This is my all-time favourite book on trading as it deals with the psychology of trading and I read it again every yearend holiday. It is not an easy read, there are no pictures, fun stories or jokes but it is still the best read to get your head in the right place for trading, and that's what matters. Trading happens 90% in the head, fear / greed and other emotions need to be managed otherwise you'll never make money.
The book starts with a questionnaire, do it when you start as you'll do it again when you have finished reading and you'll be able to see how much your thinking has progressed.
Reminiscences of a Stock Operator – Edwin Lefevre
Published in 1923 this book is the story of Jesse Livermore who was a trading in the early 1900's and the lessons he learnt back then still apply today. I first read this book twenty years ago and many of his theories still resonate with me and are still being used in my trading.
My catch phrase of ‘trade the price’ comes from this book as does not trying to catch bottoms or tops. An invaluable read for traders.
Fooled by Randomness - Nassim Taleb
Better known for his book Black Swan this was Taleb's first book and far better than the more famous Black Swan. In this he explains the importance of luck and helps us understand the difference between luck and skill. This is a hugely important concept for traders as we need to understand trading is not about mastering the markets, it is about mastering ourselves.
I said three but here are two bonus books.
Technical Analysis Explained - Martin J Pring
There are tens of thousands of books and websites dedicated to technical analysis and I honestly have no idea which is best but frankly the concept remains the same and this is the first and only book I have ever brought on the subject having purchased it in the early 1990's.
Trend Following - Michael Covel
This books ends as marketing exercise to get you to buy his black box systems (don’t). But as a trend following trader who recommends every else also trade using the trend the book is a worthwhile read to help you understand the concepts and power of trend following.
What's your favourite trading book(s)? Leave us a comment.