Top 5 Trading Books For Forex & Stock Traders
BY Chris Andreou|October 28, 2021
Our 2021 line-up of the five best books for forex and stock traders is here – and just in time for Christmas! From technical analysis to trading psychology, you’ll find everything you need in these books to make 2022 a happy and successful trading year!
Currency Trading For Dummies – Kathleen Brooks
The ‘For Dummies’ books are the go-to series for anyone new at anything, and forex trading is no different.
Currency Trading For Dummies provides 384 pages of everything you need to know to get started in the world of online trading. You’ll get 19 in-depth chapters, taking you from an easy-to-understand introduction to the forex market, all the way up to trading successfully on your first demo account.
Along the way, you’ll learn how to read the markets, how to manage risk, how to make a game plan, and how to choose a trading style that’s right for you. You’ll also be clued in on a few essential secrets to success. If you’re a novice at trading and are looking to get started, this book is the least dumb place you could possibly start.
Multiple-time-frame technical analysis is nothing more complicated than looking at charts using different time frames of data. The basic idea is to look at the big picture first to identify the key longer-term features and then drill down into shorter data time frames to pinpoint short-term price levels and trends. Our own preference is to focus on daily, four-hour, and hourly time frames, but you can use whichever time frames you think best match your trading style. Short-term traders, for instance, may want to focus on 2-hour, 30-minute, and 5-minute charts to better reflect the narrower time frames of their trading.
The Right Way To Learn Forex
I originally checked this book out, from the Library…in fact…I checked it out several times. Since the Library requests that you return their books, I finally decided I needed this one, on my own personal Forex Training/Educational shelf.
Even though it is written by a GAIN Capital Strategist, the information is presented in an unbiased and completely educational mode.
I would highly recommend this book to anyone planning to learn how to trade in the Forex Market.
A Three Dimensional Approach To Forex Trading – Anna Couling
This is an excellent book to sink your teeth into once you’ve passed the beginner stage of your forex trading journey. The book explores areas other forex trading books simply don’t, including how to gain a secondary perspective on the market, the next generation of economic powerhouses, and whole chapters on the US dollar and Asia Pacific economies.
Intermixed with that, you’ll also read Anna’s own perspective on trading essentials, such as how to use economic indicators and the fundamentals of global economies.
Support and resistance works on all charts and in all time frames, from tick to time charts. It is used in all trading strategies, from intraday scalping to longer term position trading and investing. Furthermore, as a technique it is simple and easy to use, and is one which also helps in any validation of price behaviour.
Support and resistance price levels and zones are created because markets primarily move in one of three ways: markets go up, markets go down and markets move sideways. It is when markets move sideways that areas of price congestion (or consolidation) are created. These are zones where the price simply moves up and down within a relatively small price range, neither up nor down, but simply oscillating like a vibrating string.
I am someone who has always struggled to understand some of the big-picture stuff. Sure, I could tell you what a Bond is, and explain a little about the yield curves, but I never *really* understood it . . . . until I read Anna Coulling’s book!
Coulling presents such a spectacular easy-to-understand description of ALL the different markets and how they interconnect. Granted this book is directed toward the Forex trader, but even if you’re trading equities or futures, this book is indispensable if you want to have big-picture comprehension of the financial world at large.
Note: If you are really trying to ingest this, it is NOT a quick read . . . . but definitely worth the hours I invested into reading it.
The Little Book of Market Wizards – Jack Schwager
In this small, enjoyable and highly educational book, Author Jack Schwager brilliantly distils the most important lessons he learned from interviewing some of the most successful traders over more than a decade.
After the resounding success of the first two books in the series, Market Wizards and The New Market Wizards, this book is essentially a “greatest hits” album that takes the best bits of the previous two books and categorises them by specific themes that are key to trading success, such as “What Is Not Important” and “The Importance Of Having An Edge”.
Now, why will the monkey do better? The monkey will do better because humans have evolved to seek comfort, and the markets don’t pay off for being comfortable. In the markets, seeking comfort means doing what is emotionally satisfying. Eckhardt says, “What feels good is often the wrong thing to do.” He quotes his former trading partner, Richard Dennis, who used to say, “If it feels good, don’t do it.”
As an example of doing what feels good in the markets, Eckhardt cites what he terms “the call of the countertrend.” Buying on weakness and selling on strength appeals to the natural human desire to buy cheap and sell dear. If you buy a stock when it falls to a six-month low, it feels good because you are smarter than everyone else who bought that stock in the past six months. Although these trades may feel better at the moment of implementation, for most people, following such a countertrend approach will be a losing, and possibly even disastrous, strategy.
Wonderful experience and lessons
I had the opportunity to read the first book of the series Market Wizards and I felt very impressed with the amount of useful information that I could extract from the multiple interviews made by the author. Well, this time I’ve found something even more precious, a resume of the most important features that successful traders have in common compiling the work of over 20 years. It’s a wonderful book full of important insights made by probably one of the best trading authors in the entire world. Important tips inside that would be very useful for beginners up to professional traders.
Trading In The Zone – Mark Douglas
Trading In The Zone is a book dedicated to mastering the most difficult aspect of trading, and the number one reason why most traders fail: psychology. Mark Douglas walks you through some core principles, such as taking responsibility and understanding the nature of belief, before explaining how to gain the edge by mastering your emotions. While the techniques explained in this book are no substitute for technical analysis, fundamentals, or a sound trading strategy, they should help you execute strategies with high levels of confidence and efficiency.
If you asked me to distil trading down to its simplest form, I would say that it is a pattern recognition numbers game. We use market analysis to identify the patterns, define the risk, and determine when to take profits. The trade either works or it doesn’t. In any case, we go on to the next trade. It’s that simple, but it’s certainly not easy. In fact, trading is probably the hardest thing you’ll ever attempt to be successful at. That’s not because it requires intellect; quite the contrary! But because the more you think you know, the less successful you’ll be.
A must-read for every trader…
This is a watershed text on investing and trading psychology. Too often we underestimate the importance of individual mindset, psychology and particularly emotion on the effectiveness of our investing or trading systems. If we can understand our traits, strengths and weaknesses, then we can personalise a system which will improve returns. Douglas articulates the common dangers of trading, such as failing to take responsibility, and then gives us principles and tools to overcome them. Thinking in terms of probabilities and not ‘right and wrong’ is perhaps the most important single understanding. When we shift our thinking in this regard, and then devise objective rules in an effective trading or investing system, then we can be more objective and consistent. This book is a must in anyone’s library.
Trend Following – Michael Cove
This book is an in-depth look at one of the most simple, and yet often the most misunderstood areas of trading – trends. It’s a long and comprehensive dive into market trends, exploring areas such as the great trend-traders of our time, how to identify trends by understanding human behaviour, and the problem of “analysis paralysis”. It also looks at the 2008 financial crisis and seeks to learn lessons about what we could have foreseen and what we should look for going forward.
The book concludes with several actionable chapters, outlining systems and practices that you can use in your everyday trading to maximise your chances of following a successful trend-chasing strategy.
But what won’t change? Change. When a period of difficult performance continues, however, most investors’ natural conclusion is that something must be done to fix the problem. Having been through these drawdowns before, we know that they are unpleasant, but they do not signal that something is necessarily wrong with the future. During these periods, almost everyone asks the same question in these exact words: ‘Have the markets changed?’ I always tell them the truth: ‘Yes.’ Not only have they changed, but they will continue to change as they have throughout history and certainly throughout our 19 years. Trend following presupposes change. It is based on change.
Skip months of research with this book
I could have saved countless hours researching trends by just reading this book first. It gives you all the foundational knowledge needed to begin building your own system and get in the right trend following headspace. Beyond Covel’s own articulate and easy to digest composition, the book points you in all the right directions for further inquiry into the world of trend following if you pay attention to the referenced materials and figures of the space Covel draws on.
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