There are many great books out there about how to become a successful trader, whether via stocks, commodities, options, foreign exchange or all of the above. Here is our list with three of them. Just remember, trading takes a lot of hard work and reading a book (or two, or three or many) is just the start of the endeavour.
Reminiscences of a Stock Operator by Edwin Lefèvre
Described by the Wall Street Journal as a “classic”, Reminiscences of a Stock Operator by Edwin Lefèvre was published in 1923 and despite its age, it continues to offer insights into the art of trading and speculation.
The book is effectively a narrative about the life and times of Jesse Livermore, a
man considered by many to be the greatest stock trader of all time.
Livermore began his trading career in the 1890s via the "bucket shops" and progressed from day trading to market speculator, market maker, and market manipulator, and finally to Wall Street where he won and lost million-dollar fortunes several times between 1901 and 1921. Along the way,
Livermore learns many lessons, which he happily shares with the reader.
The book is also filled with numerous pearls of wisdom on trading that are still often quoted today, such as "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
The Disciplined Trader by Mark Douglas
Best known for his book on trading psychology, Trading In The Zone, Douglas’ first book The Disciplined Trader written in the 1990 is a gem of a read also.
Based on his firsthand commodity trading experience, Douglas demonstrates how habits and beliefs, which have served us well in society are often psychological barriers in trading as trading requires much more self-discipline and self-control than many other activities.
Although the author addresses a subject that might appear complex to some, the book is a very clear and easy read and shows the reader how to develop and apply attitudes and behaviours that transcend psychological obstacles and lead to success.
It also offers a list of avoidable mistakes designed to heal your trading account and your trading perspective after you've had a string of losses.
Market Wizards by Jack D. Schwager
Jack D. Schwager, a well-known author, fund manager and an industry expert in futures and hedge fund, published a number of books including Market Wizards which consists of a collection of interviews with some of the most successful traders across most financial markets.
The interviews contain a mixture of facts about the trading careers of the interviewees, including Bruce Kovner, Richard Dennis, Paul Tudor Jones, Michel Steinhardt, Ed Seykota, Marty Schwartz, Tom Baldwin, their philosophy, and many anecdotes about market experiences.
After each of the interviews, Schwager summarises what he believes are the key things to be learned from that particular trader
The book also contains a fifth part on the psychology of trading and two appendices on program trading and basic options theory.
Here is a valuable quote from the book: "To make money in the markets, you have to be willing to get in the way of danger" -Michael Steinhardt