Last updated on June 18th, 2020
Tony Robbins talks about “modeling” the best to help you become the best.
Do you want to become a successful trader?
Then you should think of reading some of the best trading books ever written about the financial markets.
There are so many great day trading books out there that is almost impossible to say one is “the best book for traders”.
Think of trading books as a private interview with the author of your choice.
Let’s dive in….
Best Trading Psychology Books
I have to say this was a tough one because I really like Disciplined Trader and Trading in the Zone both books by Mark Douglas.
But the book The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist by Brett N. Steenbarger is my bookshelf pick. Maybe because I feel everyone has read the Douglas book.
It doesn’t fall into the category of day trading books in the traditional sense but a book about coaching yourself to peak performance. We’ve all heard that trading is as much mental as it is a trading method so it makes sense to have your mental game in a state conducive for success.
I love the fact that he hammers home giving yourself a daily review after each session as well as the “cues” that are given after each chapter. While some may find imaging yourself as success can lead to success a little hard to believe, any professional in any sport will tell you that visualization is vital.
“Making money and being right are at opposite extremes of the spectrum”.
Best Technical Analysis Book
It’s an older book but is the first one I ever read so I have to go with Getting Started in Technical Analysis by Jack D. Schwager.
Don’t expect much in the way of indicator coverage (there are so many) but he covers various price patterns very thoroughly especially in “real-world chart examples” section.
He covers designing trading systems as well as optimizing and testing them to ensure there is an edge in the chosen approach.
Chapter 17 has 82 trading rules/observations covered under sub-headings such as:
- Entering trades
- Risk control
- Holding winning trades
The book starts to wrap up with broad trading principles and psychological factors under the heading Market Wiz(ar)dom. Nice play on his Market Wizards books.
It is one thing to read about the analysis of price and a totally different thing in doing so on a chart. It is a skill that will take time before you will be able to confidently execute a trade from them. This book will give you great insight into technical patterns that have been the hallmark of professional traders for decades.
This is such a vast subject because there are so many ways to approach the markets. From technical analysis and fundamentals all the way to price action and Fibonacci trading. High Probability Trading by Marcel Link is the bookshelf pick because it covers a general approach including the use of oscillators and multiple time frames.
Right from the start, Marcel gives the reality that it is a long road before you will find success…somewhere between 3-5 years.
- Hard work
Each chapter ends with a recap which will help solidify the content discussed. He urges you to understand you will face frustration but it is working through that and coming out the other side that is what all successful traders have had to do.
Learn About Trend Following
If you are looking to learn about a more hands-off trading approach, then Trend Following by Michael Covel is a good read.
The books spend a lot of time with facts and statistics about the success of a trend following. Complete with interviews and tidbits from successful trend followers (some who run big trading firms), you will gain an appreciation for this longer-term trading approach.
It does not blow smoke – the book highlights the years of bad runs, the win-loss records, but also hits home the massive gains that come from markets that run.
This is trend following for today’s generation. If you’re looking to go beyond passive index funds and trusting the Fed, this cutting edge classic holds the keys to a weatherproof portfolio.
Learning from those who have made fortunes, literally, from trend following, is priceless and this is a good book to do it with.
Stock Market Trading Book
Trading stocks is not much different than other asset classes but there are some differences that every stock trader should know about.
Trade Like A Stock Market Wizard by Mark Minervini is a great book about trading stocks
Mark Minervini has been known around Wall Street for over 30 years and unlike the hype of many “stock traders” online, Minervini seems like the real deal.
You will learn:
- How to pick the best stocks before they move
- How to manage your losses and protect your hard-won profits
- How to avoid mistakes made by most traders
Mark covers a lot of the fundamentals around stock trading – a technical and fundamental approach to trading. There is nothing better than reading the words of those that have succeeded to learn from their experiences.
Top Book On Position Sizing
You can have a great trading system and the best market environment for trading but if you are missing position sizing, you are in trouble.
Definitive Guide To Position Sizing by Van Tharp will help you, even with an average trading system, make profits that you have planned for.
- Understand low-risk trading ideas
- Learn to define 6 market types and which market your trading system will work best in
- Learn the psychological barriers to a position sizing plan
- 96 different position sizing models
Gone are the days where you throw on a trade without considering the risk involved and how to mitigate it.
Learn how to position size properly every time your trading strategy presents a buy/sell signal.
I am always interested in the thoughts of those who have risen to the top of this business.
We’ve all heard that the mind plays a huge part in the success you may or may not have.
Given that, I return back to Schwager and his Market Wizards books. Reading about the highs and lows and how they ultimately found success can be very inspirational and also add cred to the principles you may already have.
You can find a few of the “Market Wizards” on Twitter and they drop a few nuggets of wisdom every now and then.
I also want to add another one to this section and that is: Trader Vic: Methods of a Wall Street Master.
If you are a stickler for writing style you may want to pass but if the thoughts of people like Paul Tudor Jones and T.Boone Pickens matter to you, it’s worth a read.
This is not a book on trading strategies but it if currency trading is your market of choice, you will want to understand everything about it
and Foreign Exchange: A Practical Guide to the FX Markets fits the bill.
You’ll become familiar with some of the basic elements of foreign exchange—major currencies, bid-ask spreads, and the importance of interest rates—as well as gain some historical perspective on the evolution and development of the FX markets.
After this introduction, you’ll read a detailed description of the products, techniques, and strategies that can be used to master the foreign exchange markets.
This is a great primer for those entering trading. While cryptocurrencies are all the rage, the steadfast FX market will continue to supply opportunities for decades to come.
The Best Trading Books Can Change
These are the books that I have found extremely valuable but this is not a final list. Over the years you build a collection but I chose books that I would give to a new trader from my bookshelf.
The truth is that reading about the experiences of successful traders through their books is interesting. That said, not much has changed in trading over the years.
- Some of the 20-30 year old indicators are still in use today
- Fundamental analysis has not changed
- Risk and money management are still important
Netpicks also has the Trading Tips blog that you will find trading information covering the areas these books have covered as well.
There is a lot of information you will need to digest as a trader. It is time consuming and when complimented with designing and testing your own trading system, you could easily add years to your trader development time line.
These readings though can help you shorten the learning curve.