As with most other skills, practice is the best way to become effective at paraphrasing. Also, you may need to write several drafts before developing one that accurately reports the author's intentions in your own words.
Note also that if you cite three or more words from the original or even one word that was coined by the author, you should acknowledge your indebtedness by placing quotation marks around the borrowed terms.
To give you a sample of how writers mix direct quotes with paraphrase, take a look at a short excerpt from Stephen North's influential book, The Making of Knowledge in Composition. As you read the passage, note how North intermixes his own opinions about ethnography along with an occasional direct quote from the work of Clifford Geertz. Note also that North is careful to show readers how Geertz quoted from the work of Paul Ricoeur. Finally, North cues readers that he has not emphasized Geertz's words by italicizing them; he does so by writing "his emphasis" in parentheses. When he felt the need to clarify Ricouer's terms, he placed his clarification in brackets.
Ethnographic inquiry produces stories, fictions. Ethnographic investigators go into a community, observe (by whatever variety of means) what happens there, and then produce an account—which they will try to verify or ground in a variety of ways—of what happened. The phenomena observed are gone, will not occur again, and therefore cannot be investigated again. What remains, then, is whatever the investigators have managed to turn into words. Clifford Geertz perhaps put it best in Chapter 1 of his The Interpretation of Cultures: "Thick Description: Toward an Interpretive Theory of Culture": "The ethnographer 'inscribes' social discourse, he writes it down. In so doing, he turns it from a passing event, which exists only in its own moment of occurrence into an account, which exists in its inscription and can be reconsulted" (p. 19, his emphasis). This is not to say, as Geertz is careful to explain that the ethnographer transcribes, literally, all of what a community's members say. Rather, the inscribing is an effort to capture what he calls, borrowing from Paul Ricoeur, the "said": "'the noema ["thought," "content," "gist"] of the speaking. It is the meaning of the speech event, not the event.'" (p. 19)