Like mentioned in How to Trade Currency Like a Pro Forex Trader, getting market mastery is a must to go pro. Reading trading books is the cheapest yet effective way to acquire needed market knowledge. When I get started, like other new traders, I know nothing about trading.  I asked questions in forums for recommendations, and tried to find the best trading books to learn from. Years later, after reading many trading books and spending lots of screen time, I came up with this list, which I believe can help new traders. Personally I learned a lot through reading these books. It should do the same job for you.

Actually these ten books are somehow related. Both Market Wizards‘ book are  interviews of top traders of our time. Most top traders recommend Reminiscences of s Stock Operator as a must read. Pit Bull was written by market wizard Martin Schwartz. Street Smarts was written by another market wizard Linda B. Raschke. The Taylor Trading Technique was Linda B. Raschke’s recommendation. The goal of professional trading is Trading for a Living. Trading psychology and trading tactics are two important factors to achieve this goal. Trading in the Zone is by far the best trading psychology book. To assemble a successful trading tactics, Technical Analysis of the Financial Markets is the best technical analysis book; Japanese Candlesticks Charting Technique and Point & Figure Charting are the best charting tools to interpret market price action.

1.  Market Wizards and The New Market Wizards by Jack Schwager

If your goal is to be a professional trader, these two wizards books are perfect for you. Many top traders were interviewed in the book. Just to name a few, Richard Dennis, Paul Tudor Jones, Ed Seykota, Marty Schwartz, James B. Rogers, Victor Sperandeo, and Linda B. Raschke. Some of them already retired, while others are still going strong now days. You might get disappointed, if you are trying to find any specific trading techniques or trading secrets in the book. After finish reading these two books, you will understand there is no such thing as holy grail in professional trading. New traders can benefit from top traders’ market insight and how them deal with various trading challenges as well.

2. Reminiscences of a stock operator by Edwin Lefevre

Reminiscences is a true classic. It was published 87 years ago (1923), and still read by traders around the world, professionals and amateurs alike. It’s the most recommended, and most quoted trading book ever written. This book chronicled Jesse Livermore’s trading career. Jesse Livermore is considered one of the best speculators ever.  Reminiscences is full of trading wisdom. My favorite quotes have to be “there is only one side to the stock market; and it is not the bull side or the bear site, but the right side”, and “there is nothing new in Wall Street… Whatever happens in the stock market today has happened before and will happen again.”

3. Pit Bull: Lessons from Wall Street’s Champion Day Trader by Martin Schwartz

Pit Bull was written by market wizard Martin Schwartz. In this book, Schwartz chronicled his trading career. Schwartz didn’t expose the detail of his trading system, but he did mention the trading tools he used to make trading decision, which includes 10 day exponential moving averaging, and Terry Laundry’s Magic T Theory. By the end of Pit Bull, Schwartz shared what his typical trading day looks like. After reading this book, you will find out super trader’s success has nothing to do with getting lucky or because they are smarter than others, they actually work very hard to get what they want. If you are still thinking trading as getting easy and quick money, then I am afraid trading might not be your cup of tea.

4. Technical Analysis of the Financial Markets by John Murphy

There is no need to repeat the importance of technical analysis to ones trading success. Most professional traders are using technical analysis to earn their butter and bread. For example, the author of Pit Bull, Martin Schwartz states, “I always laugh at people who say “I’ve never met a rich technician” I love that! It’s such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician.” Unlike other technical analysis books’ dry reference written style, this book is well written and an excellent read. If you want read only one book about technical analysis, Murphy’s book should be your pick.

5. Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude by Mark Douglas

If you have put your money on the line for awhile, you might already realize that the most important factor in trading success is not about finding a profitable trading system; trading psychology plays a rather significant yet often overlooked role. Trading in the Zone is the best trading psychology book I have ever read. If you are still struggling to achieve consistent performance, you might experience some aha moment reading through this book.  Have you ever been wondering why people use identical trading system while having different trading results. Trading psychology is the answer.  So grab this book and learn to put trading psychology as your edge as well.

6. The Taylor Trading Technique by George Taylor

This book was recommended by market wizard Linda B. Raschke. Well, I have to agree with Raschke that George Taylor definitely a better trader than writer. I don’t have a dyslexia, but I do feel I have one after reading. Don’t be fooled by the hard understandable writing style though, this is an excellent book which captures the essence of swing trading . Taylor divided trading days into three categories: buying day, selling day, and short sale day. Then there are certain trading strategies for each trading day. Short time traders shouldn’t miss this book. It might bury the information you have searched high and low for years.

7. Street Smarts: High Probability Short-Term Trading Strategies by Linda B. Raschke, Laurence A. Connors

Linda B. Raschke was featured in the New Market Wizards. This book introduced quite a few high probability trading setups. It’s not necessary to use or even understand all of them. If you could just find one setup ring a bell, that would be good enough. My personal favorite trading setup is the range contraction. I found the NR4/ID, and NR7 patterns are quite reliable in currency trading. Other useful patterns to me include Wolfe Wave, morning news reversals, and big picture news reversals. Raschke’s analogy of trading to playing poker makes lots of sense to me, “The real discipline is in waiting for the right hands. You don’t have to play every hand but you must bet very aggressively when you have the best hand. Don’t bet money when the odds are not fully in your favor!”

8. Japanese Candlestick Charting Techniques, Second Edition by Steve Nison

Candlestick charts are originally used by legendary Japanese rice trader Homma Munehisa in 18th century, and introduced to western world by Steve Nison in last century. Candlesticks interpret price action in an quite unique way, which are perfect combination of eastern philosophy and western financial world.  If you want to add candlesticks to your trading arsenal, look no further, this is THE book for you. Although there are some cheaper candlesticks books available, Nison‘s book is head and shoulders above others. Try to learn from the best resources, candlesticks could be your trading edge as well.

9. Point & Figure Charting: The Essential Application for Forecasting and Tracking Market Prices by Thomas J. Dorsey

Among various charts, only point and figure charts can be used as a charting tool and a trading system as well. Since point & figure charts filter out pre-defined price fluctuation, it is great to identify major support and resistance levels, and take advantage of real breakouts or breakdowns.  Trend following pretty much goes hand in hand with Point and Figure charting. For more information about the benefits of using P&F, please refer to Forex Trading with Point and Figure Charts.This book will teach you how to construct point & figure charts, identify bullish & bearish chart patterns, and project price objectives. A must read for P&F fans.

10. Trading for a Living: Psychology, Trading Tactics, Money Management by Dr. Alexander Elder

The ultimate goal as a trader is to consistently take money out of the market. Trading might be the most challenge career ever. It is possible to trade for a living, and many already achieved the goal, for example the traders featured in Market Wizards. This book points out three important factors to trading success: psychology, trading tactics, and risk control, and offers practical suggestions to drive home each point. Study Guide did a wonderful job to help readers to check what they learned and how to implement those knowledge.

Buy and read these 10 best trading books might be one of best trading decisions you ever made. This investment is way much better than just buying a black-box system, which has little to do with becoming a professional trader. Since these books are so classical, you might find some in your local library as well. I found at least five books at my local library. Sure it takes lots of time to read these books, and even more efforts to implement what you just learned. I can assure you that would be money and time well spent on your journey to grasp the essence of trading. If you missed any single book listed above, I would urge you to go grab a copy and read it sooner rather than later. You won’t regret about that decision. These picks are just my own opinions based on my trading  experience. You might have a different view, please share your wisdom on the subject in the comments. For more trading books recommendations, please refer to forex resources.

No related posts.