A lot has been written about trading, investing, and financial markets over the years. Some books are great, and many are, well, bad (really bad). Here’s a list of ten names that have stood the test of time and that are worth a look when you’re shopping for your next reading material.
Reminiscences of a Stock Operator by Edwin Lefèvre
A classic. This book, first published in 1923, tells a fictionalized account of the life of the securities trader Jesse Livermore. It provides great insight into investor psychology - fear and greed - and how trading and speculation shape markets.
Technical Analysis of Stock Trends by Robert Edwards and John Magee
Some people argue that “chart-trading" is futile because prices of stocks, commodities and other financial instruments behave in random fashion. Yet, others point out that, since millions of investors are looking at the same charts, there must be value in studying them. First published in 1948, Technical Analysis of Stock Trends was the first book to describe a methodology for interpreting the behavior of investors and markets through stock charts: patterns, trendlines, support/resistance areas. It has been revised many times over the years and is a good starting place for investors seeking to learn the fine art of technical analysis.
Dark Pools by Scott Patterson
Published in 2013, but Dark Pools provides an interesting look at how trading has evolved in recent years and the many ways technology has changed the way securities are bought and sold. It highlights some of the positives and negatives of the new electronic trading world.
Random Walk Down Wall Street by Burton Malkiel
Random Walk Down Wall Street popularized the passive approach to investing. In the 1973 book, Burton Malkiel argues that it’s impossible to beat the market on a consistent basis and therefore it’s simply better to buy the same stocks as the S&P 500 – or the approach known as index investing. While the success of numerous investors (most notably Warren Buffett), contradict the main premise of the efficient market theory, the book is well-researched and well-written. Moreover, it had a major impact on the financial world today.
Flash Boys by Michael Lewis
Several books by Michael Lewis could be added to this list - he's the most prolific financial writer the world has ever known. Flash Boys is perhaps the most influential. Published in 2014, the text immediately stirred up controversy because the underlying premise is that the stock market is rigged. It was a very hot topic! In fact, Lewis said his appearance on CNBC after the Flash Boys debut drew the network's largest audience ever (which he compared to being the world's tallest midget). Regardless of whether you agree or disagree, the book is worth a look, as it digs deep into the structure and landscape of the US stock market today.
Trading for a Living by Alexander Elder
MACD, Stochastics, RSI? All these indicators, and a lot more, are covered in Trading for a Living. The book is a quick and easy read. It helps to understand the logic and methods used to create many of the indicators available in charting packages today.
Richest Man in Babylon by George S. Clason
It seems unlikely that a collection of stories set 8,000 years ago in ancient Babylon would resonate with investors in 2019, but this 1926 book by George Clason is still relevant in many ways. That's because, although many of types of investments and markets are vastly different today, the fundamentals of saving and investing really haven't changed that much.
The Intelligent Investor by Benjamin Graham
While mostly focused on investing in stocks, the 1949 book the Intelligent Investor by Benjamin Graham is considered the bible of investing. More recent editions include commentary from Jason Zweig, a financial journalist who draws parallels with today's markets and shows readers how to apply Graham's principles in modern day markets.
Options as a Strategic Investment by Larry McMillan
Puts and calls are not everyone’s cup of tea, but for those who want to learn more, Options as a Strategic Investment is probably the best place to start. The lengthy book begins at the very basic level and then continues to more advanced strategies.
Market Wizards by Jack Schwager
Want to hear how the best traders navigate chaotic financial markets? Market Wizards includes interviews with dozens of profitable traders and summarizes what works, and why. The key takeaway: hard work, a good methodology, and the proper mental attitude are essential ingredients for success.
Feel free to share titles that you've read that other traders might enjoy. Looking forward to hearing your comments and feedback.