Since this is my inaugural post as a Traders' Library guest contributor I thought it would be appropriate to list a few of the books that I believe should be on every trader's bookshelf. Most of these I have mentioned at one time or another in my own blog so to my readers they will come as no surprise. Instead of giving a summary of each one I will allow the author's own words to provide an idea of what is in store for the reader. Although these are categorized please approach the books with the understanding that each one could fall under any or all of the categories mentioned.
ONE HOUR LIFETIME BOOKS: these books are easily read within an hour or so yet provide a lifetime of trading wisdom.
1. Zen in the Markets by Edward A. Toppel. Although deceased Mr Toppel has provided a trading book that will outlive his children's children. "Egoless people have nothing to protect. They just do whatever the market tells them to do" (11).
2. 8 Ways to Great by Doug Hirschhorn. I recently had the pleasure of interviewing Dr Hirschhorn and came away with a greater understanding of risk. "Frequently, what they [successful traders] learn from losing money is more valuable than what they learn when they make money" (90).
3. How I Made $2,000,000 in the Stock Market by Nicolas Darvas. An oldie but goodie not for its $2 million system but for its wisdom that has not changed since it was written some 50 years ago. On losing $100,000 in a few short weeks: "I can hardly believe it. Now I know it was cause by egotism leading to vanity leading to overconfidence, which in turn led to disaster. It was not the market that beat me. It was my own unreasoning instincts and uncontrolled emotions" (113).
NEW NEW BOOKS: these are books that were recently published and will most likely become time honored classics.
1. One Good Trade by Mike Bellafiore. I have provided a detailed book review of OGT and recommend it. "Developing a bias can be helpful when trading a stock, but when the price action contradicts your theory, then you must exit" (137).
2. The Daily Trading Coach by Brett Steenbarger. Although Mr Steenbarger has left the blogging world this book encapsulates much of his teachings in 101 lessons. "The drive for self-improvement is different from the desire to make money and is far more rare" (108).
3. Trading From Your Gut by Curtis Faith. This former turtle trader reveals the psychology behind the turtle trading rules. "As with the moves of a chess master, the master trader makes trades with purpose and passion" (55).
4. Technical Analysis Using Multiple Timeframes by Brian Shannon. Almost exclusively for the technically inclined, TAUMT is full of information on how to understand market behavior as seen through the eyes of moving averages and various time frames. My signed copy is highlighted and marked up in such a manner than I couldn't give it away. "If you anticipate all possible scenarios, it is easier to maintain objectivity and avoid costly emotional decision making" (5).
CLASSY PSYCHOLOGY: these are books about the psychological and behavioral aspects of trading. In my opinion, these should be read first before any technical analysis is even attempted. If the mind is not right, no chart is going to look right.
1. The Disciplined Trader and Trading in the Zone by Mark Douglas. These two books make up the Bible, both the old and new testaments, of stock trading psychology. Must haves. "If I had to distill all of the reasons [for success] down to one, I would simply say that the best traders think differently from the rest" (Trading in the Zone, p.7).
2. The Investor's Quotient by Jake Bernstein. Personally recommended to me by world renowned trader and cycle forecaster Charles Nenner, Bernstein's book is one of the best treatises on behavior psychology and its effects on our trading. "The final test of any trading methodology is inextricably tied to the individual who is using the technique" (55).
This is by no means an exhaustive list but does give a good base upon which to build a solid understanding of the stock trading game. See you later...in the crosshairs.