Top 10 Trading Books Every Trader Must Read (+ 3 Life-Changers)
Trading isn’t just a skill—it’s a journey. Over the last 16 years, I’ve dedicated myself to mastering the markets, learning from both triumphs and setbacks.
Along the way, these books have been invaluable companions, shaping my mindset, refining my strategies, and transforming my approach to trading.
Here’s my curated list of the top 10 trading books I’ve read, plus three bonus gems that offer timeless principles to enrich both your trading and life.
Introduction
Trading is as much about strategy and discipline as it is about understanding markets. The books I’ve read over the years have equipped me with the technical knowledge, psychological tools, and philosophical insights needed to navigate the complexities of trading.
Some taught me to analyze charts and manage risk, others guided me in understanding human behavior, and a few challenged me to see trading as part of a larger personal journey. Here are the must-reads that have made the biggest impact on my trading career.
1. "Reminiscences of a Stock Operator" by Edwin Lefèvre
Why It’s Essential:
This classic tale, inspired by the life of Jesse Livermore, captures the essence of trading psychology, market speculation, and the hard lessons every trader must learn.
Key Takeaways:
Understand Market Sentiment: Trading isn’t just numbers—it’s about understanding crowd psychology.
Patience is a Virtue: Wait for high-probability setups; don’t trade just for the sake of it.
Risk Management: Protecting your capital is as important as making profits.
Learn from Your Losses: Every mistake is a lesson in disguise.
2. "The Market Wizards Collection" by Jack D. Schwager
Why It’s Essential:
This book is a treasure trove of wisdom from some of the most successful traders in history, proving there’s no single formula for success.
Key Takeaways:
Diverse Approaches Work: There’s no one-size-fits-all in trading.
Risk Control is Key: Every great trader has a plan for managing risk.
Traits of Winners: Discipline, focus, and continuous learning are non-negotiable.
Psychology Matters: Master your emotions to master the markets.
3. "Trading in the Zone" by Mark Douglas
Why It’s Essential:
This book transformed the way I approach the mental side of trading, teaching me how to think in probabilities and detach from individual outcomes.
Key Takeaways:
Probabilistic Thinking: Focus on probabilities, not certainties.
Control Your Emotions: Stay calm and composed, no matter the outcome.
Consistency is Everything: Build trust in your process to achieve consistent results.
Detach from Results: Focus on executing your plan, not the outcome of individual trades.
4. "Thinking in Bets" by Annie Duke
Why It’s Essential:
Written by a professional poker player, this book taught me to approach trading as a decision-making game under uncertainty.
Key Takeaways:
Decisions Over Outcomes: Good decisions can still lead to bad results due to chance.
Embrace Uncertainty: Learn to make peace with the unknown.
Learn from Feedback: Use outcomes to refine your process.
Emotion-Free Decision Making: Stay rational, even in high-pressure situations.
5. "Technical Analysis of the Financial Markets" by John J. Murphy
Why It’s Essential:
This comprehensive guide to technical analysis gave me the foundational tools to analyze price action and trends effectively.
Key Takeaways:
Chart Basics: Learn to read and interpret market charts with precision.
Identify Trends: Recognize trends early and ride them for maximum profit.
Indicators and Tools: Master technical tools to enhance your trading edge.
Intermarket Analysis: Understand how different asset classes influence one another.
6. "Trade Your Way to Financial Freedom" by Van K. Tharp
Why It’s Essential:
This book taught me how to build a trading system tailored to my personality and financial goals.
Key Takeaways:
Customized Trading Systems: One size doesn’t fit all.
Position Sizing Matters: Manage risk with strategic position sizing.
Understand Your Psychology: Your mindset directly affects your results.
Evaluate Systems: Use expectancy to measure the effectiveness of your approach.
7. "The Intelligent Investor" by Benjamin Graham
Why It’s Essential:
Though focused on investing, the principles in this book are timeless and applicable to trading, especially the importance of discipline and patience.
Key Takeaways:
Value Matters: Focus on substance, not hype.
Margin of Safety: Always leave room for error.
Long-Term Thinking: Success requires patience and discipline.
Emotions Kill Returns: Stay rational and ignore market noise.
8. "Fooled by Randomness" by Nassim Nicholas Taleb
Why It’s Essential:
This thought-provoking book challenged me to rethink the role of luck and randomness in trading.
Key Takeaways:
Recognize Randomness: Not all outcomes are the result of skill.
Avoid Overconfidence: Understand the limits of your knowledge.
Expect the Unexpected: Prepare for rare, high-impact events.
Humility Wins: Stay grounded, no matter your success.
9. "The Psychology of Trading" by Brett N. Steenbarger
Why It’s Essential:
This book helped me understand how emotions and stress affect trading decisions, and how to manage them.
Key Takeaways:
Emotional Mastery: Use self-awareness to improve decision-making.
Stress Management: Learn techniques to stay calm under pressure.
Behavioral Patterns: Recognize and break harmful habits.
Personal Growth: Continuous improvement is key to long-term success.
10. "The Alchemy of Finance" by George Soros
Why It’s Essential:
This book introduced me to Soros’s theory of reflexivity and inspired me to think critically about market dynamics.
Key Takeaways:
Market Reflexivity: Market participants influence market fundamentals.
Macro Insights: Think big-picture when analyzing markets.
Risk-Taking Philosophy: Be bold but calculated in your trades.
Adaptability is Key: Stay flexible and ready to pivot as markets change.
Bonus Books: Beyond Trading
11. "Think and Grow Rich" by Napoleon Hill
Why It’s Essential:
This timeless classic taught me the power of mindset, goal setting, and persistence in achieving success.
Key Takeaways:
Clarity of Purpose: Define what you want and go after it relentlessly.
Faith in Yourself: Believe in your ability to succeed.
Persistence Pays Off: Never give up, even in the face of adversity.
Positive Thinking: Your thoughts shape your reality.
12. "The Science of Getting Rich" by Wallace D. Wattles
Why It’s Essential:
This foundational text for the law of attraction explains how focused thought and purposeful action can create wealth and success.
Key Takeaways:
Thought Shapes Reality: The book teaches that everything begins with a clear, focused thought. Visualizing success and wealth helps bring them into reality.
Gratitude Multiplies Wealth: Being thankful for what you have opens the door to receiving more.
The Law of Attraction: Align your thoughts and actions with the frequency of abundance to attract wealth.
Creative Thinking Over Competition: Focus on creating value and opportunities instead of competing with others.
Act with Faith and Purpose: Consistently take action while trusting the proces
13. "The Hero’s Journey" by Joseph Campbell (Personal Favorite)
Why It’s Essential:
This book explores the universal story structure that underpins all great adventures and challenges, including the trader’s personal journey.
Key Takeaways:
Understand Your Path: Every trader's journey mirrors the hero's arc—struggles, transformation, and mastery.
Embrace Challenges: Difficulties are part of growth and lead to ultimate success.
Learn from Mentors: Guidance from others can illuminate the path forward.
Transformation Leads to Mastery: The journey itself transforms you into a better, more capable person.
Over 16 years of trading, these books have been my guideposts, offering technical insights, psychological breakthroughs, and inspiration for the journey.
Whether you're just starting out or looking to refine your edge, these reads will give you the tools and mindset to thrive.
Final Thoughts:
Start with One: Pick the book that resonates most with where you are now.
Take Action: Apply the lessons to your trading and mindset immediately.
Commit to Growth: Trading isn’t just a profession; it’s a personal evolution.
These books have shaped my trading and life. I hope they inspire you to achieve your own success and thrive in every aspect of your journey.
Marketwizards
📖 Market Wizards: ResumePublished by Jack D. Schwager in 1989, "Market Wizards" marks the beginning of an indispensable series for traders and investors alike. Through engaging interviews, Schwager brings to light the experiences of titans such as Bruce Kovner, Richard Dennis, Paul Tudor Jones, Michael Steinhardt, Ed Seykota, Marty Schwartz, and Tom Baldwin, making learning from the best an enjoyable journey.
To keep things short, we highlighted the most important parts of the interviews and came back with these key takeaways:
There is no holy grail to trading success. The methodologies employed by the "market wizards " cover the entire spectrum from purely technical to purely fundamental and everything in between. The time they typically hold a trade ranges from minutes to years.
Although the styles of the traders are very different, many common denominators
were evident:
1. All those interviewed had a driving desire to become successful traders - in many cases, overcoming significant obstacles to reach their goal.
2. All reflected confidence that they could continue to win over the long run. Almost invariably, they considered their trading as the best and safest investment for their money.
3. Each trader had found a methodology that worked for him and remained true to that approach. Significantly, discipline was the word most frequently mentioned.
4. The top traders take their trading very seriously; most devote a substantial amount of their waking hours to market analysis and trading strategy.
5. Rigid risk control is one of the key elements in the trading strategy of virtually all those interviewed.
6. In a variety of ways, many of the traders stressed the importance of having the patience to wait for the right trading opportunity to present itself.
7. The importance of acting independently of the crowd was a frequently emphasized point.
8. All the top traders understand that losing is part of the game.
9. They all love what they are doing.
Below we've gathered a list of opinions from the traders interviewed in the book:
1. Implementation is as IMPORTANT as direction:
Getting the direction of the trade right is only part of a successful trade; putting the trade in the right way is critical.
2. You don’t get paid for being right.
Many traders fail not so much because of the trades they make when they are wrong, but rather because of the trades they don’t make when they are right.
3. Sometimes it is what you don’t do that counts.
“Music is the space between the notes.” – Claude Debussy. Analogously, the space between investments – the times one is out of the market – can be critical to successful investing.
4. Risk Control
Many market wizards interviewed in this book consider risk control even more important than the methodology.
5. Trade size can be more important than the entry point.
Traders focus almost entirely on where to enter a trade. In reality, the entry size is often more important than the entry price because if the size is too large, a trader will be more likely to exit a good trade on a meaningless adverse price move. Don’t let your greed influence position sizing beyond your comfort level.
6. Don’t try to be 100 percent right.
The market is moving against you and you are well aware of the dangers of an unconstrained loss, but you also still believe in your position and you are worried about throwing in the towel before the market turns. You are frozen in indecision.
7. Flexibility is a critical trait.
Flexibility is an essential quality to successful trading. It is important not to get attached to an idea and to always be willing to get out of a trade if the price action is inconsistent with your trade hypothesis.
8. The best remedy for a losing streak.
When you are in a losing streak, you can’t turn the situation around by trying harder. When trading is going badly, often the best solution is to stop trading for a while.
9. When everything is going great, watch out!
The worst drawdowns often come suddenly right on the heels of periods when just about everything seems to be working as well as if it had been optimistically scripted. In this case, a trader will be most susceptible to being lulled into complacency.
10. The market doesn’t care where you entered a trade.
Don’t make trading decisions based on where you bought (or sold) a stock or futures contract. The market doesn’t care where you entered your position. A common error traders make when they realize they are in a bad trade is to commit to getting out, but only after the market returns to their entry level – the proverbial “I will get out when I am even”. The linkage of liquidation to entry level is one of the major causes of turning small losses into large ones.
In conclusion , "The Market Wizards" by Jack D. Schwager serves as an illuminating guide into the minds and strategies of some of the most successful traders of our time.
Through insightful interviews and analysis, Schwager provides invaluable lessons on trading psychology, risk management, and market tactics. However, this is just the beginning of the journey into the world of market mastery.
To delve even deeper and expand your understanding, we highly encourage traders to explore the following volumes penned by Schwager: "The New Market Wizards" (1992), "Stock Market Wizards" (2001), "Hedge Fund Market Wizards" (2012), and "The Little Book of Market Wizards" (2014) . These sequels offer a rich tapestry of new interviews, anecdotes, and wisdom from a diverse array of trading luminaries, further enriching your knowledge and empowering your trading endeavors.
Whether you're a novice or a seasoned trader, these volumes are indispensable companions on your quest for trading success. Dive in, absorb the wisdom, and let it guide you on your path to becoming a true market wizard.
gbpjpy analysis - 01 mar 2023happy first of the month!! hope we all have profitable months :)
so here it goes...
- on the daily market closed below the downward trendline yesterday
- down to the H4 a bearish engulfing formed closing two previous bullish candles
- a head and shoulder pattern formed which is more clearer on the H1
- entry could have been taken at the london open where the right shoulder formed
- but now we WAIT for a breakout of the neckline and depending on how aggressive your entries are you can enter at the immediate breakout or wait for a retest of the neckline
- and just like every other trade I DO NOT KNOW WHAT WILL HAPPEN NEXT, i'll just act on my edge and SEE WHAT HAPPENS
gbpjpy analysis - 27 feb 2023so here's what i see...
- market has been forming HH and HL on higher timeframes
- market is currently showing signs of breaking through the previous HH
- so i'll wait for market to retest that level of the previous high which will be the new HL if it does not i do not take the trade
- but as with other trades there is no 100% guarantee with my predictions
gold analysis - 09 feb 2023so first things first...
-market brokeout to the downside on the daily timeframe
- then market ranged for 4 days forming a bearish flag which is a continuation pattern
-market is currently at a significant support level so if it breaks entry can be taken on the initial breakout (aggressive) or wait for a retest of that structure (conservative)
- take profit is placed at the 1849 level but market could go down to the 1835 which is current support on daily
market can be bullish out of nowhere but we will wait and see
S&P 500 analysis - 06 feb 2023hope all you guys are doing fantastic here's my analysis for the s&p 500
- market made a higher high at around 4190
- then went on to make lower highs while breaking higher lows
- initial entry could have been taken last week thursday, but market showed signs of continuation and at the london open it retested the support level where my entry was taken
- take profits are at 4083 and we will see what the market decides to do when it gets there
- if it breaks that support i will wait for a retest and go short, if it respects that level then i will look for a bullish reversal pattern and/or wait for the formation of a higher low point where i will place my long trades
God bless!
:)
Trading Books that are MUST readThere are many books that traders should read if they want to become skilled in the craft of trading: Here are three books that I recommend if you are looking for trading books.
☀️ Market Wizards by Jack Schwager
☀️ Reminiscences of a Stock Operator
☀️ Trading in the Zone by Mark Douglas
nas100 analysis (07 june - 10 june)hope you lot are blessed and are having a great day where ever you are!
so my current take on nas100 is as follows :
1. about two weeks back we broke through the neckline of the daily double bottom and we have been in a range for the whole of last week as seen by the rectangle
2. at yesterdays new york open the market showed signs of being strongly bearish because of the large bearish candlesticks on higher timeframes and a breakout on an upward trendline
3. another confluence is that a head and shoulder pattern formed on the H4 and it's neckline has been broken so there is a high probability that market will tank down
4. entry will be at the retest of the range/head and shoulders and stop loss a few pips higher than the recently broken structure and lastly take profits at the level which was previously used as support
those were my reasons of confluence so there is a high probability of my analysis playing out but i will make sure to update my analysis if need be, God bless!!
SPX500 wizardryYesterday we nicely executed long trade in SPX500. Seeing the bigger picture though promises very tough road ahead. WXY corrections are so tricky, almost non-tradable. In the chart, I indicated 2 possible scenarios and I am sure there are many more possibilities. You can see that if pink scenario materialises, SL will be knocked out.
This leaves no choice but to trade short-term. My newly developed rules allow trading C wave only in those wxy corrections. So we'll be watching the developments very closely, identifying waves C before they start and taking profits when they finish.
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