I started reading about the stock market in the mid-1980s when a close family friend gave me a book to read, Martin Zweig’s timeless masterpiece, “Winning On Wall Street”. My family worked in a stock brokerage firm, and I spent many days after school there watching the brokers, dressed in expensive suits and sitting in plush offices, go about their day, which fascinated me.
I began to read IBD staring in the mid-1990s and started my personal venture into trading in 1998. Since then I have read likely over 50 books on trading and investing. These 5 below, listed in order, have made the biggest impact on my trading career, and as a result, my life. There are many great trading books, and some that I hold highly, such as works by William J. O’Neil and Mark Douglas, that are classics, but I wanted to list my personal Top 5. This list is my highly experienced personal opinion and I am not being compensated in any way, or by any vendor for this list. There are no business affiliations.
These 5 books are classics, must read works for any serious trader. Jesse Livermore’s story will always be my top ranked book, for reasons I explain below. Numbers 2 – 5 are all exceptional, and I rate them equally, although I did rank them. All are highly recommended, to be read and reread.
1. REMINSICENCES OF A STOCK OPERATOR BY EDWIN LEFEVRE
The unofficial story of all-time trading legend Jesse Livermore. This is far and away my favorite trading book of all time, and in actuality, the book that prevented me from giving up on trading. Like many traders, I struggled for years, 7 or 8 actually, in the journey to find a style that suited me. Like many, I thought that trading meant “doing something, all the time”, trading in and out of positions every day, and always following the news, and predictions. I failed at trading this way, as it was not conducive to my personality or mindset. As I was casually reading the book, I landed on the page that changed my outlook forever, when I discovered that essentially, the big money was in the big swing. The page below, page 57, is the core concept that changed my trading philosophy forever. This is absolutely the most important concept for me in trading:
2. MARKET WIZARDS BY JACK SCHWAGER
This classic is easily ranked next to the top, because of the caliber of traders that were interviewed by the author. Legendary Billionaire traders, Bruce Kovner and Paul Tudor Jones, and other legendary traders such as Richard Dennis, Ed Seykota, Larry Hite, plus Dr. Van Tharp and William J. O’Neil, the founder of Investors Business Daily. Trading is somewhere between 60 – 80% a mental endeavor, and being able to study the words, thoughts and comments on some of the greatest traders ever is an invaluable lesson. Another book that I constantly revisit for reminders.
3. TRADE YOUR WAY TO FINANCIAL FREEDOM BY DR. VAN THARP
I rank this book at #3 because it taught me the Three ‘M’s of successful trading:
Money Management (position sizing & risk management)
Method (signals and setups)
Also, the random-entry coin-toss experiment performed by legendary trader, and personal friend, Tom Basso, and the author, Van Tharp, (page 253, below) enlightened me to the fact that back-testing is overrated, there is no magic entry signal or setup, as I had believed for years that there was, and that the key to profitability is a consistent process, with exceptional trade management, risk management and position sizing. This is a must read classic, to constantly be revisited.
4. THE COMPLETE TRADING FOR A LIVING BY DR. ALEXANDER ELDER
This is the most complete, A – Z book, that I have read on trading. It is what I would recommend first to someone who wanted to get an overview of psychology, system, charting, price and volume, and various technical methods. An outstanding and very detailed work, a pure novice will finish this book with an excellent grasp of the basics and mechanics of sound trading. This is also where I learned the concept of doing my chart and market analysis outside of market hours, to avoid emotional decisions. An excellent read.
5. SECRETS FOR PROFITING IN BULL AND BEAR MARKETS BY STAN WEINSTEIN
My technical favorite, full of charts, charts and more charts. All about price, trend and moving averages. Stan’s book taught me that clarity of using price and moving averages, along with the emotional relief that it provides from not having to try to study an unlimited pool of fundamental data.
Stan was a technical wizard, and his thorough understanding and commitment to the technical process, and his ability to communicate it to readers is outstanding.
I hope that you found this list to be informative. Please feel free to share any comments or feedback with me on my Twitter page https://twitter.com/LMT978
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