The question gets asked a great deal in forums, and sometimes directly, as to what books are must reads or strongly recommended. It’s not necessarily an easy question to answer. We’re all different in what writing style and approach works best for us in a book. Also, we’re at varying stages in our development as traders. New traders have very different needs than experienced ones, for example.
That said, here are the five trading books I would rate as the best I’ve ever read. Obviously, I can’t include books I haven’t read, so there might be some really good books out there which belong here but I just haven’t got to yet. Of the many I have, though, here are the cream of the crop – in no particular order.
Market Wizards, by Jack Schwager
This book won’t teach you any specific trading systems or anything like that. What it will give you, though, is insights into the thinking and approach of some of the great traders and investors of our time. The interviews Schwager conducted with these men and women provide some really outstanding nuggets of wisdom. By the way, I lump The New Market Wizards and the newest addition, Hedge Fund Market Wizards, in here as well.
How to Make Money in Stocks, by William O’Neil
This book is the one I give credit for launching both my own trading and market analysis careers. Ironically, the title of the book is of the sort that strikes one as being of questionable design, the type we see so often promising lots but delivering little. In this case, though, the book really delivered for me. It was my introduction to a great many things – technical analysis, screening, researching methodologies, and having a comprehensive trading plan. This book contains a fully described and specific trading system which became the basis for the stock trading I still do today.
Enhancing Trader Performance, by Brett Steenbarger
Brett Steenbarger is one of the most insightful commentators on trader psychology and development around today. This book focuses more on the development side of things, though it does touch on some of the psychology elements covered in his earlier book, The Psychology of Trading, as well. Being a coach and educator myself I found this an incredible resource both for helping me help others and for traders looking to help themselves. (Read my full book review here)
Markets In Profile, by James Dalton
This book is a discussion of the Market Profile analysis and trading methodology. More than that, though, it is an intensive discussion of how the way the markets at their core play out through the way prices move. This book is a follow-up to the author’s previous book, Mind Over Markets, which is a bit more mechanical regarding the Market Profile technique. (Read my full book review here)
Trade Your Way to Financial Freedom, Van K. Tharp
This book presents an excellent systematic way of approaching the application of risk and money management in trading. If you read it with the right mindset (not the one implied by the title), you can get a huge amount of value out of it. The concept of “expectancy” is more than worth the price of the book all by itself. There is a healthy does of trading psychology along the way also – all of which is quite useful as well, especially given that the author was among the first to be involved in the area of modelling success in trading.
These, of course, are my own views. Others will no doubt have their own ideas. Perhaps that includes you? By all means, feel free to share your own thoughts on the subject.
And definitely take a look at all the trading book reviews I’ve posted here on the blog for your benefit.