5 must read books for Traders
Often times, traders, especially short-term ones, have their eyes glued to the screen. With a day job to juggle on top of trading, traders may be too busy to research on useful books to read. Here are five of our top picks curated just for you.
The Art of Short Selling by Kathryn F. Staley
Short selling is an incredulously risky venture in which timing and self-discipline is crucial. For traders looking for a detailed explanation and insight about when a stock’s price will drop or rise, this is the book for you. Key signals to watch out for, where they can be found as well as how to make sense of the signals will be covered. This book can help you understand the mechanics behind short selling to better strengthen your foundation.
Equipped with this knowledge, you can better convince yourself in times when you are tempted to deviate from your original plan and trade emotionally. Thankfully, this book is not a bore and does not involve too much technicalities.
2. The Art of Thinking Clearly by Rolf Dobelli
This book is a personal favourite as it explores a whole range of psychology concepts that are applicable to everyday life. Each chapter, capped at a maximum of about three pages, talks about psychological pitfalls that people find themselves trapped in subconsciously. With the book being so easy to read and the chapters being so short, you have absolutely no excuses to not read at least one chapter every day. A tip would be to mark your favourite chapters as you are likely to revisit them time and time again! This is a perfect read for people with a short attention span or a busy schedule. Some of the more intriguing and relatable chapters include ‘Why Watching and Waiting Is Torture’ and ‘Don’t Take News Anchors Seriously’.
Overall, The Art of Thinking Clearly serves as a helpful guide about what can unknowingly affect or drive your decisions. This book provides a low commitment and almost bite-sized learning that all readers can, and should, try.
3. The Big Short: Inside the Doomsday Machine by Michael Lewis
An entertaining story for slightly more advanced traders, this book tells the stories of three groups of little-known financiers, whose investments were shorted during the 2008 sub-prime mortgage securities. This book is nuanced with shady feeder markets, inflation of the housing bubble, how junk bond securities managed to be sold with AAA ratings, and more.
If you would like to read more of Michael Lewis’s books, check out Liar’s Poker and Moneyball, both of which are very interesting reads as well. The former talks about the Wall Street bond-trading house, Salomon Brothers, when it was at its peak in the mid 1980s. As a slightly more fun read, Liar’s Poker features memorable characters such as the Human Piranha and the Opportunist.
4. Reminiscences of a Stock Operator by Edwin Lefevre
This classic, while written back in 1923, is very much applicable to this day. Based on the famous trader Jesse Livermore, Reminiscences of a Stock Operator explores what it takes to make or break a trader.
The rich story telling helps shed light on the struggles that every trader is likely to face at different stages of their trading journey. With insights sprinkled generously, this is an easy read for every trader regardless of experience.
5. Trading in the Zone by Mark Douglas
Consistency and self-discipline are both goals that all traders hope to work towards and ultimately achieve. If you are looking for a guide book or a comprehensive road map for your trading career, reading this book can be a great start.
The author describes the mind as an irrational medium which seeks to find short cuts. An explanation of the phenomenon along with how to handle it is explored in the book. Do note that if you are looking for specific and detailed trading strategies or technical analysis, then this book will not be for you.
If you would like to check out more of Douglas’ popular reads, try The Disciplined Trader.
Taking the time to immerse yourself in a full book can deepen your understanding of the subject extensively. In fact, reading, as opposed to listening or watching, can possibly engage you on a deeper level as your mind has to be actively making sense of the written words. While every individual differs, growing and training your mind in this manner is likely to retain information better while invoking curiosity. Start sparing five minutes a day to read a couple of pages just before bed time. In fact, taking your eyes off the trading charts on your computer before going to bed, and opting to read can help you sleep better as well. Visit the library or borrow a book from a friend to start contributing to your investment knowledge today!