There is a learning curve to trading—don’t let anyone tell you it’s easy. So, why not help yourself out by starting with some of the best material out there in print? But, navigating the Trading Library can be a bit overwhelming. In this age of the internet when any old monkey can publish a book, the market is flooded with endless drivel, while a handful of real gems are lost in the literary melee.
Let us make it easy for you. But, before we do that—a caveat: These books will help put you on the path to successful trading by giving you the fundamental knowledge you need to build on. They are not, however, magic books. The rest is up to you. These books are meant to compliment your other painstaking efforts to become a phenomenal day-trader. They represent an important piece of the trading puzzle—but only a piece. Learning from other traders, taking some trading courses and actually trading for real should be combined with your newly acquired literary knowledge.
Then, after you’ve read them once and taken things further—go back and see what you missed. Re-read them with a different perspective.
Enjoy our Mind-Bending Traders Reading List. It’s not in order of best to worst. Instead, it’s in our preferred chronological order, which means we are telling you which to read first and how to work your way through the list. There are plenty of other trading books out there worth reading, but these are our top picks for beginners and we consider them an absolute must. (Also worth checking out, our 40 ‘Stock Trading Terms For Beginners‘ Article and Infographic!)
Download this cheat sheet for the 5 best book trading reads that you can read.
#1 Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay.
A MUST READ. Have you ever wondered why the market works the way that it works? Why does a stock—without identifiable stimuli—rise and fall? What are the driving forces behind the market? While not limited to the subject of trading, this book tells you everything that you need to know about crowd psychology, as it relates to economics and more.
From Europe’s witch trials to Holland’s tulip mania, this book will give you a basic understanding of the madness of crowds—as true today as it was in 1841, when it was originally published. The mechanics of trading and how to trade should come only after you have read this book and fully understand the why of the market.
If you don’t understand the crowd mentality, you will never understand the market. This book is where you start. It’s definitely ground zero, because psychology defines trading.
Be sure to get the full unabridged version. There are copies out there that only contain a few chapters out of the whole.
When you’ve finished with Book #1 about the madness of crowds, pick up this book to learn about the history of the stock market and the events that arguably led to the Great Depression. It’s important to understand the history of the market you are now attempting to trade in.
Many will shrug this off as too much work. Please don’t be tempted to do that. A lot of wannabe traders fail, quite simply because they do not really have the wider knowledge of the market and how it functions (or doesn’t function) and why. If you don’t fully understand how a market can crash, they you may be a victim of the next one. And, if you think it’s going to be a boring read—think again. It’s riveting. And, if you don’t believe me, take the Financial Times’ word for it. 320 pages (but every page is worth it).
#3 Reminiscences of a Stock Operator by Edwin Lefevre.
This is a bit of fiction, a bit of history and a bit of nonfiction. Actually, it’s a true story, told using a fictional character. This is not your run of the mill dull, finance how-to book. Instead, it’s a story, written in fictitious autobiographical style. This is probably one of the most-cited books on investing and traders discuss it frequently. If you want to learn the lingo, learn how the market moves and learn a strategy (of the fictional narrator, based on the actual author), then this book is a must-read. It is possibly also the most entertaining book you will ever read about trading. 288 pages.
#4 How to Make Money in Stocks: A Winning System in Good Times and Bad by William O’Neil.
This too, is required reading. How to Make Money in Stocks is another great step to take in your understanding of how the market works. O’Neil outlines his rather complex CANSLIM investing method in this book, providing insight into how mutual funds operate, as well as concepts such as the 50-day moving average, growth stocks vs. value stocks, accumulations, distributions, puts, calls, pivot points, breakouts and so much more. This is a pretty meaty book that is designed for the professional, individual investor. Grab a snack and set aside an hour each night to read! 464 pages.
#5 An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund, by Timothy Sykes.
This book is a great look into the world of stock trading and hedge funds, particularly penny stocks—a subject of much debate. There is a lot of drivel out there about penny stocks and a lot of hype and promotion. But, there is generally little substance. This book details Tim’s true story of how he turned his bar mitzvah money into millions of dollars. It’s a great resource for beginning traders who are just learning the ropes. 235 pages.
When you’ve finished the five books above, there is one more must-read to start you off on your trading career.
Bonus read: Japanese Candlestick Charting Techniques by Steve Nison.
There are lots of spin offs of this book, but this is the real deal. This book explains basic concepts and patterns related to candlestick charting, and is often lauded as “one of the best investment books ever.” This unique book reveals the “claws” of Japanese candlestick charts, which were a “hidden secret from the Western World for over a century.” It gives you a brand new perspective on trading and making money the ancient way. If you fancy yourself an above-average guru, this is right up your alley and will blow your mind. 299 pages.
Other great reads that didn’t make the list, but are certainly worthy of being included in the top spots are:
- Market Wizards, by Jack D. Schwager (or any title from Schwager)
- How I Made $2,000,000 in the Stock Market, by Nicolas Darvis
- Confessions of Street Addict, by James Cramer
- Sold Short: Uncovering Deception in the Markets, by Manuel Asensio
We hope you’ll take our Top 5 reading list to heart (and mind). Reading to broaden your trading skills is sorely under-rated—but everyone else is wrong about that. If you don’t have the time, find it—it’s worth it.