To be successful in trading, you need to absorb as much information as you can and take advantage of every educational resource. I think books are a great way to hone your skills and improve, and in this post, we’re gonna talk about my top five favorite trading-related books.
“Hello, everyone! Today, I’m excited to share with you my top five favorite trading books. In my opinion, books serve as an invaluable resource to build and enhance your trading skills. They offer a fantastic opportunity to grow consistently over time, especially during those moments of ‘dead time’ that we all experience. Whether you’re waiting at the doctor’s office, for an Uber, or on an airplane, these pockets of time can be transformed into valuable learning opportunities. By making the most of these moments, you can truly maximize your time and propel your trading expertise to new heights. Join me as I delve into my recommended reads that have played a crucial role in shaping my understanding of the market and refining my trading strategies.”
1. The Daily Trading Coach by Brett Steenbarger
My first favorite trading book, and it is my all-time favorite, is The Daily Trading Coach by Brett Steenbarger. One of the reasons I love it so much is number one, the content is great. Brett Steenbarger is a trading psychologist, a really sharp guy, and the book is very well-written. But the best part is especially if you’re not necessarily an avid reader, what’s great about The Daily Trading Coach is its 101 chapters. All of them are probably five-minute reads, some less, maybe some a few minutes more.
Even if you’re not a person who likes to read for hours a day, you can grab that book, again, while you’re sitting there waiting for a ride, waiting for the next appointment, and you can read one of these lessons. I think it’s probably the best trading book out there. Oddly enough, I had it on my Kindle, and Amazon would not let me highlight any more passages as I read that book. It maxed me out with the number of passages. So, check it out. It’s one of the great ones, and read a lesson each day, and just keep repeating.
2. Reminiscences of a Stock Operator by Edwin Lefèvre
My second favorite trading-related book is a, it’s a great book because it’s historic. The ending is a little sad, but it’s pretty wild to read and realize that something 80, maybe even 90, or 100 years ago still works today in 2018, and that is Reminiscences of a Stock Operator. It is the story of Jesse Livermore. He was probably the most successful momentum trader ever. I think again, it was in the early 20th century. He made millions, lost millions, and ultimately ended up committing suicide. That’s the sad part of the story, but the great part about it is he tells his journey through the bucket shops and really details what we do today.
He would locate hot trends, you know, whether that be in cotton or grains, I mean some of these commodities that we necessarily don’t trade, well, they are still traded today, but in momentum lane, we don’t trade them, but the charts are there. The patterns are there. He would recognize hot sectors. I certainly believe if Jesse Livermore was around today, he’d be trading cannabis stocks. He’d be trading cryptocurrencies because he had his ear to the ground and knew what was hot. It’s just really neat to see from a historical standpoint. Great book. You might not learn trading techniques, but it gives you great in-depth into the mind of a momentum stock trader.
3. Trend Following by Michael Covel
The third favorite book of mine is by Michael Covel. He’s a friend of mine. It’s Trend Following. This book really helps and shapes a lot of my swing trading-type style. When I talk about swing trading, it’s more trading over multiple days and multiple weeks. Be sure to check out our other videos. We kind of talk about the difference between day trading and swing trading a lot, but it’s really that different mindset of instead of trying to be in and out the same day, you’re holding stocks multiple days, weeks, maybe months, or even years, and what Michael Covel talks about in this book is isolating those charts.
It’s a great charting book, you know, if you’re looking, you know, if people talk about looking at charts, and you’re like, “Well, how do I read a chart?” It’s a great way to get started there and learn that knowledge. You know, the common mistake a lot of new traders make is they’re out too early.
They take profits too early. You know, the old adage is, you know, the biggest mistake a lot of new traders make is they let their losses run, and they cut their profits early. Sounds funny, you know, you might think, “Who would let their losses run and take profits too quickly?” I see it every day in day trading land and swing trading land. People let their losses grow, grow, grow, and the instant they see green, they take profits, Trend Following is a great book to get you in that mindset of as long as you’re green on a trade, let it work. If you’re red on trade, cut that loss quickly, and you’ll be, you know, that’s the way to be maximizing your success. Small losses, big wins. Trend Following‘s one of my favorites. Also, check out TurtleTraders by Michael Covel as a bonus.
4. The Psychology of Trading by Brett Steenbarger
My fourth favorite trading-related book is The Psychology of Trading by Brett Steenbarger again. For sure, check out Brett, Google him. He’s got a great blog. All of his books are great. The Trading Psychology, as well as Trading Psychology 2.0, where he did an updated version, it’s another one of those books where especially if you’ve got a little bit of experience. I recommend these books if you’ve been trading for a while. I’m sure you could read them if you’re totally new, but when you’re really new, you’ve kind of gotta make the mistakes. It’s kind of like a baby learning to walk, and you realize when you run into things, you make these mistakes, and then you see that baby kind of learn from those mistakes, Trading Psychology reminds me of that, whereas I was reading it,
I’m like, “Oh, I’ve done that.” “Oh, I’ve done that.” And then he talks about solutions to those problems, so again, I say buy it today, both of them. They’re both great. Trading Psychology 2.0 was the updated version, but for sure, if you’re a couple of months or a couple of years into this journey, and you’ve never read it, check it out, and you’ll be amazed at how it’s almost like as I read it, I’m like, “He wrote this book for me.” And I have a feeling a lot of traders ’cause again, trading is a business of mistakes. It’s a lot like baseball. You strike out a lot in trading, and there are so many lessons in this book that can potentially be a-ha-type moments.
5. Japanese Candlestick Charting Techniques by Steve Nison
The fifth book I think every day trader should have swing trader, for that fact, is Japanese Candlestick Charting Techniques by Steve Nison. It is a, I would call it a little more of a textbook-y type book. Daily Trading Coach, is very easy, very quick read, bite-size chapters. Japanese Candlestick Charting Techniques is a little dense. I consider it more of like a reference material, but I really think you should have it to recognize these chart patterns, to understand candlesticks. If you’re new to trading, you might be like, “Candlesticks. What’s he talking about?” Those are the charts, the types of charts we look at as short-term traders.
We don’t look at the traditional line chart you might see in the newspaper or something because we’re trading volatility. Candlestick charts show you the high of the day, the low of the day, how far the stock went, where it opened, where it closed. It’s amazing the amount of information you can garner from a candlestick chart. Seasoned veterans like me and other day traders can look at a candlestick chart and instantly recognize that’s a bullish pattern. That’s a bearish pattern. That stock’s breaking out. That stock’s breaking down. It’s consolidating. So, it is a dense read. It is kind of expensive. Last I checked, it might be $70, $80 on Amazon, but I think it’s a reference material that needs to be on your shelf, accessible to pull out when you need a reference.
And then as a bonus, I know it’s the top five favorite books, but the sixth favorite, as a bonus, is American Hedge Fund by Timothy Sykes. You know, I look back at my history, if you’ve read some of where my journey in trading, I was always interested in finance, literally since elementary school. Never made any money until I found Tim Sykes’ American Hedge Fund on Amazon, roughly right when it came out about 2007, 2008. That’s when I discovered day trading these low-price stocks.
That’s when I discovered short selling. I didn’t think you could even short-sell low-price stocks until I read Tim’s book, and it’s an amazing journey. Tim’s got a pretty crazy story. This book details his starting out with $12,000 in high school, turning that into $1.65 million, trading on a boat back in the early 2000s when internet access was nothing like it is today. He was traveling the world. He was still successful, and primarily shorting these low-price stocks. So, definitely check it out. It’s a great read. It’s a fun read, and it’s a great deal. The American Hedge Fund by Timothy Sykes.