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Stock Trading: My Top 5 Stock Trading Books

top stock trading booksCraig Fisher, Portfolio Analyst from The Chartist, has broken out of the beginner's cycle (finally!) Craig has put together a list of his top 5 stock trading books. These are the trading books he wishes he had found earlier and that he goes back to on a regular bases.

As my trading experience grows I am tending to read less stock market trading books, but still enjoy doing so. In my formative years, I read as much as I could but still would not profess to having ‘read them all’ by any stretch of the imagination – far from it. As a beginner I tended to focus on the Australian share market and consequently Australian books. It was probably also a function of price as they were significantly more affordable than those from the US. If I had my time over, I would research books a lot more and not let price be so much of a buying criteria, as my shelves are full of disappointing books that really don’t teach you much of what really matters.

One of the challenges for the beginner is to find and trust the information in the better texts and discard those of little use. With that in mind I present my top five books for trading; those that I have found most useful and as a basic criteria for inclusion, that I keep going back to over time to reference and re-read. They are presented in no particular order.  

Trade Your Way to Financial Freedom by Van Tharp
This was a book of firsts in many areas for me. The first time I had come across concepts for trading such as expectancy, R-multiples and the importance of the risk/reward ratio in one text and as detailed as presented. It also covers all important money management or position sizing strategies, stock trading system design, degrees of freedom and trading biases. It really got me thinking about trading in terms of probabilities and statistics.

Market Wizards: Interviews With Top Traders by Jack Schwager
I also include other books in the series; The New Market Wizards: Conversations with America's Top Traders and Stock Market Wizards: Interviews with America's Top Stock Traders . This is a series of interviews with top traders and contains so many pearls of wisdom. It presents a picture of what trading is really like as opposed to the spruikers out there who profess easy money. The interviews reiterate the need for discipline, persistence and determination, along with the old adage “cut your losses and let your winners run”.

Adaptive Analysis for Australian Stocks – Nick Radge
I wish I had come across this book in earlier in my trading career as it the best Australian book on technical analysis I’ve read. In his typical easy reading style Nick focuses on what is important and visits concepts such as risk management, low risk setups, the Expectancy curve and skewing the numbers in your favour. It is an excellent precursor to something like Van Tharp’s text. I’ve read this from cover to cover several times and the first fifty one pages at least half a dozen times, probably more.

Master the Markets – Tom Williams
This is a book that Nick Rage put me onto. It is quite simply the most definitive guide to volume analysis that I have come across. It requires a few reads to absorb all the information; at least it has with me! A new concept for me was the volume spread analysis or VSA, and also covers information relating to supply and demand, recognising market tops and bottoms, along with the importance of looking in the background as well as the present.

The Power of Now: A Guide to Spiritual Enlightenment – Eckhart Tolle
This book is nothing to do with trading but everything to do with trading. It won’t teach you about stock market trading systems, or about short term trading, long term investing, technical analysis or such things as pyramiding. What it will teach you is about yourself and your potential trading sabotages. It will give you a practical guide to being in the here and now – a much underestimated prerequisite for trading and not widely discussed, but such a valuable tool. It will assist with your trader’s mindset. A profound and potentially life changing read.

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