I understand this is a bold claim. Of course, everyone has their different opinion about what are the best trading books. In my opinion, the books discussed below are the greatest investment texts. These are the ones that I frequently turn to when I want an answer or need motivation. I hope they may be beneficial to you as well. This list is not necessarily ranked in order, although I do have my two favorites ranked as 1 and 2.
10. Trading for Dummies, by By Michael Griffis and Lita Epstein. The dark horse on the list. This was one of the first investment books I read. I still occasionally peruse it just to get a different perspective. This book gives a plain language description of trading, from the basics of how to place an order to candlesticks, to reading balance sheets. The good thing is that both technical and fundamental analysis are covered. It also goes toe-to-toe with the more scholarly trading books that read more like classroom texts. Also, unlike the more scholarly tomes, this is reasonably priced.
9. Japanese Candlestick Charting Techniques, by Steve Nison. Nison is said to have introduced candlestick charting to America. I remember the first time I looked at candlesticks before I was even into the market-extremely intimidating! Even after I became more involved in trading, I still was reluctant to learn to interpret ‘sticks. Slowly, I became more comfortable to the point that reading them is now second nature. Using candlesticks enables one to notice price fluctuation and patterns much easier than standard bar or line charts.
8. Secret for Profiting In Bull And Bear Markets, by Stan Weinstein. Mr. Weinstein’s way of trading is very similar to that of Bill O’Neil (see below), but with less of an emphasis on fundamentals. The sections on market direction and short selling are excellent.
7. The Dow Theory Today, by Richard Russell. Although published in 1961, this book is still relevant today. Some consider Richard Russell the last true practitioner of pure Dow Theory. I particularly like Mr. Russell’s description of investor sentiment near tops and bottoms. The book is loaded with fantastic quotes. I even used one recently in a prior post. The book is small and is reasonably priced.
6. The Complete Guide of Market Breadth Indicators, by Gregory Morris. An extensive overview of the numerous types of indicators available for deciphering the market. My personal favorite is the section on the McClellan Oscillator.
5. Technical Analysis of the Financial Markets, by John Murphy. Mr. Murphy runs stockcharts.com. While this book is more like a reference guide, I routinely find myself reviewing different parts. There is a fantastic introduction section on Elliot Wave Theory and candlesticks. Aside from the book, the website is fantastic; the charts are great and the “chart school” section is the best on the web.
4. Encyclopedia of Chart Patterns, by Thomas Bulkowski. Another reference book, but well worth it. It not only provides detailed description of patterns and the relevant characteristics, but their actual performance in both bull and bear markets. If you are a practitioner of technical analysis, not having this book is like a ship captain not having a compass.
3. Market Wizards: Interviews with Top Traders, by Jack Schwager. One would think nothing can be taught by reading trader war stories- at least that is how I felt at first. However, after reading the book, I realized a lot of the issues I dealt with were also encountered by traders, such as risk management, over-trading, etc. A lot of the great are interviewed: Jim Rogers, Ed Seykota, Bill O’Neil, etc. Reasonably priced.
2. How I Made $2 Million In The Stock Market, by Nicolas Darvas. Details the journey of professional dancer-turned-trader, Nicolas Darvas, and how he amassed $2 million in a short time. Mind you, this was not easy money. It took Darvas seven years to figure out the market before he hit it big. The reason this book resonates with me, and many other traders, is that Darvas goes through the same stages most investors encounter: trying to make money trading penny stocks; listening to analysts and tips, using only fundamental analysis to make decisions, etc. Eventually he settles on a system in which he buys stocks achieving their all-time high. While maybe not the best book as far as technical information (although it provides plenty of that), it is my all-time favorite trading book. If you check other recommended reading lists, this book is regularly cited. I actually scoffed at reading it at first, thinking “what the hell can I learn from this story?” I decided to give it a chance after I saw how often it was recommended. The recommenders are right. Reasonably priced.
1. How To Make Money In Stocks: A Winning System In Good Times Or Bad, by Bill O’Neil. Do not let the infomercial-like title deter you. While I tried to get away from ranking these books, O’Neil’s book is the best. In this book, O’Neil, the founder of Investor’s Business Daily, provides the perfect blend of fundamental and technical analysis along with motivation to make you a successful investor. With the exception of this book, I have yet to see one that provides you with a solid set of rules. Most books, even the good ones, will discuss what you should and should not do, but never provide you with a firm plan. O’Neil provides the investor with a system for profiting. Although the book is used to peddle the newspaper’s services, considering the information provided, this shortcoming is easy to look past. Reasonably priced. Interestingly, the 4th Edition is due out in April 2009.
10. Trading for Dummies, by By Michael Griffis and Lita Epstein. The dark horse on the list. This was one of the first investment books I read. I still occasionally peruse it just to get a different perspective. This book gives a plain language description of trading, from the basics of how to place an order to candlesticks, to reading balance sheets. The good thing is that both technical and fundamental analysis are covered. It also goes toe-to-toe with the more scholarly trading books that read more like classroom texts. Also, unlike the more scholarly tomes, this is reasonably priced.
9. Japanese Candlestick Charting Techniques, by Steve Nison. Nison is said to have introduced candlestick charting to America. I remember the first time I looked at candlesticks before I was even into the market-extremely intimidating! Even after I became more involved in trading, I still was reluctant to learn to interpret ‘sticks. Slowly, I became more comfortable to the point that reading them is now second nature. Using candlesticks enables one to notice price fluctuation and patterns much easier than standard bar or line charts.
8. Secret for Profiting In Bull And Bear Markets, by Stan Weinstein. Mr. Weinstein’s way of trading is very similar to that of Bill O’Neil (see below), but with less of an emphasis on fundamentals. The sections on market direction and short selling are excellent.
7. The Dow Theory Today, by Richard Russell. Although published in 1961, this book is still relevant today. Some consider Richard Russell the last true practitioner of pure Dow Theory. I particularly like Mr. Russell’s description of investor sentiment near tops and bottoms. The book is loaded with fantastic quotes. I even used one recently in a prior post. The book is small and is reasonably priced.
6. The Complete Guide of Market Breadth Indicators, by Gregory Morris. An extensive overview of the numerous types of indicators available for deciphering the market. My personal favorite is the section on the McClellan Oscillator.
5. Technical Analysis of the Financial Markets, by John Murphy. Mr. Murphy runs stockcharts.com. While this book is more like a reference guide, I routinely find myself reviewing different parts. There is a fantastic introduction section on Elliot Wave Theory and candlesticks. Aside from the book, the website is fantastic; the charts are great and the “chart school” section is the best on the web.
4. Encyclopedia of Chart Patterns, by Thomas Bulkowski. Another reference book, but well worth it. It not only provides detailed description of patterns and the relevant characteristics, but their actual performance in both bull and bear markets. If you are a practitioner of technical analysis, not having this book is like a ship captain not having a compass.
3. Market Wizards: Interviews with Top Traders, by Jack Schwager. One would think nothing can be taught by reading trader war stories- at least that is how I felt at first. However, after reading the book, I realized a lot of the issues I dealt with were also encountered by traders, such as risk management, over-trading, etc. A lot of the great are interviewed: Jim Rogers, Ed Seykota, Bill O’Neil, etc. Reasonably priced.
2. How I Made $2 Million In The Stock Market, by Nicolas Darvas. Details the journey of professional dancer-turned-trader, Nicolas Darvas, and how he amassed $2 million in a short time. Mind you, this was not easy money. It took Darvas seven years to figure out the market before he hit it big. The reason this book resonates with me, and many other traders, is that Darvas goes through the same stages most investors encounter: trying to make money trading penny stocks; listening to analysts and tips, using only fundamental analysis to make decisions, etc. Eventually he settles on a system in which he buys stocks achieving their all-time high. While maybe not the best book as far as technical information (although it provides plenty of that), it is my all-time favorite trading book. If you check other recommended reading lists, this book is regularly cited. I actually scoffed at reading it at first, thinking “what the hell can I learn from this story?” I decided to give it a chance after I saw how often it was recommended. The recommenders are right. Reasonably priced.
1. How To Make Money In Stocks: A Winning System In Good Times Or Bad, by Bill O’Neil. Do not let the infomercial-like title deter you. While I tried to get away from ranking these books, O’Neil’s book is the best. In this book, O’Neil, the founder of Investor’s Business Daily, provides the perfect blend of fundamental and technical analysis along with motivation to make you a successful investor. With the exception of this book, I have yet to see one that provides you with a solid set of rules. Most books, even the good ones, will discuss what you should and should not do, but never provide you with a firm plan. O’Neil provides the investor with a system for profiting. Although the book is used to peddle the newspaper’s services, considering the information provided, this shortcoming is easy to look past. Reasonably priced. Interestingly, the 4th Edition is due out in April 2009.
