The Naked Trader by Robbie Burns
The Naked Trader by Robbie Burns is a book about personal investment and trading written in a personal and conversational tone. It makes for a fast and easy to read format but can be annoying at times. That said, its a very instructional and informative book for anyone doing or considering personal part or full-time trading. The author himself makes his living being a “medium-term trader” and this is the tactic he teaches, however, it should be noted that he made the critical mass of money by good old-fashioned work and risk-taking entrepreneurship. He lives and works in the UK and some of the advice are UK or FTSE-centered but most information is quite universal nonetheless.
The book works well as an introductional text to personal investment but gives good advice to more advanced investors as well and, especially when it comes to investing, its good to be reminded about the basics every now and then. Its easy to think you are better than the rest after a few wins - which in turn usually makes you crash spectacularly.
So, the book begins from the basics, asking you if trading is right for you and describing the reality of trading from a refreshingly honest angle. It goes on to teach the basic vocabulary of stock trading and what it means. By chapter three even the more experienced investor should start to read more carefully, this is where the author goes into different trading strategies and describes his own in more detail. Basically what he does, and mostly describes in the rest of the book, is called “medium-term trading”. This means that he doesn’t, very often at least, try to day-trade and find the hot stock of the day. Instead he does research his investments like value/long-term investors do but try to find shorter upsides. Reasons why the stock would give him 30-40% return over the following months or at most couple of years. This also means being able to cut your losses quick instead of getting stuck with a badly performing stock which didn’t go as planned.
He does also go into more details about warrants, short-selling and other things that a beginning trader really should avoid but is good to know exists. Some instruments like spread-betting aren’t available here in Finland either - I think, but then again, I’m a beginner so I haven’t even searched for anything like that (yet). The information on how to do basic chart-reading and technical analysis alone was worth the price of admission for me, it didn’t teach me magic but it did give me a enough information to understand the vocabulary and thinking behind it.
The book also has a chapter on usual mistakes investors make and which really could have been avoided and does give you some good rules of thumb on how to avoid a similar situation. It also reminds you not to get too cocky because that is when you think the rules do not apply to you!
Since the book doesn’t try to be very advanced it ends with an excellent suggested reading list which I have copied down for future Amazon-orders.
If you are curious about or already investing you really should do yourself a favor and read this book, its easy to read and informative. It doesn’t claim to help you make millions but it will help you not make stupid mistakes and that’s all you can honestly ask for. Warmly recommended!
