Trading in a Nutshell, 2nd Edition
Review by YTE MAGAZINE (May - June 2005)
Trading In A Nutshell, 2nd Edition: An Australian Share Traders’ Guide by Stuart McPhee
John Wiley & Sons 2005, 191 pages. 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 setups. 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 setup 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 management and risk management. Trading in a Nutshell does not let you down. Stuart emphasizes the importance of position sizing in preserving capital and provides a number of easy to follow examples to support his view. The book provides a whole chapter on putting together a trading 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. Stuarts 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. 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.
Review by Brent Penfold
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