A Book Review: Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading

Peter Brandt’s Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading has achieved a rare spot on my bookshelf: I will be reading it twice for fear I may have missed some morsel of wisdom in the first reading.

Brandt’s prose is direct and insighful. You will not find boastful claims of enormous returns. Rather, it is an insight into the methodology, daily thought process, and career of a professional trader. It could be considered both an encouraging and discouraging read, depending on your expectations. The discouraging (but necessary) part is the lack of a get-rich quick scheme (they doesn’t exist). Readers seeking a fail-proof system or a fast track to easy money should continue their futile quest elsewhere.

For the rest of us – the general investment community, aspiring/novice traders, and professional traders – we can take solace in Brandt’s successes and failures. On average he has more losing trades than winning trades, but by developing a trading plan, which he calls the Factor Trading Plan, and continually working to improve and hold his plan accountable, he has achieved a lengthy history of real, documented trading success.

Brandt uses classical chart patterns to identify his trade setups but he is clear that trade identification is the least important component of his trading plan. Proper risk/money management, trade management, emotional discipline, and accountability play bigger roles in his overall trading plan. This is a key point – too often in the financial media we see an emphasis on trade setups but little or no follow through in terms of how to manage an open trade, let alone one’s emotions.

The author provides a “live” diary of 21 weeks of real trading – all of the winners, losers and missed opportunities. We see his thought process with each trade, the pattern used for each entry, his position size, the initial stop loss point, and the eventual exit point. Brandt critiques each trade after the fact, holding himself and his trading system accountable for each winning and losing trade. We also see some minor improvements he makes to his trading plan after the conclusion of 21 weeks, showing us that even the most successful traders are always looking to improve.

While Brandt gives the key elements of a successful trading plan, he does not expect the reader to adopt his system. Rather, we are encouraged to develop our own unique trading plan and to hold our plan accountable. Trading takes hard work and discipline and Brandt does an excellent job of reinforcing this throughout the book. There is no easy path to wealth but if you want to become a better trader or active investor then read this book.