Review of “The Essentials of Trading” by John Forman
Brett N. Steenbarger, Ph.D.
Note: This was posted to the Amazon site 4/22/06.
Rarely does a week go by in which someone in the trading world does not ask me to endorse their website, product, or publication. I politely decline 90% or more of the time. The sad truth is that many trading texts are written by individuals who are not truly experts in their domains. When I had the opportunity to review John Forman's book "The Essentials of Trading" prior to its release, I not only gave it my endorsement, but consented to write its Foreword. I would only do that for an author who knows his stuff and for a work that I am proud to be associated with.
What John has accomplished is, to my mind, the best general-purpose introduction to trading I have yet encountered. Having run a training program for aspiring professional traders at a proprietary trading firm, I know the questions that new traders ask and the lessons they need to learn. John has clearly addressed these in "The Essentials of Trading". He begins with trading mechanics: the nuts and bolts of executing and managing a trade. His discussion is accompanied by real examples, with screen shots of order tickets and trading screens. This is no academic, theoretical treatise, but a hands-on introduction to trading basics.
Later chapters take up the important topics of trading plans and risk management, followed by methods for analyzing markets and designing, testing, and optimizing trading systems. Once again, practical examples abound, with clear illustrations of actual markets, positions, and systems. A nice touch are the text boxes throughout the book highlighting key concepts. Many of these are comments from traders and the lessons they've learned.
Overall, I found John's writing to be clear and concise. He has served as content editor for the Trade2Win community site, and his writing experience shows. When I endorsed the book, I said that it was the text I wished I had when I started my training program. I stand by that comment: this is a great introduction to the trading world.
Are there weaknesses to the book? Those will depend on readers' interests. Two full chapters are devoted to trading systems, but only part of a chapter to technical analysis. Valuable insights regarding trading psychology are scattered through the text, but there is no dedicated chapter to the topic. Conversely, the bonus sample trading system included in the appendix is worth the price of the text alone, providing an illuminating example of a trading methodology.
In sum, I highly recommend "The Essentials of Trading" for new and developing traders. From execution to planning to risk management to market analysis, it covers the basics in a clear, engaging style.