One of the most frequent questions we receive at TradeSmart is, "what book should I read to learn this stuff?" Well, we have created a list of up our favorite books, which are primed for a spot in your library.
Technical Analysis
Everything we teach at TradeSmart is built around technical analysis. We believe it is the main way to get timely market information which you can use to trade. The following books are an excellent starting point for your library.
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Technical Analysis of Stock Trends - Robert Edwards & John McGee
Originally written about 80 years ago, the information in this book is as relevant today as when it was first published. The book lacks in the areas of more modern technical analysis, but in terms of a basic understanding of the core principles of technical analysis, it’s the foundation of which all else is built.
Technical Analysis Explained - Martin Pring
This is a good utilitarian book as it covers everything. It might not change your trading, but it is a single-volume resource that covers pretty much everything in the world of technical analysis. It's a must for the bookshelf.
Technical Analysis: The Complete Resource for Financial Market Technicians - Charles Kirkpatrick and Julie Dahlquist
This book was written as the official textbook of the Market Technicians CMT program. It’s a bit technical at times; at other times, it’s technical; however, it’s a great resource, and it certainly has helped make everyone a much better trader.
Technical Analysis of the Financial Markets - John Murphy
This was our first real textbook on Technical Analysis. While it’s a little outdated today, it has served as an excellent volume on trading over the years, and we consider it one of the best.
On Candlesticks
A relative newcomer to western technical analysis is the study of Japanese Candlesticks. Some people still consider them off-limits, but once you learn the trading psychology behind candles and once you learn to read them, you can never look at a chart the same again. Below are some of our favorite books on the subject.
Japanese Candlestick Charting Techniques - Steve Nison
This is the book that started it all. Steve Nison’s original book on candlestick trading should hold a prime space in your library.
Candlestick Charting Explained - Gregory Morris
Greg Morris has an interesting work here that dissects the patterns themselves. This is truly a reference work as every pattern you can imagine is in this book, complete with probabilities of success and frequency of occurrence.
On Elliott Wave
The Elliott Wave phenomenon is awesome, complex, and promising. We used the principles for a few years; however rarely apply them now. But if you want to read some great words on the subject of trading and if you would like to round out your technical analysis knowledge a bit, here are a couple of titles for you.
Elliott Wave Principle - Robert Prechter & A.J. Frost
The book that set the course of Robert Prechter’s career and the one that stands as the ultimate textbook related to Elliott Wave. Considering the complexity of the subject this is a surprisingly easy read. You will find it much easier to read this book than to trade the system, but if you want to know about Elliott Wave, this is where you start.
R.N. Elliott’s Masterworks - Ralph Nelson Elliott, Robert Prechter
Also published by Prechter, this is a collection of Elliott's works. Even though trading Elliott Wave is insanely difficult, this is one of our all-time favorite books. There is an excellent biography included on the life of R.N. Elliott, and you can read the way Elliott first presented his theories.
On Trading Psychology
By far, the most important skill to learn in trading is controlling your mindset and personal psychology. All great traders will agree your mindset and how you think about a trade will determine your probability of succeeding in the market.
Trading in The Zone - Mark Douglas
The best introduction to why trading is 80% psychology and 20% execution. Every trader must learn to manage their emotions and their psychology. This is a must-have for every trading library period. If you get one book on this list, make it this book. Mark was years ahead of his time when he wrote this book, and his work thrust the topic of trading psychology into the mainstream. Read it.
Trading Beyond the Matrix - Van Tharp
The Red Pill for Traders and Investors. Simply put, it’s a good one.
On Options
Options are one of the greatest things to ever hit the world of trading. And since the late 1990s, the volume and interest in the options market has continued to grow. More than ever, traders are finding reasons and motivation to add options to their trades, and here is an excellent place to start.
Options as a Strategic Investment - Lawrence Mcmillan
This book is an excellent reference for just about everything you could ever want to know about options. When you pick it up, you will see why so many refer to it as the bible of options trading. Not the easiest of reads but worth the effort.
Trading Options for Edge - Mark Sebastian
This book is not for the faint of heart, but the information presented is for those who wish to know the inner workings of option greeks and how to create an edge with that knowledge.
On Fibonacci
The Fibonacci sequence has been around hundreds of years, but modern computing has made the application to the financial markets finally possible. The good news is you don't need a degree in mathematics to apply this tool in your trading, and here is a great place to get started.
Fibonacci Analysis - Constance Brown
Simply put, this book is the standard on Fibonacci Analysis.
Generally Awesome Books
Some of the most valuable books in our libraries do not fit into a nice category, and yet they are a great addition for every trader's library. Below are a couple you should consider if you want to round out your collection.
All of the Market Wizards books - Jack Schwager
Jack Schwager has spent his career now interviewing great traders and learning from their successes. His “Market Wizards” series is a must for ever trader. He has now released several in the series, and some of the older ones have been updated to newer editions as well. We recommend all of them.
So there you have it, the cornerstone to a powerful trading library. Read, enjoy, and learn your way to a complete understanding of the market and the forces which drive it.