Selecting Exceptional Trading Books
Having perused numerous trading books over the past decade, I've noticed a recurring issue: many of them tend to convey similar information. It's often the same old story – the Head and Shoulders pattern, the MACD indicator, buying at support, and selling at resistance.
It didn't take me long to realize that truly transformative trading books are hard to come by. So, today, I'd like to recommend a few books that can genuinely enhance your trading skills. Most of them contain a "eureka" moment, offering a concept or idea that will undoubtedly elevate your trading game.
A Complete Guide to Volume Price Analysis by Anna Coulling
When I was learning the basics of technical analysis, I often experienced nervousness when entering a trade. Mostly, this was due to my uncertainty about price action and whether the trade had the potential to sustain the trend.
However, this book provides a comprehensive explanation of candlestick basics and how volume can offer valuable insights into future market direction. Understanding volume is the missing yet critical piece to effectively interpreting charts.
This book will equip you with the ability to gauge market sentiment surrounding price action through the analysis of volume changes. It delves into the concept that volume is a reliable indicator, never leading traders astray, and elucidates why and how the smart money drives market movements.
The methods outlined in this book can serve as a trading strategy or enhance your existing strategies. This is an absolute must-read for anyone who approaches trading with seriousness and dedication.
The Mental Game Of Trading by Jared Tendler
Trading is fundamentally about mastering emotions, and this book delves deep into the emotional mistakes that traders commonly make. It stands out as one of the most practical guides to trading psychology available. What sets it apart is its exceptional balance between theory, real-life examples, and actionable plans.
The author thoroughly addresses the challenges traders encounter and provides highly specific strategies for tackling them head-on. Reading this book will help you systematically uncover and address the psychological barriers that may be impeding your trading progress.
What truly distinguishes this book is its provision of actionable steps to overcome the mental obstacles that may be hindering your peak performance. If you're willing to put in the effort, this book has the potential to make a significant impact on your trading journey. It's recommended to read with a pen in hand, ready to take notes.
Market Wizards: Interviews with Top Traders by Jack D. Schwager
Gaining insight into the experiences of professional traders can be a profoundly valuable source of knowledge. This book demonstrates that there are myriad pathways to success in the financial markets.
The author conducts interviews with professional traders who achieved success through various methods: technical analysis, fundamental analysis, mechanical trading systems, and discretionary trading. Reading about the diverse strategies employed by top traders is eye-opening.
Although the anecdotes in the book pertain to the 70s and 80s, the underlying principles remain as relevant today as they were back then. The book is a treasure trove of tips and wisdom shared by some of the finest traders, which you can apply to your own trading.
While the book doesn't provide specific trading strategies, technical analysis, or charts, it imparts a crucial lesson: there is no holy grail in trading, and no one-size-fits-all approach. Instead, it offers insights into the mindsets of these exceptional traders and presents numerous ideas for achieving success in the market.
Master the Markets by Tom Williams
Market manipulation, Wyckoff analysis, and the role of volume are central themes in this book. If you delve into its pages, you'll gain valuable insights into price action and the potential pitfalls that the market can present during trading.
This book elucidates the reasons behind price movements and teaches you how to discern the underlying forces influencing the financial markets. It's a must-read for those seeking a deeper understanding of volume trading and the intricate relationship between price, spread, and volume.
You'll grasp the fundamentals of volume spread analysis and uncover the fundamental drivers of price fluctuations, particularly the imbalance between supply and demand. Furthermore, you'll become adept at recognizing key indicators of the involvement of major market players on price charts, enabling you to conduct insightful analyses of potential price movements.
As you absorb the contents of this book, you'll experience numerous "aha" moments. By implementing these techniques, you'll gain a significant advantage over the typical retail trader.
Wyckoff 2.0 by Ruben Villahermosa
The Wyckoff method isn't a rigid, rule-based trading system; rather, it's a discretionary approach that hinges on your ability to conduct effective market analysis. This book is an invaluable resource for gaining a comprehensive understanding of the fundamental principles that underpin successful Wyckoff trading.
It commences by elucidating supply and demand concepts and delving into the intricacies of order flow. Each of these components is then examined in greater detail, providing you with a clear grasp of the dynamics between price and volume.
Furthermore, you'll gain insight into the mechanics of accumulation and distribution and how they function in practice. The book breaks down each phase within the accumulation or distribution process, offering in-depth explanations for the occurrence of each step and guidance on what to watch for in various scenarios.
Additionally, you'll acquire knowledge about the logic of market cycles and the recurring patterns that manifest during accumulation and distribution. If your aim is to truly comprehend market structure and profit from it, this book will unquestionably expedite your learning curve.
Mastering Trading Psychology by Andrew Aziz
What sets you apart as a superior trader isn't merely mastering technical analysis or determining entry and exit points. It's also about gaining insights into the psychology of trading. This book serves as an invaluable resource for addressing various psychological aspects of trading.
The approach of sharing stories from fellow traders fosters a personal connection with this book. It's replete with anecdotes from diverse traders, making it accessible even to beginners. You'll find it easy to relate to these stories.
Importantly, this book doesn't just help you identify and understand trading-related challenges; it also equips you with actionable strategies to rectify those mistakes. The advice, stories, and perspectives contained within these pages will help you maintain focus, stay motivated, and, most crucially, chart a path toward self-mastery.
You'll uncover insights on managing your emotions, practicing self-discipline, and mastering risk management. The book delves into real issues faced by traders in their own words, such as focusing on quality setups, coping with a string of losses, avoiding revenge trading, setting goals, and even addressing aspects like diet and sleep.
This book proves highly beneficial if you possess the technical skills for trading but struggle with the practical application of your ideas.
Reading Price Charts Bar by Bar by Al Brooks
This book delves deep into the intricacies of technical analysis, focusing solely on price action and omitting oscillators, relying solely on a 20 EMA as an indicator. When I first read it, I came from a background of indicator-based trading and couldn't fathom trading without MACD and stochastic indicators cluttering my charts. This book stands as one of the few resources that truly assisted me in reshaping my approach to trading.
It will grant you insights into the psychology underlying market movements and the reasons behind them. Remarkably, this book is among the rare few that will genuinely teach you how to trade by comprehending the actions of market participants.
You'll acquire the ability to decipher price action, recognize market traps, and capitalize on high-quality opportunities that arise daily. While indicators may reveal what has occurred, understanding price action provides an immediate insight into what is happening and the psychology driving it.
It's essential to note that this isn't a book on trading strategies; rather, it's a guide that aims to teach you the language spoken by the market. The concepts presented can be applied to scalping, day trading, and even swing trading. If you're dedicated to trading and aspire to master pure price action, reading this book is a must.
Trading in the Zone by Mark Douglas
Many individuals are eager to learn trading strategies, often overlooking a crucial element: their mindset. If your mindset isn't in the right place, it doesn't matter which trading system you employ – you're likely to lose money. This book has the potential to remedy that.
Only a handful of trading books are considered must-reads, and this is undeniably one of them. It's essential reading for traders of all levels. As mentioned, this book addresses one of the most vital skills in trading: your mindset. The author guides you in viewing the market objectively and highlights how conflicting beliefs can obstruct this perspective.
It will fundamentally alter your outlook on trading. This is not a beginner's "how-to" book for trading; it assumes you already possess the knowledge of reading charts and conducting technical analysis. Instead, it places its emphasis on trading psychology, delving into emotional defense mechanisms and the mindset required to avoid the pitfalls that ensnare 90% of traders.
Packed with psychological and behavioral principles, this book will help you unearth the root causes of your trading issues and show you how to unlearn detrimental habits. Reading this book compels you to step back and conduct a thorough self-analysis, acknowledging that your trading results stem from your mental framework.
You'll learn how to conquer the fear of missing out, the fear of losing money, the fear of being wrong, and if you implement these principles correctly, you'll achieve consistency in your trading.
The Ruff Guide to Trading by Steve Ruffley
This book is well-suited for intermediate traders, offering concise and straight-to-the-point insights.
While this book doesn't primarily focus on technical analysis, it does touch on related topics. Its core emphasis lies in areas such as calculating target entry and exit points and the critical importance of planning. Essentially, it serves as a guide for determining when to trade and when to exercise caution.
The author relies on a select few key indicators that he incorporates daily into his trading routine. The book predominantly centers around intraday trading and the utilization of various timeframes to form a short-term market outlook, facilitating sound entry and exit decisions.
Furthermore, it dedicates a substantial section to risk management and provides practical trading strategies. The book's accessibility and clear explanation of the author's trading approach make it reader-friendly.
It aids retail traders in understanding their position in relation to the market and underscores the significance of adopting a professional approach to retail trading.
Best Loser Wins by Tom Hougaard
Upon reading this book, you'll come to a profound realization: successful trading extends beyond technical analysis. It addresses the paramount issue—the crucial final piece in the puzzle of becoming a triumphant trader: mastering emotions and comprehending how your instincts and mind may work against you.
This book is tailored for experienced traders who have achieved only mediocre results. The author operates under the assumption that these subpar outcomes occur despite the intelligence of most traders and their grasp of the fundamentals of both fundamental and technical analysis.
The primary reason for trading failures, as per the author, is the innate human inclination to add to losing positions and prematurely exit winning ones to secure profits. Many traders possess the knowledge but falter in executing it, even after winning a sufficient number of trades.
Emotional stability, courage, and perseverance are highlighted as the most valuable attributes a trader can possess. While every trader experiences losses, only a select few comprehend how to safeguard their accounts, maintain detachment from outcomes, and recognize when it's prudent to step away on days when anger or anxiety threaten to disrupt their strategies.
The book delves into the emotional battle waged within your mind when contemplating trade entries and when actively engaged in trading. The author sheds light on how the divergence between reality and what one perceives as rational thinking becomes evident once real money is involved, jeopardizing performance.
Reading this book will undoubtedly lead to numerous "aha" moments, such as the notion of assuming you're wrong on every trade until the market proves you right. It is an essential read for enhancing your trading mindset. It's worth noting that several books in this article address the psychological aspects of trading.