The Naked Trader – A Book Review

The Naked Trader: How Anyone can Make Money Trading Shares
Author: Robbie Burns (2011)

The Naked Trader is an in depth beginners guide to trading on the stock market. The book serves as an unbiased, essential how-to guide which provides everything you need to know before going out and trading shares. From setting up your accounts with share monitors and stock brokers to running your own pension in a SIPP; you’ll surely be well informed and ready to trade once finishing this entertaining guide!

About the Author

Robbie Burns is a down to earth family man who has managed to escape the rat race with a combination of working a salaried job, putting together side hustles and developing a real knack for trading shares/spread betting. He now lives in an apartment in London and trades full time! His experience in the market is invaluable and he provides a real honest document of his trading activity on his blog: The Naked Trader.

The Review

For such a complex topic this was actually a very easy read! Robbie introduces you to world of the stock market with a friendly step by step approach. From the opening times of the stock market to strategies on how to make money in bull and bear markets; the Naked Trader is a must read for anyone looking to get involved in trading shares.

I think the best thing about The Naked Trader is that it encourages you to jump on your laptop and do your own share research while reading the book. You will be introduced to a small selection of basic softwares and sites that are crucial to starting your trades, Robbie gives you insights on how to use these, which are the best value for money and even goes one step further by giving you a discount code to join!

Burns breaks down the technical trader language to the point where you could feel confident in speaking about it yourself. My favourite section of the book outlines a huge variety of strategies that Robbie uses to find potential shares. Each of these are simple to understand and you can comfortably sit there with your laptop to try and find similar opportunities while you are reading.

What to Look for When Trading Shares

This isn’t something I can fully cover in this short book review; but here are some key pointers from Robbie on what to consider when trading shares:

Searching and Buying

1.  Look for shares in The Times, Investors Chronicle and ADVFN Toplists – Do your own research. Don’t buy because of a tip but remember; shares with good publicity have higher chances of rising
2. Companies with a market cap of £50m – £900m have good room for substantial growth an (profits for you!)
3. Good times to buy are 10am and 3pm as this is when the market settles
4. Buy uptrends; shares with a history of steady growth
5. A company’s net debt should be less than three times their yearly profit; any more than this and you could be in trouble!
6. Rising dividends are a fantastic sign to buy!
7. Check a company’s recent news before buying and see if there is any important information highlighted by others in bulletin boards
8. You should write down every trade and write down your objective for each; this will help you work your timing and evaluate whether it is worth buying.

Selling

1. Always set a ‘stop loss’ and stick to it; you need to be protect against the market and also against any emotional decisions you could make in the heat of the moment!
2. Identify a share’s resistance and support; the points where a share doesn’t tend to fall below/rise above. Use this to time your buying and also as an additional guide for your stop loss
3. A good rule of thumb in setting a stop loss is 10% lower than your buying price.
4. Make sure you calculate the additional costs from your broker and stamp duty before buying and selling. This tends to be around £50 per trade so you should be aiming to make considerably more than this to cover your costs.
5. You can set a moving stop loss that goes up when your share goes up to ensure you are banking profits; some brokers will do this for you or you can do it manually yourself

There’s a whole host of fantastic tips and advice in this book supported by brilliant examples from Robbie’s trading career, you will also learn a little more about ISAs, SIPPs, hedging and spreadbetting. This is a must read for any aspiring beginner traders out there.

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