Book Review: Bulletproof Trader

Richard Gill, CFA, reviews Bulletproof Trader, a book that provides evidence-based strategies for overcoming setbacks and sustaining high performance in the stock markets.

Popularised by Adam Smith in his seminal work The Wealth of Nations is the concept of the division of labour. This is a practice which sees a production process divided into various stages, with individual workers specialising in specific tasks. Smith famously used the example of a pin factory, identifying 18 distinct steps which workers focussed on, including cutting, straightening, grinding and packaging. The key point is that by dividing up tasks in this fashion, significantly more can be produced as the process is highly efficient. Smith estimated that a pin factory employing ten workers could produce 48,000 pins per day if they worked together but perhaps not even 20 if the workers did every step themselves.

The division of labour also demonstrates itself in the separation of different professions and trades, especially in large organisations. A big bank for example, supporting its core activities, might have departments including human resources, legal, finance and public relations. Within these departments, jobs can be even more specialised, leading to some unique and even bizarre job titles – I remember the story of a lady who lost her job as Chief Party Planner at a bank following the financial crisis.

A focus on specialism in jobs, combined with other economic and technological factors, has led to a wide variety of ways that individuals can now make money by doing things never previously thought possible. Who would have thought only a few decades ago that people could make a living from being a professional poker player, by playing video games or by broadcasting themselves spouting rubbish on the internet?

Big Bang

One other unique profession which has increased in popularity, especially since the dawn of internet technology and the opening up of markets to the masses, is financial trader. Whether trading the stock market, forex, bonds or more exotic instruments, on a short-term or long-term basis, many people are attracted to the potential rewards that the financial markets can bring. But it isn’t easy to be a success in financial trading. A recent study from trading platform eToro for example suggested that 80% of day traders lose money over the course of a year, with the median loss being 36.3%.

On that note, in his new book Bulletproof Trader, author Steve Ward provides a range of practical advice to help traders avoid losses and to enjoy the large rewards which are available in the financial markets. He does this by explaining how traders need to put in the effort to master their craft, including how to train their mind and body to deal with stresses and setbacks and to sustain high performance. In other words, he teaches you how to become “bulletproof” and to reach your full potential. The author suggests that this book is ideal for anyone who wants to deal with the stresses, challenges and setbacks encountered while trading and for those who want to learn to trade at their best in the long run.

This book is ideal for anyone who wants to deal with the stresses, challenges and setbacks encountered while trading

Ward is a specialist consultant, providing coaching to traders and fund managers aimed at enhancing their risk-taking, improving their decision-making and achieving and sustaining high performance. The basis for his methods are a mix of performance psychology, decision science, neuroscience, behavioural science, physiology and philosophy. Before his move into the finance sector Ward provided sports psychology coaching to elite athletes and has even provided psychological coaching for professional poker players. He is also a prolific writer, having penned titles including High-Performance Trading, Sports Betting to Win and TraderMind.

Triggering success

Bulletproof Trader is divided into nine parts, with earlier ones setting out the fundamentals of bulletproof trading before moving on to specific strategies, concepts and techniques.

Part One kicks off with the story of a hedge fund manager, who despite already being a successful trader, wanted Ward to coach him on how to prepare to deal with a run of bad performance, which he knew would inevitably happen. In other words, he wanted to become bulletproof by learning mental and physical techniques to enable him to become more resilient and to deal with tough trading situations. This was a less common situation however, with most clients approaching Ward when they are already facing a specific challenge in the markets. The end of the first chapter asks the reader to consider what they want to gain from the book before reading any further.

The word “resilience” is a crucial concept in the book, being synonymous with being bulletproof. Chapter Two introduces a framework to help increase your resilience, with the four areas of psychology, physiology, philosophy and pragmatism forming a multidisciplinary approach to maximise trading performance.

After covering the nature of financial trading and humans’ inherent aversion to loss in Part 2, Part 3 moves on to the importance of the trading mind set – how people think about events in the trading world – and how it affects stress. Ward argues that how you think about stress will profoundly impact your experience and success in the markets, so you need to get good at accepting it and dealing with it. The first practical exercises then come in, with the author advising readers to identify their top trading values (what they want to achieve) and how these are reflected in their behaviour. The point here is to turn values into actions that help to achieve your goals.

The rest of the book contains a glut of further practical advice, ranging from how to manage risks in the market, embrace uncertainty, plan for the worst, focus attention, deal with discomfort and build confidence. There are even some breathing activities to help you stay calm and reduce stress and advice on how to create an environment in your bedroom to make it more conducive to sleep. A concluding chapter summarises the key principals and practices of the book, along with some thought provoking questions on how becoming a more resilient trader will make you feel.

Give it a shot

Bulletproof Trader is a unique book that replaces the financial theories and candlestick charts of typical trading tomes with an approach that focusses on improving the mind and body. It is also practical, packed with exercises and activities which are evidence based and which are used by Ward with his own trading and investing clients. Whether a novice or professional trader, the mixture of psychology, physiology and philosophy will likely help anyone involved in the markets to improve their long-term attitude to trading, and more importantly, their performance.