Trading in a Nutshell, 3rd Edition

Trading in a Nutshell, 3rd Edition provides the reader even more trading tips than the original of this book published in 2001 and the 2nd Edition published in 2005. This new edition includes more information about preparing your mind for the mental rigours of trading as well as more guidance on how to develop your own trading plan that you will implement with confidence. The foreword has been written by Daryl Guppy.

You can read more details and purchase the book at www.tradinginanutshell.com

Trading in a Nutshell, 3rd Edition was reviewed in the September / October 2008 issue of Your Trading Edge Magazine.

Review from Your Trading Edge

It is easy to understand why this book by Stuart McPhee is now in its third edition. Aimed at share traders, it is a great reference manual on the various aspects of operating a share trading business. There are specific chapters on many facets of trading shares, which need to be read and understood by every serious trader.

Two chapters on technical analysis and the use and understanding of charts and indicators provide useful explanations and interpretations of many of the more common of these trading tools. The book works through many of the concepts covered in most trading books. The big difference is that discussion is supported by many practical examples of the use of these concepts. They include entry and exit techniques, and the setting of stops, which is always important. The chapter on money management and risk is relevant and well presented, and provides a great introduction to these all too often neglected topics.

Chapter 10, ‘Developing your Mindset’, is very pertinent. It presents its material in a very readable and useable format, unlike the psychobabble of a number of other books that try to explain this extremely important topic.

The book is a great overview of the many aspects of successful share trading and should be read by everyone setting out on their trading career. The chapters on money management and developing your mindset are well worth reading by all traders, regardless of their level of expertise. It is a great reference book for those launching their trading business, and a healthy refresher for more experienced traders. True to its name, the book provides a great overview of the realities of trading ‘in a nutshell’.

You can read more details and purchase the book at www.tradinginanutshell.com

Contents

Chapter 1 - An Introduction to Trading

• Trading
• Develop a Trading Plan
• Commit to It
• Put in the Required Effort

Chapter 2 - Financial Markets

• What are stock exchanges?
• Stock Exchanges around the world
• Other Markets and Products
• Stockbrokers
• Indices
• Global Industry Classification Standard (GICS)

Chapter 3 - Technical Analysis and Charts

• Fundamental Analysis
• Technical Analysis
• Open, High, Low, Close and Volume
• Charting
• Volume
• Trends
• Peaks and Troughs
• Moving Averages
• Always Consider the Trend

Chapter 4 - Chart Patterns and Indicators

• Support and Resistance
• Symmetrical Triangles
• Ascending Triangles
• Descending Triangles
• Double Tops and Bottoms
• Indicators
• Relative Strength Index
• Moving Average Convergence Divergence
• On Balance Volume
• Directional Movement
• Stochastic Oscillator
• Need More Indicators?

Chapter 5 - The Entry Decision

• The Importance of Entry
• Sector Analysis
• Using Indicators
• Confirmation
• Trade Initiation
• Confidence
• Liquidity
• Weight of Evidence
• Diversity
• Keep it Simple!
• Checklist

Chapter 6 - The Exit Decision

• Stop Losses
• How to Set a Stop Loss
• Inactivity Stop
• Trailing Exits
• Stop Losses and Trailing Exits Together

Chapter 7 - Trade Execution

• At Market / At Limit Orders
• Which One Should I Choose?

Chapter 8 - Money Management and Risk

• Importance of Money Management
• Your Primary Aim
• Risk
• Capital Preservation
• Risk Amount
• Position Sizing
• Probability
• Half the risk
• Averaging Down
• Averaging Up
• Adopt a Defensive Posture
• A Final Thought

Chapter 9 - Developing your Trading Plan

• Buy and Hold Approach
• Black Boxes
• Aim for Something
• Discover Yourself
• How Much Time do you Have?
• How Confident are You?
• Give Yourself an Edge
• Monitoring your trades and performance
• Paper Trading/Testing

Chapter 10 - Developing Your Mindset

• Attitude
• Confidence
• Patience
• Control
• Emotions
• Perspective
• Decisiveness
• Humility
• Discipline
• Get Healthy
• Trading as a Game
• Give Yourself a Break
• Ultra Comfort
• Focus

Chapter 11 - Rules of Trading

• Cut Your Losses
• Let Your Profits Run
• Follow the Trend
• Don't Overtrade
• Never React to a Tip
• Always Trade Liquid Stocks
• Keep Positions Small
• Don't Buy Something Because it Looks Cheap
• Keep it Simple

Chapter 12 - Getting Started

• Guidance for New Traders
• Discover Yourself
• Money Management
• Entry and Exit
• Your Routine
• Taxation Structure
• Information
• Computer and Software
• The Internet
• Record Keeping
• Conclusion