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The Universal Principles of Successful Trading by Brent Penfold takes a little different approach than the typical trading book. Brent Penfold is a trader in Australia who mainly trades index futures and forex markets. Many readers of trading books are often looking for the latest and greatest trading setups, but Penfold chose to focus on a few principles that a trader must follow before they can be successful – regardless of their trading setups.

I have to admit that I am always curious on what type of trade setups other traders are using. However, I have come to realize over a period of time that it is fun to look strategies of other traders, but it is best to stick with what I know already works. I have found many setups that work in the commodity futures markets, but it is more important to concentrate on the underlying factors of trading in order for those setups to work over time. That is exactly what Brent Penfold is trying to convey in this book.

One of the main principles Penfold emphasizes throughout the book is money management. This book goes much more in depth than the typical trading book when it comes to controlling risk. The first part of money management comes from what the author describes as “risk of ruin.” The point is that you only risk a certain amount per trade so that when you hit a string of losing trades, your account won’t go bust. This analysis is backed up by statistical formulas, which is very interesting reading and I’m sure it will open the eyes of many struggling traders.

Overall, Penfold does an excellent job on money management. He describes several types of money management strategies that traders can follow. He is trying to get traders to find the best balance between maximizing gains and enduring the least painful and catastrophic drawdowns in a trading account. Understanding these principles should help traders stay in the game and increase their profits in the long run.

The author does discuss many of the common trading methodologies and strategies that he once used and that many traders rely upon. There is also a section on trading psychology and advice from about a dozen other professional traders. They provide good advice, but nothing earth shattering in there.

In all, traders could save themselves a great deal of frustration in searching for the next holy grail strategy if they realize it is more important to focus on these underlying principles presented in the book. No matter how great your strategy, it is usually worthless in the hands of a trader who cannot understand and implement the basic principles of successful trading.

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