Six Books That Will Improve Your Trading

Probably the most common request I
get from TradingMarkets members is to suggest certain books to them.

People are always pretty specific as to what they are looking for.

“Rob, could you suggest some good books on technical
analysis? Daytrading?
Growth investing?When I get these questions, I try and oblige as well as I
can. I’ll suggest a book on swing
trading or technical analysis or whatever. So
far, though, no one has left it open ended.
Maybe it’s because you don’t care what I think, but I’m going to
tell you anyway.

The best trading books are not the ones that teach you
about systems, setups, or technical or fundamental analysis concepts.
(Don’t get me wrong — these books can be valuable — they’re just
not “the best.”) The best trading
books are the ones that teach you about other traders.
They’re the storybooks that tell how Joe Failure one day saw the light
go on, and now he’s Joe Millionaire. The
trading system Joe uses is not the most interesting part of the book.System and technical analysis books are fine, but you can
make money trading any system. Even
crummy systems can make money (with good money management).
The key is finding a system and a trading style that fits your
personality. One that you have confidence
in, that you are comfortable trading, and that you are capable of executing.

The best trading books will tell you just how someone else
went about discovering and fine-tuning their system.With all that said, here’s the list of books that no one
asked for (in no particular order):

  • Market Wizards (and New Market Wizards)
    by Schwager


  • The Best — TM’s Conversations with Top Traders

    by Marder and Dupee

  • Electronic Day Traders’ Secrets by Friedfertig
    and West (This is kind of a Market Wizards for daytraders.)

  • How I Made $2,000,000 in the Stock Market by
    Darvas

  • Reminiscences of a Stock Operator by Lefevre
    (Probably my favorite.)

  • Pit Bull by Schwartz (My father-in-law’s
    favorite.)

Most of these books are in the $20-$30 range, as opposed to
the $100 or so that most technical analysis books cost.
They say you get what you pay for, and with most things it’s true.
For my taste, though, I like cheap trading books and cheap beer.Looking at the market, I still think things are looking up.
I’d be inclined to back off the gas pedal a little, though, until the
up trend signals it’s resuming.

Have a good long weekend, and if you have the time, curl up
with a cheap book and relax.

Rob

robhanna@rcn.com