Trading in a Nutshell

This is the second edition of Trading in a Nutshell, originally published in 2001.

Within this clear and precise book Stuart covers all the essential elements of successful trading. Although it is a relatively small book with a simple title you should not be fooled by either when considering its merits.

Stuart covers all the basics, beginning with the role of technical analysis in identifying set-ups. The reader is given a good education, with clearly marked and well-explained charts on how the use of patterns and indicators can help to identify good trading opportunities. Once a trading set-up is found, Trading in a Nutshell explores alternative entry techniques. Following this the book explores alternative stop and exit strategies to help traders cut their losses and maximise their gains. Stuart discusses and illustrates three stop alternatives: percentage capital, technical and volatility. He then continues with three similar alternative trailing stops that will help traders gain the most from their winning positions.

Any good trading book will have a chapter on money and risk management. Trading in a Nutshell does not let you down. Stuart emphasises the importance of position sizing in preserving capital and provides a number of easy-to-follow examples to support his view. To bring the practical aspects of trading together the book provides a whole chapter on putting together a trade plan.

An addition to the second edition is a short chapter on the ASX and another on how to manage the psychological challenges of trading. Stuart shares his ideas on the character attributes that all successful traders need in order to prosper in the market.

I liked Trading in a Nutshell. Stuart cuts to the chase. The book is like a good set of university notes – concise and informative. If you ever feel overloaded with too much information, a reading of Stuart’s book will put everything back into perspective and encourage you to keep things simple. I particularly liked the key summary points at the start of each chapter. An inconsistency is Stuart’s statement that money management is the most important element of trading, contradicted later in the book when he makes the declaration that a trader’s mindset is the most important element. Obviously you cannot have two elements which are the ‘most important’. Apart from this small criticism, Trading in a Nutshell is a very worthwhile, concise, factual guide to trading.

This article was originally published in the Sep/Oct 07 issue of YourTradingEdge magazine (www.YTEmagazine.com). All rights reserved. © Copyright 2009, MarketSource International Pty Ltd.

Tuesday, December 16th, 2008 Trading books reviews

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