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Many people would like to learn how to become successful traders, whether via stocks, commodities, options, foreign exchange (forex), or all of the above. Unfortunately, trading and investing are not subjects commonly addressed in either high schools or colleges in the United States.
Fortunately, a wealth of excellent books is available on every aspect of trading for those with the desire and motivation to teach themselves the craft of trading.
Key Takeaways
- Becoming a successful trader can be a difficult achievement, with several ups and downs along the way.
- There's no one right way to become a great trader, but reading about how others have done it can point you in the right direction for your personality and trading style.
- Several classic books exist that not only document real-world traders and how they rose to the top, but also relate strategies you may not learn in finance class.
These books, and many others, can provide in-depth information on the complexities of investor trading from basic how-to tips to the psychology behind making investments. Visit your local bookstore or library to find these books and others on financial topics.
Reminiscences of a Stock Operator
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Amazon
"Reminiscences of a Stock Operator," written by Edwin Lefèvre and published in 1923, is possibly the single most recommended book for aspiring traders and investors.
The book is a fictionalized account of the life of the man considered by many to be the greatest stock trader of all time, Jesse Livermore, presented as the main character, Larry Livingston, in the book.
This book, which is also noted as simply a good read, is one of the few attempts at a detailed biographical account (albeit fictionalized) of one of the famous investors in stock market circles in the early 20th century and provides interesting insights into Livermore's self-education as a trader. The book is also filled with numerous pearls of wisdom on trading that are still often quoted today, such as, "Always sell what shows you a loss and keep what shows you a profit."
The Intelligent Investor
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Benjamin Graham's "The Intelligent Investor" is considered the classic text on value investing, which is still one of the most popular basic investing strategies and the underlying principle of hundreds of investing strategies developed since Graham's book was first published in 1949.
This book holds the distinction of being touted by famed investor Warren Buffett as the best book ever written on the subject of investing, and as one of the primary sources for his own education in trading stocks. In the book, Graham presents his core investing philosophy of identifying the intrinsic value of an investment and then looking to buy into it at a price below that value.
Market Wizards
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Amazon
Jack Schwager has put together two very popular books on trading: "Market Wizards" and "The New Market Wizards." Both books consist of interviews with some of the most successful traders of the past half-century, such as Paul Tudor Jones, the billionaire founder of Tudor Investment Corporation.
It is often argued that the best way to learn any craft or occupation is to be mentored by people who have already attained success in the field. Schwager's books offer readers the opportunity to pick up some mentor-like advice from very successful traders. The interviews offer both interesting biographical information on the interviewees and exposure to a wide variety of investing strategies.
The Disciplined Trader
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Amazon
"The Disciplined Trader: Developing Winning Attitudes" written by Mark Douglas in 1990, addresses the subject of the psychology of trading, the mental discipline that is required in order to be a successful trader.
Although many other books have since been published on this subject, Douglas' book is still considered a "must read" classic text on trading psychology. One of the strengths of the book is the fact that, although it addresses a subject that might appear dauntingly complex to some, it is a very clear and easy read.
Douglas does an excellent job of describing the basic mindset and attitudes that are essential for traders. Douglas subsequently penned another very popular book on trading psychology, "Trading in the Zone."
Trader Vic II: Principles of Professional Speculation
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Amazon
This book, written by Victor Sperandeo, is not as well known as many books on trading but is a favorite of many traders who have read it. In the book, Sperandeo puts forth an investment strategy that is based not on specific market events or company-specific metrics but on analysis of the general direction of the economy as driven by factors such as the fiscal policies implemented by the Federal Reserve and tax policy.
Sperandeo argues that identifying the basic direction in which such policies will inevitably drive the economy enables traders to determine the most probable overall market direction, as well as specific market sectors that will thrive.