10 books for traders helpful at any level of professional advancement

Cy Wakeman, an author and a writer for Forbes, Huffington Post, and Business Insider, once wrote on her Twitter: “When you decide you know everything, you stop learning.” This quote applies perfectly to trading and investing. The domain is constantly changing, and there is information that may become obsolete in a day, but the fundamental knowledge that helps you adapt and develop a creative mindset is forever invaluable.

We present a set of 10 books, which, in our opinion, may be useful for beginner and professional traders alike.

1. “Trading Psychology 2.0: From Best Practices to Best Processes,” by Brett N. Steenbarger

This is the acclaimed bestseller by Brett Steenbarger, the renowned American psychiatrist and trader. The book is not a pure textbook on investing and focuses on the psychological aspect of trading.

“We become what we consistently do.”

The author tells how to find a comfortable method of trading and learn to cope with stress during surges in market volatility. At the same time, the psychologist repeatedly emphasizes that investing is not for everyone. The book contains many life stories and descriptions of numerous psychological experiments. It is worth noting that Steenbarger talks about financial instruments and the stock market itself only in passing.

2. “How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price,” by Jesse Lauriston Livermore

This piece of writing simply cannot be avoided. Jesse Livermore is perhaps the greatest trader in history, a renowned individualist, and the most successful stock-jobber.

“All a person needs to do is observe what the market is telling him and evaluate it.”

Written by Livermore shortly before his death in 1940, this book is still one of the best known and most popular in the financial domain. You will read about the mechanisms and reasons why a trader was able to win and lose tens of millions of dollars. Over 45 years of trading and watching the stock market, Jesse Livermore has created several unique tools using his formulas and equations that have taken the profitability of the trading system to new levels.

Autobiographical and historical details have turned this book into a fascinating novel.

3. “Investment Fables: Exposing the Myths of "can't Miss" Investment Strategies,” by Aswath Damodaran

Damodaran is a well-known expert in investment evaluation and corporate finance, and this is a bedside book for all investors.

“As long as there have been financial markets, there have been mountebanks and frauds luring investors into get-rich schemes that ultimately fail.”

The book includes an objective analysis of 13 popular investment strategies, mostly fundamental. The author lays out their theoretical underpinnings, and describes how the perceptions match reality. At the end of each chapter there are "lessons for investors" that describe how in reality these strategies should be applied, avoiding adherence to myths.

4. “The Complete TurtleTrader,” by Michael W. Covel

Michael Covel is a bestselling author who co-founded TurtleTrader.com, an online resource later expanded into TrendFollowing.com. It focused on an investment style known as trend following, allowing traders to profit in both buy and sell markets.

“How much of a role does luck play in trading? In the long run, zero. Absolutely zero. I don’t think anybody winds up making money in this business because they started out lucky.”

The book is dedicated to the famous experiment organized by the legendary Chicago trader Richard Dennis. Having once argued with his colleague William Eckhardt whether it was possible to teach a “man of the street” trading, he placed an advertisement in the newspaper, inviting everyone interested in a two-week course. As a result, only 23 people were accepted. They were the “turtle traders” who made $100 million for Dennis. The book describes what and how they were taught, including the rules for entering and exiting the market, personal advice from Dennis and Eckhardt.

5. “Technical analysis,” by Jack D. Schwager

Jack Schwager is an American trader and recognized expert in financial markets.

“The usefulness of charts as an indicator of future price direction is a fiercely contested subject.”

This book is an encyclopedia of technical analysis. The author not only describes in detail the basic concepts, methods, indicators, trading techniques but also gives practical advice on building trading systems. Also, here you will find the analysis of specific situations using the charts.

It is worth noting that the book was written quite a long time ago, before the widespread use of personal computers and trading robots. This should be taken into account before adopting the methods described there.

6. “The Intelligent Investor,” by Benjamin Graham

Warren Buffett called this the best book ever written about investing. And he said this about a book written back in 1949.

“Those who do not remember the past are condemned to repeat it.”

Benjamin Graham, an influential British economist, professor, and investor, created the veritable Bible of the stock market. After reading the book, you can get a full understanding of the difference between stock market speculation and investing, and get acquainted with the strategies of passive and active investors. Specific examples of equity analysis are also provided.

7. “Common Stocks and Uncommon Profits,” by Philip A. Fisher

Morningstar describes Philip Fisher as one of the greatest investors of all time.

“The business “grapevine” is a remarkable thing.”

The book presents a method of selecting interesting stocks, which assumes that the growth in the value of common stocks is conditioned by the prospect of future growth in profits. The author gives advice on how to build an investment portfolio and choose the right moment to buy and sell assets. One of Fisher's followers is Warren Buffet, who said that his view of investments is 15% Philip Fisher and 85% Benjamin Graham.

Read more: 2 WAYS TO INVEST LIKE BUFFETT

8. “Intermarket Analysis: Profiting from Global Market Relationships,” by John J. Murphy

John Murphy is an American financial market analyst who is considered the father of inter-market technical analysis.

“We have all come a long way since 1990 in our awareness of how any market in the world has an impact on many others.”

The book is dedicated to the principles of interaction between financial markets. The author describes the relationships between stocks, bonds, currencies, and commodity assets. The book gives examples of how the use of inter-market indicators allows making a fundamental estimation of the situation, to make forecasts for one type of assets, based on the dynamics of another type. It should be noted that the book was written in early 2000, and after the financial crisis of 2008, the picture has changed due to the active policy of the world's central banks. However, in the larger picture, the general principles remain relevant at all times.

9. “Irrational Exuberance,” by Robert J. Shiller

Robert Shiller is an American researcher, winner of the 2013 Nobel Prize in Economics.

“In the future, we will surely have even bigger such bubbles, each built up around its new and different new era story, and we will have to invent new names for them.”

The book highlights the psychological factors underlying the behavior of markets, refuting their "efficiency" in the presence of "rational" participants. It describes the irrationality of human thinking that leads to inadequate asset pricing, speculative bubbles, and collapses. The first edition of the book, which was published in 2000, drew attention to the serious overheating of the American stock market, and the collapse of the NASDAQ was not long in coming. The second edition in 2005 drew attention to the overheating of the U.S. real estate market, followed by the 2007-2008 mortgage crisis.

10. “The Essays of Warren Buffett: Lessons for Investors and Managers” by Warren Buffett

Our list closes with the work of Warren Buffett, one of the most successful investors in the world with a net worth of over US$85.6 billion as of December 2020.

“It is better to be approximately right than precisely wrong.”

The book includes Buffett's annual messages to shareholders of his investment company, Berkshire Hathaway, written over the past decades. They provide interesting educational content and reflect the financial guru's profound investment philosophy. The concise and easy-to-understand book contains useful aphorisms about the nature of investing and reveals the most important problems for managers and investors.

This article represents FXOpen Markets Limited opinion only, it should not be construed as an offer, invitation or recommendation in respect to FXOpen Markets Limited products and services or as financial advice.