Book Review > Trading Secrets 3rd edition

1.    Overall Concept of Book

Author
The author, Louise Bedford, is reasonably well known in the industry and is co-author of the website www.tradinggame.com.au as well as the author of several books on trading and technical analyses. In all of her writings that I have seen Louise uses a very personal and everyday approach i.e. she couches the content in a confidential voice such as “this is the trap I fell into so you should avoid this by doing A/B/C…)

Concept Development
The cover of the book indicates that this is the 3^rd edition and the updates relate mainly to new trading platforms and other technicalities. Very little of the advisory content has changed since 1^st edition in 2001 except perhaps some “new” psychology.

Parts and Chapters
The book is divided into 6 Parts and 25 Chapters over about 300 pages giving around a dozen pages per chapter on average. This makes this an easy book to read in small chunks e.g. on the train, before sleep etc. However, it also means that there is not much detail.

The Parts start with general background knowledge (who should trade, what platform, it takes time to learn, find a mentor etc.) through management aspects (trading tools, capital preservation, different products etc.) and finishes with essential administration (trading plan, recording the background to trading decisions, develop successful habits and finally “The Real Secret”).

2.    What is the book about
In the next section I have detailed a chapter by chapter summary of the contents. In short, the book tries to cover the whole range of topics that a beginning trader will encounter from how do I buy a share to what tools do I need to be successful.

With 25 chapters in 300 pages there is obviously not much detail and the subject material is lightly touched on in most cases. The exceptions to this are the technical chapters (charting, stop losses, entry and exit strategies) which are given more development. However, there are many books which deal more rigorously with these subjects and anyone that has read even moderately about the share market would already have encountered these.

This is an entry level book for those considering venturing into the share market for the first time. To its credit there are many warnings that this is a difficult area to make money and that many skills are needed. However, the conversational style and personal touch may suit some readers with a soft spot for the human side of us all. If you are an analytical reader who likes detail and complexity then look elsewhere. The teaser “The Real Secret” turns out to be “self-awareness”.

3.    Content Detail by Chapter

Chapter 1 – Stop Trading, Start Thinking

Plan for success and do background research

Discussion of fundamental analysis

Discussion of technical analysis

Find a method that suits you either or a combination of the above

Don’t trade on tips and gossip

Don’t leverage until you gain experience

Chapter 2 – Trust a Broker? Are you Crazy?

Set up your own trading business rather than use a broker or planner

Choose data according to needs – intra-day or end of day 

Use charting software that you are comfortable with

Invest in your own education

Chapter 3 – Get Ready for Action

Getting the most out of our energy

When we are stressed we don’t make good decisions

Breathing exercises

Chapter 4 – Got a job? Hang on in there…for a while

It takes a while to learn to trade successfully

Don’t quit your job until you have developed these skills

Some people can combine trading and work

Work out in advance how you can trade and take holidays

Chapter 5 – It’s all about sex

Men and women are different

Be aware of the characteristics of your gender and develop strategies

Chapter 6 – The best gift you can give your child

Teach your children about money management and the share market

Chapter 7 – Find a hero – the undervalued success secret

Finding a mentor is an easy and quick way to learn

Take note of others then develop your own style

If it sounds to good to be true then it probably is

Chapter 8 – Trader – know thyself

Controlling your own mindset will benefit your trading success

Be detached from your trading positions

Chapter 9 – History never repeats. Are you sure?

Past share price can be used to estimate future price

Basic chart theory for candlesticks (GOOD)

Chapter 10 – Stop playing blind archery

Techniques such as trendlines, moving averages, volume etc

Trade entry and exit techniques

Chapter 11 – Speed counts. Should you get online

You need a broker to execute trades

Being online makes it easy to over trade

Chapter 12 – Show me the money

Honing up entry and exit skills (GOOD)

Back test and trading assumptions

Chapter 13 – Sector analysis – your shortcut

Top down and/or bottom up analyses

Identifying opportunities with IPOs

Chapter 14 - GFC victims didn’t use stops

Analysis of different types of Stop Loss (GOOD)

Chapter 15 – Most people suck at money management

Money management is a key skill

Considerations for position size (GOOD)

Chapter 16 – More bang for your buck

The theory of pyramiding (GOOD)

Chapter 17 – it’s TattsLotto time

Planning for profits and losses

Chapter 18 – Warning Measure or go broke

Using an equity curve to measure performance

Using expectancy calculations

Chapter 19 – Make the bear your friend

In a volatile market – follow trading plan and stops

Short selling and CFDs

Chapter 20 – Options multiply your results

Description of the Options market

Chapter 21 – New trading products

Description of CFDs and FOREX

Chapter 22 – Associate with success

Choose those you associate with carefully

Chapter 23 – Write it down or suffer the consequences

Develop a trading plan and stick to it

Chapter 24 – Habits determine your success

Again stick to your trading strategy

Chapter 25 – The Real Secret

NEED TO HAVE CLARITY OF PURPOSE – YOUR STRENGTHS AND LIMITATIONS