the reader how to do just that -- effectively time the trade.
O’Brien clearly borrows from the work of Richard Wyckoff and incorporates it throughout the book. He often refers to a phrase from Wyckoff’s writings, “Jumping the creek, and coming back to ice.” This phrase was new to me, and the discussion of it was one of the most interesting aspects of the book. If you want to know more about how to use it, I suggest you read this book!
Author Tom O’Brien is the host of a widely followed radio show broadcast on Tiger Financial News Network, “The Tom O’Brien Show”, which is a widely followed daily source of stock market trading news, information and analysis.
Full table of contents and more information on this book may be found at http://www.traderspress.com/detail.asp?product_id=2288
Review by
Edward Dobson, President
Traders Press, Inc.
Greenville SC
