Daily Archives: August 31, 2010

One of the questions that just about every trader asks, either in their own head or out loud in some fashion, is what books they should read. That's why I included the question in New Trader FAQs (available in the Currensee Marketplace).

There are, of course, probably as many lists of “the best trading books” as there are traders. We all have different perspectives on things and read certain books at different points in our development. That leads to a variety of views on which ones are the best. All I can do is provide for you the ones that I think are the most useful based on my own experience.

That said, here’s my list (excerpted from New Trader FAQs).

The Essentials of Trading is, of course, my own book. I don’t include it from any sense of vanity, but because I honestly believe it’s a great resource for new traders. I wrote it specifically to help them develop a good, solid foundation for their trading. It’s not specific to any market or timeframe or strategy, but rather focuses on the general requirements for creating long-term success in the markets. Those are things like having a solid understanding of the markets and how they work, putting together a personalized trading plan, and being able to evaluate different systems and methods.

The Market Wizards books (especially Market Wizards and The New Market Wizards) should be in every trader’s library. They are collections of interviews done by author Jack Schwager (a trader and market analyst in his own right) with some of the most successful traders, investors, and money managers of recent times. There is loads of great stuff in these books. No. You won’t find the one system that will make you a multi-millionaire in the markets. What you will find, though, is a whole array of little nuggets of wisdom from the years and years of experience these folks represent. Any time you can learn from what someone else had been through it can shorten your own learning curve. That’s what these books let you do.

Trade Your Way to Financial Freedom was written by Van Tharp, who was featured in the first Market Wizards book. Tharp was one of the early proponents of modeling success in trading. This book incorporates a number of elements of that and trading psychology. What I’ve always found to be the more valuable stuff for a new trader, though, is the discussion of expectancy and trading system performance assessment. Oh, and there’s a lot of good talk about risk in the book too.

When it comes to trader development, Brett Steenbarger is one of the guiding lights. His focus is on self-coaching, and Enhancing Trader Performance (see also The Psychology of Trading) is a fantastic resource in that area. Trading is like any other performance activity and Steenbarger goes to great lengths to highlight that. He does so because there are important implications for how you approach your development as a market participant. Steenbarger is a therapist by training and a trader himself. He works as a trainer for prop trading shops, so he knows what he’s talking about.

Markets In Profile is a discussion by James Dalton of the Market Profile analysis and trading methodology. More than that, though, it is an intensive discussion of how the way the markets work at their core plays out through the way prices move. This book is a follow-up to the author’s previous book, Mind Over Markets, which is a bit more mechanical regarding the Market Profile technique

A very good read for anyone researching or developing trading systems is Way of the Turtle by Curtis Faith. The author was one of the original Turtles selected to learn trend trading by market legend Richard Dennis. Faith describes his own experience in the Dennis program, but also spends a lot of time talking about constructing and evaluating trading systems. It’s a very practical book in that area.

So that's my list. I realize they aren't Forex-specific, but the fact of the matter is that successful trading is based on principles which are not market-specific.

What's on your list?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.