||Feb 2, 2009
Trade Like the Little Guy takes the approach that the small
trader is not like the large trader – they have a unique footprint. They
are able to dart in and out of stocks easily and find that high levels of
cash are safer in times of uncertainty rather than in safe stocks. Small
traders have advantages and it is imperative that they use them.
Technical Analysis Today
Trade Like the Little Guy informs the everyday trader on how to
successfully build wealth over time in a methodical fashion. It starts
with a current market thesis and then seeks to exploit opportunities in
the market place with trading ideas that are congruent with that thesis.
The book starts with a definition of a successful trader and then shows
you how to become one. Emphasis is place on risk factors and risk
management; trading tools; thesis creation and the formation of a trading strategy. Through the use of a real world trading example, the concept of Active Portfolio Management is shown to minimize risks while creating substantial rewards.
Small stock traders are unlike large ones yet stock trading literature implicitly assumes that they are one and the same. Small traders have inherent advantages and disadvantages. The recognition of these characteristic are critical to success. All traders require a methodology to guide them in their trading. Equally true, they need a structured method to manage risk and to put the winning odds on their side.
Trading Like the Little Guy explores these concepts then provides a detailed step-by-step process (reinforced through trading examples) of how a small trader can become a successful trader.
Trading Like the Little Guy is directed at the small trader who wants to successfully manage their own investments. It’s intended for the investor who is fed up with mutual fund managers and brokerage firms that consistently under perform the markets and many times lose their money. It reaches out to the average guy/gal and says, “You have significant advantages and strengths – use them!”
The book approaches trading from a holistic perspective beginning with the development of a big picture thesis then drills down to find opportunities. Once found, a trading plan is developed to exploit those opportunities. The heart of the book centers on how a small trader practices active portfolio management. By continually nipping away profits and reducing risks, small traders can methodically take advantage of what the system has to offer turning their modest nest eggs into small fortunes. The best part is that most anyone can do it once they understand what there is to do.
Trading Like the Little Guy is a timely book with little direct competition on the book shelves. Timely because the deregulation that has transpired over the past 35 years has only recently combined with technological innovation providing small traders with the ability to implement profitable trading strategies on small scale portfolios. Most trading books focus on either the technical or fundamental aspects of trading. Few deal with the somewhat boring details of risk and portfolio management strategies. None, from the research I have done, present these more mundane topics in the context of real trades – walking through the steps that a successful trader takes to reduce risk while extracting profits from the market. There is no literature out there that adequately explains how a small trader can use the ebb and flow of the market to consistently make money while simultaneously reducing risk. This book is not about the perfect trade – it’s about developing and following a workable trading plan that fits the needs of the small trader.
Review: Trade Like the Little Guy by Manoj Rengarajan on BookPleasures.com
Trade Like the Little Guy is targeted towards the small trader with advise and techniques specifically for the small investor unlike the plethora of books in the market which seeks to provide advise which has worked primarily for large investors.
L.A. Little states upfront the guiding principles of money management namely capital protection, risk management, simple tools to monitor and make investment decisions, and active portfolio management.
L.A. starts from defining who a small trader is and builds the case about how trading a small portfolio vastly differs from professional money management and how vast improvements in information and trading costs makes it possible for the small trader to consistently make profits if they adopt a disciplined approach.
Although the book takes a technical approach to trading, LA starts from fundamentals for the benefit of a new trader explaining difference between fundamental and technical approaches, how these methods are different, and how a small trader with limited resources should pick and choose an approach where he/she has an advantage.
Having established a solid basis for the small trader, LA discusses the different stages in the market cycle and links the trader's own trade cycle to the market cycle.
LA then describes the practical steps in implementing a trading portfolio including generating trade ideas and the type of trading orders available to implement the ideas. Useful guideline on using simple techniques such as watch lists are covered in this context.
The book carefully explains the construction of a trade by predefining risks and protecting the position from very adverse moves in the stock or the market. Useful indicators such as risk to reward ratios and how to use them for effective trade sizing is explained.
The crucial importance on risk management for a trader has been rightly emphasized. The author describes the various sources of risk and what an investor can do to protect the portfolio. Actively managing the position as the trade progresses highlights this aspect clearly.
LA disabuses many of the commonly marketed techniques such as dollar cost averaging which usually prove to be a big drag on a traders profits. The reader will benefit from the author's advise on analyzing one's own performance and other related aspects such as using leverage in the trading portfolio.
The complete trading process is described comprehensively by taking a recent example which takes the reader step by step from trade preparation till the unwinding of the trade.
The book provides a small trader with a complete framework, techniques, and plenty of great advise to implement a trading portfolio. Further, LA shares his significant experience in trading which should help a diligent reader in the right way to becoming and disciplined and profitable trader.
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Reader Reviews for "Trade Like the Little Guy"
|Reviewed by Falgesh Sanghvi
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