Book Review: Diary of a Professional Commodity Trader (Peter L. Brandt)

I’ve been reading very positive reviews of Peter Brandt’s book on Amazon for some time and, recently, I’ve decided to read the book myself to see if it’s really that good. Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading turned out to be a rather unique book in a way that it’s the only Forex book that is based on the real-time trading experience rather than on the review of the previous charts and the past performance. Although the events described in the book are the past for the reader, they were added into the book on the go as they appeared. The book is worth reading just because of this particularity.
I cannot rate it as high as Trade Your Way to Financial Freedom by Van K. Tharp or Fooled by Randomness by Nassim Taleb. But this doesn’t mean that the book is bad, of course. It’s full of things to learn and old trader’s wisdom to gain.
Although it’s written in a form a diary, there are some learning chapters that clearly make more or less universal statements regarding the Forex/commodity trading. From those statement I would prioritize the following theses:

  • It’s difficult to be profitable as an intraday trader. That’s why long-term trading should be employed.
  • Long-term traders should pay little attention to charts after they’ve detected their patterns and have set their pending orders. Constant chart watching may lead to overtrading and other stupid errors.
  • It’s impossible to forecast the markets using the chart patterns. Chart patterns in a union with the sound money management rules just provide some small edge to a trader. (In my opinion, the edge of a strategy is the same as the ability to forecast; otherwise the chart patterns would be useless.)
  • It’s better to have 30 to 70 chance of winning each trade than 70 to 30. Can’t agree with that. Brandt offers three paragraphs of explanation of his point, but it doesn’t make sense to me. This statement is wrong just because it deals only with the probabilities rather than the trade expectancies.
  • Months or even years of losses are normal to trader’s account history.
  • The trading system should be adjusted to meet the current challenges, but it shouldn’t be optimized to fit the curve of the latest market events.
  • Keeping a trading journal is a good way to find disadvantages of your own trading strategy.
  • The book possesses a short list of quite strong advantages that are worthy of mentioning here:

  • The author (Peter Brandt) has almost 40 years of experience in commodity and Forex trading. 30 of which were overall rather successful. The trading records of his Factor LLC are audited.
  • Detailed examples of chart pattern trading with a lot of useful info regarding various patterns’ reliability factors.
  • Useful trading ideas (trailing stop rule, hikkake patterns, etc.)
  • A complete set of steps for developing a successful trading plan with detailed explanation of each step.
  • Unfortunately, the book wasn’t as good as I have expected. It had several flaws:

  • Some dubious statements. (See the list of theses above.)
  • One of the trading technique mentioned is the money management stop-loss, which is basing your SL level not on your technical or fundamental analysis of the current situation but on the amount of money you can afford to lose. Needless to say that employing such a stop-loss technique is a wrong way to trade as it ruins the trading system.
  • Not much details are given regarding the author’s choice of using trailing stop or other exit strategies for specific trades.
  • The emphasis of the Diary may seem too long-term for many traders, with some example patterns spanning for years.
  • Diary of a Professional Commodity Trader won’t impress you, it won’t give you a profitable trading strategy, it won’t offer you anything extraordinary, but it will definitely make you start looking in a right direction and will ease your strategy development process with so many valuable trading ideas.
    P.S.: The Kindle version of the book is full of errors. Perhaps the paper version is also ridden with them, but I haven’t had an opportunity to compare.

    If you have any questions, comments or opinions regarding Diary of a Professional Commodity Trader by Peter L. Brandt, please feel free to post them using the commentary form below.

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