The Naked Trader: How Anyone Can Make Money Trading Shares

Author: Robbie Burns | Categories: Trading, Stock Market, Trading Education

Executive Summary

"The Naked Trader" by Robbie Burns is a deliberately accessible, humorous guide to trading shares in the UK market, now in its fourth edition (2014). Burns, a former business journalist who left his day job to trade shares from home, strips away the jargon and intimidation that often surround stock market investing. The book covers everything from setting up a trading account and understanding market basics to stock selection using fundamental analysis, chart reading, spread betting, tax-efficient ISA wrappers, risk management, and trading psychology. Written in an irreverent, conversational style with honest accounts of both winning and losing trades, the book is specifically tailored to UK investors and traders, covering London Stock Exchange-specific topics including AIM stocks, stamp duty, and spread betting.

Core Thesis & Arguments

Burns's central thesis is that ordinary people can make consistent money trading shares without complex systems, expensive software, or an MBA, provided they approach it with common sense, discipline, and a willingness to learn from mistakes. Key arguments: (1) Trading does not need to be complicated - simple fundamental checks (growing profits, reasonable P/E, strong balance sheet) combined with basic chart reading are sufficient; (2) Risk management, particularly through stop losses and position sizing, is the key to survival and eventual profitability; (3) Many trading books and courses are unnecessarily complex and are designed to sell products rather than help traders; (4) Honest self-assessment and learning from losing trades are more valuable than any strategy; (5) Spread betting (a UK-specific product) offers tax advantages but also dangers that must be understood; (6) Psychology - controlling greed, fear, and the desire to be right - determines success more than any technical skill.

Chapter-by-Chapter Analysis

The book is organized as a practical progression from absolute beginner to competent trader:

Setting Up

Covers choosing a broker, understanding order types, setting up a trading account, and the basics of how the stock market works. Includes UK-specific information about ISAs, stamp duty, and capital gains tax.

Stock Selection

Presents Burns's approach to finding shares worth buying, combining fundamental screening (profit growth, P/E ratios, dividend yields, director buying) with basic technical analysis (trends, support/resistance, chart patterns). Emphasizes simplicity over sophistication.

Trading Strategies

Covers different approaches including buy-and-hold investing, swing trading, and the specific circumstances under which each is appropriate. Includes discussions of AIM stocks (small-cap, high-risk), blue chips, and sector selection.

Spread Betting

Provides a comprehensive introduction to spread betting (a leveraged, tax-free trading vehicle available in the UK), including its mechanics, advantages, risks, and how it differs from traditional share buying.

Risk Management and Psychology

Covers stop losses, position sizing, the importance of diversification, and the psychological challenges of trading. Includes honest examples of Burns's own mistakes and the lessons they taught him.

Key Concepts & Frameworks

• The "Naked" Approach: Trading without expensive tools, complex systems, or information advantages - just common sense and discipline
• KISS (Keep It Simple, Stupid): The overarching philosophy that simplicity beats complexity in retail trading
• Fundamental + Technical Combination: Using basic fundamental screens to identify quality companies, then using charts for timing
• Honest Mistake Analysis: The practice of reviewing and learning from losing trades without ego protection
• UK-Specific Tax Optimization: Using ISAs and spread betting to minimize tax drag on trading profits
• Position Sizing and Stop Losses: The foundation of risk management for retail traders

Practical Trading Applications

• Screen for stocks with growing profits, reasonable P/E ratios, and positive director buying signals
• Use simple chart patterns (trends, breakouts, support/resistance) for entry timing
• Always place stop losses before entering a trade and honor them without exception
• Use ISAs for tax-free capital gains on longer-term positions
• Approach spread betting cautiously, with full awareness of leverage risks
• Keep a trading diary with honest assessments of both winning and losing trades
• Start small and increase position sizes only as experience and confidence grow
• Avoid "penny shares" and tips from unverified sources

Critical Assessment

Strengths: The book's greatest strength is its accessibility and honesty. Burns writes like a friend sharing advice over a pint, making complex topics approachable for complete beginners. His willingness to share losing trades and personal mistakes adds credibility that more polished books lack. The UK-specific content (ISAs, spread betting, London Stock Exchange mechanics) fills a genuine gap in a market dominated by US-centric trading books.

Weaknesses: The informal, humorous style occasionally sacrifices precision for entertainment. Advanced traders will find the content elementary. The lack of rigorous backtesting or statistical analysis means readers must take Burns's trading claims on faith. Some advice is specific to UK market structures and may not apply globally. The book's emphasis on retail trading may not adequately prepare readers for the institutional dynamics that drive markets.

Key Quotes

• "This very readable book is chock-full of advice about techniques that work." - Financial Times
• "As an introduction to the world of shares, The Naked Trader scores highly." - Investors Chronicle
• "Trading doesn't have to be complicated."

Conclusion & Recommendation

"The Naked Trader" is an excellent entry point for UK-based beginners who want to start trading shares without being intimidated by jargon, complexity, or the City's formal image. Burns's honest, humorous approach makes the book genuinely enjoyable to read while delivering practical, actionable advice. The UK-specific content on ISAs, spread betting, and London Stock Exchange mechanics is particularly valuable for its target audience. Recommended for complete beginners in the UK market who want a low-intimidation introduction to share trading, with the caveat that more advanced education will be needed as skills develop.