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20 Books Every Trader Should Know About.
Posted by Brian Lund in Trading and tagged with Investing Books, Market Wizards,
Stock Market, StockTwits, Trading Books
March 13, 2012
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Before I get into this list, I have a warning for those looking for a book on tr
ading, how to trade, or how to become a better trader. Learning about trading v
ia books is a holdover from before this thing called the internet, which allowed t
hings like trading blogs, trading services, and trading communities to exist.
Books are good for a general overview of the markets and trading concepts, trade
r biographies and anecdotal stories, and trading psychology, but by the very nat
ure of their format, they are too limited and not dynamic enough to be relevant
for very long.
Use them for a foundation, for ideas, but mostly for enjoyment. I think you wil
l find that your trading will drastically improve that day you decided to stop l
ooking for the latest trading book, and write your own book on trading.
As with every list, there will be disagreements. Why is that book on the list?
Wh
y isn t that book on the list?
I picked 20 books that stood out for me as a trader
, that were a #valueadd (or a #valueloss) for one reason or another. That doesn t
even have to mean that they are about trading. For example, the General Interes
t section is made up of books that I think appeal to a trader s mindset.
With that in mind, feel free to add your picks to the comments section, along with
a sentence or two as to why you liked (or hated) them.
Special Note:
When I originally wrote this post, I committed a grave error in failing to menti
on one of the best books out there on technical analysis, Technical Analysis Usi
ng Multiple Timeframes by Brian Shannon. All I can say is that sometimes we take
things that are so a part of our lives, like our wives, for granted, and Brian s
book has been a constant part of my life as a trader. They way he illustrates t
he power, and simplicity, of using multiple time frames in trading methodology w
ill make you shake your head and wonder why it didn t dawn on your sooner. A must
have addition to any comprehensive trader s library.
Old School:
The Market Wizards Series - Chances are you will find these books on the shelf o
f any serious trader. They are without a doubt the most comprehensive collection
of interviews with superstar traders ever published (Market Wizards, The New M
arket Wizards, Stock Market Wizards, and Hedge Fund Wizards). However, their di
rty little secret is that although they capture perfectly a moment in time, they
are extremely dated and will give you almost no insight into today s markets or h

ow to trade them. Their value now is in showing how even the greatest traders in
itially struggled and often blew up (repeatedly) before becoming successful. Th
ey are like benign candy, enjoyable to consume, but won t help or hurt you.
Stan Weinstein s Secrets For Profiting in Bull and Bear Markets
This book was the
first to quantify one of the most important concepts in trading; the four stages
in which stocks move, which are the basing, advancing, topping, and declining s
tages. Despite the fact that the cover of this book has not been updated since
it was published in 1988, stage analysis is still relevant today.
How to Make Money In Stocks: A Winning System in Good Times and Bad
As an unname
d trader friend of mine recently said, all you need to do is review the charts i
n the first 150 pages of this book and you will be good to go.
These charts,
along with O Neil s annotations, give you a great foundation to understand the patte
rns stocks form before they go on massive runs.
Reminiscences of a Stock Operator
Tough call on this book, only because I don t t
hink it is the Rosetta Stone of trading books that it is often described as. Th
e language is dated and colloquial, which though strange, is actually part of it
s charm. There are definitely some foundational lessons for trading in this book
, but you as the reader have to do the historical conversion in your head from v
enue s like bucket shops to today s market.
How I Made $2,000,000 in the Stock Market
This book should really be called, How
I Made$18,000,000 (adjusted for inflation) in the stock market, because that is
how much it would be in today s dollars. That would be phenomenal for anybody, bu
t for someone who did it while traveling the globe, in a pre-internet, computer,
iPad, Smart phone world while working as a professional dancer? Well that is just
epic. His Darvas Box system, though crude and in need of adjustment to factor in
today s HFT, is still a foundation of a solid trading style/discipline.
Trading Education:
The Stock Twits Edge: 40 Actionable Trade Set-Ups from Real Market Pros - Okay,
before you accuse me of trying to kiss the ass of my blog overlords at StockTwi
ts, let me just tell you that I was recommending this book publicly, way before
I ever resurrected this blog, let alone was asked to join the network. This is
the book I wish was written when I started trading 30 years ago. The irony thou
gh is that it could not really have been written until just recently. It is the
Market Wizards for the retail trader, and more importantly, each chapter is writt
en by someone who currently has an active presence on social media. Plus it s the
only place you will ever see @The_Real_Fly write two whole pages without saying
fuck!
The Trading Book: A Complete Solution to Mastering Technical Analysis and Tradin
g Psychology - I like Anne-Marie, but if she had asked me if it was a wise choic
e to add another trading book to the world, I would have advised against it. I
would have been wrong. I was amazed at the scope of material that this book was
able to cover, and do so in a meaningful way. Anne-Marie s economical (and often
humorous) style takes you right to the core of each concept, doing away with irr
elevant and superfluous information. I don t think it is hyperbole to say this is
an instant classic for the beginning/intermediate trader.
Japanese Candlestick Charting Techniques
There are a lot of books out these on
candlestick charting, but almost all of them are derivative of Nisson s tome. It
goes through and explains the basic concepts, as well as the most relevant patte
rns related to candlestick charting. Unless you really need to know about the th
ree-drunk-salarymen-rolled-by-the-hooker-in-the-Shinjuku-train-station pattern, t
his book is all you will ever need for candlesticks.

Trade Your Way to Financial Freedom

Yes the title is cheesy and sounds like som
ething from a late-night infomercial, but this book has one of the best overview
s of the different types of methodologies you can use to make money in the marke
ts. But more importantly, it shows you how to go about formulating a methodolog
y for trading in the markets. The information on risk and position sizing alone
makes the book worthwhile.
Psychology:
The Disciplined Trader & Trading In The Zone
trading psychology. I know traders who went
t winners after reading these books. The way
a trader is scary, and there is a good chance
ed to plant the hidden camera and microphones
trading deficiencies.

These are the definitive books on

from perpetual losers to consisten
Douglas climbs into the psyche of
you will wonder aloud how he manag
that he used to take notes on your

Real World Trading:

Pit Bull: Lessons from Wall Street s Champion Day Trader Extremely dated, but stil
l the only full auto-biography (I believe) of a Market Wizard. It is a look into
the mind and process of an extremely disciplined trader who is still putting up
crushing numbers to this day. And despite the fact that he shares James Altuche
r s somewhat dubious scatological advice regarding cleaning out the plumbing before
starting the day, it s a good read.
One Good Trade: Inside the Highly Competitive World of Proprietary Trading If yo
u want to know what it s like trading in the real world of a prop firm, this is th
e book. But even more so, this book shows you how to focus on process instead p
rofits to become a successful trader. There are a number of great trading lesso
ns in this book, all wrapped around relatable stories (kinda like this blog).
General Interest:
The 50 Best (and Worst) Business Deals of All Time
This book is like eating a p
iece of candy; you will enjoy it so much but before you know it, it will be done
. Clocking in at under 200 pages, it gives concise, informative, and fascinatin
g insights into some well-known, and some not so well-know business successes an
d failures. The chapter about the ABA s settlement with the Spirits of St. Louis
one is worth the price of admission.

al

Backstage Wall Street: An Insider s Guide to Knowing Who to Trust, Who to Run From
, and How to Maximize Your Investments
Sure, once again you can accuse me of kis
sing ass to one of the heavyweights of financial blogging, but really .if you have
read Josh s blog for any amount of time, you know he s the real deal. This book pul
ls no punches and will probably be looked back upon years from now as the clario
n call against the entrenched Wall Street establishment instead of those Occupy
Wall Street douchebags.
Mean Business: How I Save Bad Companies and Make Good Companies Great
Dunlap ma
de his name as a turn-around specialist for near-death companies, and this book ch
ronicles some of his most famous successes. I get that Dunlap s career ended in sh
areholder actions, SEC investigations, and his banning from ever running a publi
c company again, but just because Michael Jackson s final few albums sucked doesn t
mean that Off the Wall and Thriller weren t masterpieces. Dunlap was an asshole to be
sure, but often times an asshole is what is needed, and his excesses in restruc
turing were merely a response to the bloated corporate excesses of the times. I
t s hard to fool guys like Kerry Packer, Sir James Goldsmith, and the principles a
t KKR, so Chainsaw Al must have been doing something right at some point.
The New Financial Capitalists: KKR and the Creation of Corporate Value

Every ti

me I re-read this book I get financial wood. Love them or hate them, KKR change
d the way M&A was done and left an imprint on corporate financing that is still
felt today. It is hard to forget in the wake of the 2008 credit crisis that KKR
was always responsible, and almost always successful in using debt and leverage
to save failing companies and create or unlock value for shareholders and their
investors. This is an authorized biography of the company, but done in a truly
objective fashion, and it highlights how the key to a KKR deal did not so much
have to do with the money (debt) that they brought to the table, but the wealth
of managerial talent they brought to their target companies.
Avoids:
Trading For A Living: Psychology, Trading Tactics, Money Management
This is the
gateway book that every new trader seems to come through on the road to trading,
but I have to say, I have never been a fan of Dr. Elder. It stems for my suspi
cion that he makes (and has always made) more money from writing about trading a
nd putting on overpriced seminars on trading, than he has from actually trading.
In this book he espouses a multiple time frame method that is rudimentary at
best and his nod to trading psychology is done better and in more depth by Dougl
as. The only interesting aspect of this book is his explanation of how trading
is NOT a zero sum game, but that is really only worthy of a blog post at most.
The Education of a Speculator
I have a blog friend, who not only is a 100x bett
er trader than I could ever hope to be, but is a connoisseur of art and literatu
re, and even surfs. He is also a friend of the author, Victor Niederhoffer, and
thinks highly of him. That is why it pains me to say that Education
is probably on
e of the top 5 worst written books that I have ever read. It would be better ti
tled, Let Me Tell You What A Great Squash Player I Am. And even though I am sure
there was meant to be some subtext in his narcissistic stories that relate to tr
ading, it is written in such a purposefully exclusionary way that you can t find i
t. Since I am part of the chattering classes it is probably that Neiderhoffer, a
true intellect, is just writing above my level, but unless you are picking this
book up on the way to your Nobel Prize luncheon, it s probably best to just skip i
t.
Hey, don t forget to check out my book Trading: The Best Of The Best
ips For Our Times destined to be on this top 20 list someday.

Top Trading T

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