My Books – 1: Universal Principles

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This book represents what I hold to be true for all active trading – regardless of the markets, timeframe, security or technique a trader chooses to follow and trade.

I’ve been involved in the markets since 1983 when I joined Bank America in Sydney as a trainee dealer. Consequently this book represents over 30 years years of accumulative practical experience you can’t buy or make up. What you’ll read comes from the school of hard knocks and not Wikipedia.

Now I know I’m biased however I believe if you’re an active trader – regardless of the market, timeframe, instrument or technique you choose to trade and regardless of whether or not you are a discretionary, mechanical or discretionary mechanical trader, this book is essential reading.

Although traders can choose to trade different markets over different timeframes with different techniques and instruments, there is one common thread that ties all winning traders together. And that is the universal principles of successful trading.

All consistently profitable traders adhere to them regardless of what, how or why they trade.

To support my view I’ve included interviews with 15 elite traders whom I refer to as the Market Masters. Not two of them trade the same. Fifteen traders all trading differently. Yet all of them embrace the universal principles.

These traders represent a diverse group. Some are the new young hot shots of trading while others are market legends who are trading today just as actively as they were 50 years ago. They’re spread across the globe –  I’ve included elite traders from the United Kingdom, America, Singapore, Hong Kong, Italy and Australia. All of them have generously agreed to offer the reader one singularly powerful piece of advice to help them towards their trading goals.

Each piece of advice emphasizes an essential element of the universal principles. These universal principles is what unites these elite traders – not their entry technique, not their markets and not their timeframes. They all trade differently, but what they won’t deviate from are the universal principles. Without doubt the universal principles are essential knowledge for all traders in all markets.

I believe many traders will love my book for its honesty, insight and breath.

I believe many traders will hate it due to my criticisms of a number of sacred cows that many in the world of technical analysis hold in high (although ignorant) regard.

And I believe many will find it hard to accept as the path to success I describe is both steep and arduous.

However, regardless of what readers think, I feel they will appreciate it’s down to earth and honest appraisal of how difficult it is to succeed in trading.

My book is not an attempt to spin the wealth dream that many trading books do. Nor is it a technique or trading tactic book. It’s more important then that. It attempts to fully explain the solid foundation stones upon which all long-term successful traders stand and it attempts to unravel the reasons why over 90% of active traders fail.

This is a solid book and one I’m proud to call mine.

I hope you enjoy it.

Brent Penfold
Sydney, Australia

This book is a "must-read" for anybody approaching the world of trading but also for skilled traders. I've read many books but this is the one I wished I had found when I was starting this adventure. Brent addresses exactly what a trader should really focus on.

Unlike most trading books, The Universal Principles of Successful Trading covers the key principles of trading success. It even has a money management chapter-a topic which most books neglect. I recommend reading this book cover to cover several times. It will change your mind about what's important in trading.

Brent gives you the opportunity to sit down with some really great traders and learn from their good and bad experiences. This should be an invaluable experience for the reader.

This is one of the best books on trading to come along in a long time and I predict it will become a classic. The book covers just about every aspect necessary to become a successful trader. His discussion and conclusions on the highly promoted Gann and Fibonacci methodologies might indeed surprise you. He made over 16,000 observations of Fibonacci ratios to derive his conclusions. This section alone is well worth the price for the "wanna-be" traders who are looking for techniques that work. In summary, read this book. You will be richly rewarded for your time and effort.

Brent has compiled all the ingredients in this book. He has experience, intelligence, and knowledge that he has tapped from traders all over the world. It is so refreshing to read a book written by a "true trader" such as Brent.

Brent Penfold has successfully provided readers with a blueprint for trading success. Not only does he cover such vital topics as trader psychology and effective money management, he also presents interviews with many successful traders and market researchers and his probing questions and their answers offer insights into their specific trading styles and psyches…a "how-to" book from start to finish.

Book Corrections

Calculation Error
On page 76 I have written;

” … (2 x 0.0015 x $91,400) … “

I should have written;

” … (2 x 0.0015 x $156,250) … “

My apologies.

Expectancy Formula
The expectancy formula on page 44 is incorrect.
The expectancy formula on page 164 is correct.

Expectancy Forumla is:

E( R ) = (Prob.of win * (Avg Win/Avg Loss)) – (Prob.of losing * (Avg Loss/Avg Loss))

[Note: This error was fixed in my book’s second print run.]

Table 8.15
The strategies in Table 8.15 on page 131 are not in the correct order. They should be listed as follows;

Single contract
Fixed risk
Fixed capital
Fixed ratio
Fixed units
Williams fixed risk
Fixed percentage
Fixed volatility

The content within the Table 8.15 is correct. Only the order of the strategy names has been mixed up.

My apologies.
Brent Penfold