Stuart’s Favourite Trading Books
Market Wizards: Interviews with Top Traders by Jack D. Schwager
A runaway best-seller and one of the most fascinating books ever written about Wall Street – it contains interviews with 17 legendary traders who reveal that they too once struggled like the rest of us. Although the trading methodologies varied widely, the revealing interviews disclosed certain important commonalties in trading attitudes and principles.
I think it was probably reading this book (which I still say has had the most influence of anything on my trading life) that made me realise that even the very successful traders all had losing trades. Not every trade was profitable. So, I realised in that sense, I wasn’t any different to them. The difference was how they reacted to those losing trades.
All of the traders interviewed in that book (without exception) emphasized that cutting losses was one of the most important things (if not the most important) they did! The fact that they all said it, despite their vast array of different trading approaches, meant a lot to me and convinced me of the importance of doing it. This was a turning point in my trading.
It was from reading this book and gaining an insight into the minds of some highly successful traders that I realised some vital ingredients to trading well. These were things like cutting losses, managing risk, and following a plan. I knew I had the discipline and organisational skills to make this work so it was this book in combination with some significant losses that made me realise I was going to be a successful trader.
Secrets For Profiting in Bull and Bear Markets by Stan Weinstein
I think this is the best book written on technical analysis – and there are certainly plenty to choose from. The book reveals Stan Weinstein’s personal philosophy on investing, the ideal time to buy, refining the buying process, knowing when to sell, selling short, using the best long-term indicators to spot Bull and Bear markets, and a great closing chapter on putting it all together.
It is a very practical book and taught me two very powerful yet simple tools that I still use effectively to this day.
Trade Your Way to Financial Freedom by Van K. Tharp
Dr Tharp is the only non-trader interviewed in the Market Wizards book, which demonstrates his standing in the trading industry.
This breakthrough book will, quite simply, transform your perceptions of successful trading. Once you become aware of the all-important psychological foundations for system design, and understand the 6 key elements to making money in the market, you’ll be able to develop a trading system that meets both your personality and profit objectives.
Most investors search in vain for the one ‘magic bullet’ or ‘holy grail’ trading method that will lead to instant success. In this performance-directed book, Van Tharp shows how the interplay of an investor’s style, goals and personality-in combination with a carefully selected system-ultimately determines true success.
Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude by Mark Douglas
Maximizing the trader’s state of mind is the key to successful results. Conflicts, contradictions and paradoxes in thinking can spell disaster for even a highly motivated, astute and well grounded trader.
Mark Douglas, a trader, personal trading coach, and industry consultant since 1982, addresses five very specific issues to give traders the insight and understanding about themselves that will make them consistent winners in the market.
The attitude survey at the beginning is a very useful tool.
Trading in a Nutshell, 4th Edition by Stuart McPhee
Yes, my book, of course.