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When you are learning to trade, you find yourself automatically going to Amazon or any other bookstore and searching for books on trading. Well, the industry has something to offer. Yet, bestsellers may not be the best choice for a struggling trader since they focus too much on beautiful setups, or underline the importance of discipline and risk control (as if we didn’t know that). 90 percent of traders don’t become more disciplined after simply knowing what they are expected to do. Knowing how good setups look like also has little correlation with success.
Most images of successful traders are unrealistic. Real traders break keyboards, violate their trading plans (if have ones), overtrade, attempt to pick tops/bottoms, trade defensively, don’t cut their losses and et cetera. And real traders rarely rely on somebody’s advice and knowledge.
Best of them find something that works for them, in their hands, and build on it. Until you find out what really works for you, no advice would help. That’s why, I always valued books which helped me become better version of myself. In this post, I want to share with you books, which have become eye-openers in my own trading. Hope, it will help you in your search for the right knowledge.
“What I learned losing million dollars”.
This book by Jim Paul and Brendan Moynihan is a cold shower for heads of beginner aspiring traders, yet it is a necessary cold shower. The author describes his experience in trading lumber futures when he was caught in a large position which didn’t work as it expected. He had failed to accept his loss, and come through a real nightmare.
What is more important, finally author recognized that he hadn’t been a trader. He thought he was, but in reality, he wasn’t. He made money on a bull market, which he thought he understood. Finally, he started to really learn trading.
Conclusion: It is a helpful book not only for beginner traders but for experienced traders as well.
“Building winning algorithmic trading systems”
Quite a big reading from Kevin Davey, winner of the World Cup Trading Championship (Robbins trading), the year of 2006. The book focuses on algorithmic trading and would be interesting to algo traders first, but it contains a lot of useful information for discretionary traders too.
The author had tested many popular mechanical strategies and describes his mishaps with them in a book. It alone is already a reason to read it.
Yet, he also describes key principles of developing, testing and creating successful algorithmic strategy. You will see, that there is no “set and forget” solutions, and will learn more about the professional approach to retail algo trading.
Conclusion: Book will be useful for algo traders, but discretionary traders would also capture useful info.
“Markets in profile”.
This book from James and Robert Dalton is a logical continuation of “Mind over markets”, a “bible” for traders who use market profile for decision making. James (Jim) Dalton gives numerous insights of how markets work in this book. He distinguishes trades by their goals/timeframes and traces of their footsteps on a chart (in a profile).
Jim trades CME futures (mostly ES), i.e. world liquid global markets. For individual stocks, things may work differently. (currency market is also global liquid market, so Forex traders will benefit from reading too)
Jim also focuses on a learning process, on cognitive dissonance which traders face with. Also, if you are interested in further learning, you may find recordings of Jim’s webinars on youtube.
Conclusion: Book is not an easy read, though it’s worth your time. Best value for futures day traders (ES).
Diary of professional commodity trader. Lessons from 21 weeks of real trading.
This book is written by the veteran trader with proven track record – Peter L. Brandt. He trades on CME futures (like J. Dalton), yet on higher timeframes using classical chart analysis.
The value of this book is in its title. It is a diary, which was written in a real time. The author was putting his thoughts and reflections in a text mode. It is unique opportunity to look over the shoulder of a professional trader.
Those interested in practical application of classical chart analysis will find real setups and trades with details. For me, as a short-term trader, it was the least interesting part. “Mental” part of the diary was more relevant for me.
Conclusion: Book focuses on classical chart analysis and mindset of a professional trader.
Trading psychology 2.0. From best practices to best processes.
This is book or renowned market psychologist Brett Steenbarger. What is interesting about books from Dr. Brett is that they contain real stories of traders, real cases of people changing and improving.
I’ve read all books of Brett Steenbarger, for me, his writings are way more realistic than ones from other authors. For example, famous Mark Douglas didn’t make a big impact on my trading. Your experience might be different.
Some people complain that there are no straight answers of what to do in books of Dr. Brett. For me, it is ok since no straight answers will help you.
Conclusion: Good reading on trading psychology.
With that, I will finish this post for now. I hope to continue my review later, there are much more valuable books which I can recommend. Keep in touch.
To be continued…