No matter the level of technological tools offered to professional traders, including contemporary tools like artificial intelligence, reading remains the best way to build a trading mindset and develop the skills needed to succeed.
Indeed, with the rise of consumer-facing fintech like Etoro, as well as online prediction platforms like DraftKings Predictions, where you can trade everything from the hourly stock market to commodities like gas and gold, millions of retail traders are now entering the arena.
But whether you are a professional on Wall Street or a newbie trying their hand at prediction trades, there are some brilliant books that will help you learn the skills and mindset to succeed. Below, we discuss seven of the best:
Reminiscences of a Stock Operator
Author: Edwin Lefèvre
Published: 1923
Still arguably the most famous trading book ever written. It is a fictionalized account inspired by Jesse Livermore, but the lessons in this book by Lefèvre, an early chronicler of Wall Street, are universal and modern. It covers many areas, but it is, at heart, a book about trading psychology and the behavior of the masses. Over 100 years later, and it’s still a reminder that trading is not about the buying and selling of different “things” – it is about understanding the mindset of other humans.
Market Wizards: Interviews with Top Traders
Author: Jack D. Schwager
Published: 1989
A classic interview collection with elite traders. Some of this might feel a bit Gordon-Gekko-like given the timing of its release, but don’t let that put you off, nor should you assume every trader is a shark. The book is highly insightful in many different areas of trading, and, importantly, it shows that different types of traders can be successful. The overall message is not to get bogged down in one type of strategy – each has strengths and weaknesses.
Technical Analysis of the Financial Markets
Author: John J. Murphy
Published: 1999
If you are ready to start thinking about the technical side of trading, looking at charts and trendlines, moving averages, and so on, then this is the gospel for that TA (technical analysis). The book can be a bit heavy a times, so you might need Investopedia open on your laptop as you read if you are a beginner, but it will provide you with a structured approach, and it will help you make sense of all those squiggly lines on the charts.
Trading in the Zone
Author: Mark Douglas
Published: 2000
Probably the definitive book on modern trading psychology. A little bit different from Edwin Lefèvre’s work, Douglas looks inwards, explaining how traders can self-sabotage through fear, greed, and, most, interestingly, the need to be “right”. Many traders have egos, but Trading in the Zone strips that all away, showing you that a cool-headed approach can win in the end, even if you have to suffer losses to get there.
The New Trading for a Living
Author: Alexander Elder
Published: 2014
A modernized version of Elder’s trading framework, this one has lots of different elements. It’s useful for a variety of reasons, but, most pertinently, it provides a kind of bridge between all the talk of psychology and mindset and all the modern technical analysis and tools offered today. Basically, it’s saying “mindset only gets you so far; here’s how to put it all into practice.”
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
Author: Nassim Nicholas Taleb
Published: 2001
Not a trading manual, but vital reading for anyone who confuses a good outcome with a good decision. Taleb’s central point is that markets are full of luck and false patterns. This is formidable advice for those who feel trading is easy. We would especially say it’s important for cryptocurrency traders who may have had success before and are waiting for it to happen again.
Options, Futures, and Other Derivatives
Author: John C. Hull
Published: 1989
Signing off with the most technical book on this list. This one is essential for traders who want to understand derivatives properly. It certainly isn’t the sort of book you’ll be ready on the beach, but it is key for anyone looking beyond simple buy-and-hold trading. A lot of retail traders lose out with derivatives – a lot of pros do, too – so this is probably the best option to master that side of the market.