Given my passion for rock music, reviewing the 3rd edition of “The Naked Trader: How Anyone Can Make Money Trading Shares” is like appreciating a classic, such as Dark Side of the Moon, by Pink Floyd. To look for points to criticise, I’d be reduced to suggesting the cover could have done with a bit of a touch up!
To my mind, there are two basic categories of guru. The first group tends to be good at trading and poor at explaining, while the second group is often very good at explaining, but not so hot on the actual trading. In the case of Robbie Burns he is the Elvis of financial gurus. He has everything including the brains, the method, the track record and, above all, the marketing genius to boot. His “cheekie chappy” persona and bright personality spring out of his work and his prose simply flows off the page. Everything about this book is a winner.
Thumbing through the pages of The Naked Trader, it quickly become clear to me that our cheeky friend has a relatively low opinion of technical analysis. I am usually amused by this stance, especially when such people are often quite sensitive to the charting position of stocks. Robbie Burns appears equally susceptible to this particular quirk. On the one hand, he is fairly critical of the dark arts, of which I am so fond, but on the other appears very conscious of market timing. He also seems to pay a great deal of attention to, what I would regard as, the technical health of stocks he researches for the first time. For example, his methods include assessing volume, using a rising price as a buy signal, historical price movements, proximity to 52 week highs and so on. If any of this sounds familiar to regular readers of my work it is because it is. These are all aspects of, what I would call, a “momentum trading strategy”.
But I don’t wish to labour this point, asthe wisdom shared within The Naked Trader is so valuable to all readers.
Perhaps the main reason I like this book is because of the “greatest hits”, Burns has collected, of plays, which usually make money in the market. For the most part, these are based on fundamental principles. He goes into detail, explaining why buying a stock before it enters the FTSE100 is generally a good idea, how to find the hot sectors and why the “boring” companies can be the best investments. What is so appealing about Robbie’s insights is that they are based on common sense, are generally easy to follow practically and you can sit on the long or short side of a trade for quite some time, bagging yourself a healthy profit in the meantime.
A crucial lesson Robbie imparts to his readers is the importance of doing one’s homework. The rule is simple. The more you do the more money you are likely to make.
To finish, I probably should deal with one of the tricky issues surrounding this book. Can anyone make money at trading shares?
The truth is this game is extremely difficult.Even though The Naked Trader is a trading bible, we all should be aware of this point. Robbie Burns is patently a very intelligent and capable person, who could, most probably, win at anything he sets his mind to. Not everyone can be a Robbie Burns, in the same way not everyone can be an Andy Murray or a Lewis Hamilton. There are clearly people at the top of every game. For the rest of us, more realistic and slightly tempered expectations are perhaps better fitting.
This said, if you have ambitions to become a success in the markets then “The Naked Trader: How Anyone Can Make Money Trading Shares” will give you a roadmap to achieving this goal, guided by one of the best men in town to take you there.