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2022-05-06 • Updated

Top 5 Trading Books to Read in 2022

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Just a guess: you’re new to trading and you think that trading is all about luck and intuition, right? Not really. In fact, being an efficient trader means more than just buying or selling assets when the time is right.

Trading takes knowledge and understanding of economic processes that affect the market. A pro trader does not play “Russian roulette” but scrutinizes the market and does a lot of analyzing to make the best of their assets.

Plus, being a trader means constantly making investments in self-development, like reading stock trading books to build relevant knowledge and increase the number of successful trades. 

In this article, you will learn about some of the best trading books you may want to read. The list will include books by authors of different fields, focusing on various aspects of trading and related topics. Whether you are a beginner trader looking for knowledge and inspiration or a pro seeking to broaden your expertise, these books will help you on your trading journey.

1.   Common Stocks and Uncommon Profits by Philip Fisher

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Philip Fisher was one of the world’s most famous stock investors, which means that if you need a piece of advice on how to manage your investments, Fisher’s writings are a great place to start. Good thing, Fisher did leave some reading stuff after his passing in 2004. 

Common Stocks and Uncommon Profits is what you should go for when looking for trading wisdom. Published in 1960, this work has steadily made the list of the best books for trading in stock markets ever since.  

Common Stocks and Uncommon Profits will give a clear idea of how the stock market works. Anyone contemplating becoming a stock investor should definitely read the book. But keep in mind that these pages won’t give you a one-fits-all set of shortcuts to massive profits, nor will they let you escape hard work. What this book will give you is a series of valuable lessons on growing and maintaining your wealth for a financially secure life.

Warren Buffett, a modern-day stock market legend, once referred to Fisher’s Common Stocks and Uncommon Profits as a “very very good book”. That’s saying something, right?

2.   How to Make a Living Trading Foreign Exchange by Courtney D. Smith

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Originally published in 2010, Courtney Smith’s book is an insightful journey into the world of Forex trading. 

Smith starts by giving the idea of the FX market as a whole, telling his reader about what Forex is and how it works. Then, a reader delves into the intricacies of six techniques for efficient Forex trading. One of them is designed by Smith himself. It’s a so-called Rejection Rule that doubles the profit of basic channel breakout systems. 

Readers will also find useful Smith’s ideas on powerful risk management techniques and strategies for successful trading psychology, all of which will let traders always be one step ahead of the game.

Courtney D. Smith has been in the business for fifty years, now. Few people can be that competent for the job of giving Forex advice and recommendations than a CEO of two brokerage firms, a treasurer of a Swiss bank, a head of derivatives trading for a major French bank, or one of the world’s most sought after investment trainers. Yes, it’s all one man: Courtney D. Smith. 

3.   Technical Analysis of the Futures Markets by John J. Murphy

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John Murphy’s 1986 study is considered crucial in the field of technical analysis. As one of the world’s top financial market analysts, Murphy wrote his book full of detailed and yet accessible information on the theory of technical analysis and methods of applications, including tips on signal interpretation.

While the work focuses on the futures markets, its content will be equally useful for technical analysis of other markets, like the stock market, for instance. Plus, you may consider exploring another book by John Murphy, Technical Analysis of the Financial Markets (1997). It is an expanded revision of what was said in Murphy’s book of 1986.

4.   Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder

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Deemed a modern classic among traders all over the world, Alexander Elder’s Trading for a Living is a book that teaches market actors how to keep it together, and remain focused even when the market gives them a hard time.   

Based on the three M’s (Mind, Method, and Money), Trading for a Living answers the questions that many traders view as vital:

  • How to become a cool, calm, and collected trader?
  • How to profit from reading the behavior of the market crowd?
  • How to use a computer to find good trades?
  • How to develop a powerful trading system?
  • How to find the trades with the best odds of success?
  • How to find entry and exit points, set stops, and take profits?

Reading this book, you will learn how to discipline your Mind, find the Methods for trading the markets, and manage Money so that not a single market downturn can sweep you off your feet.

Author of a dozen of books, a professional trader, and a traders’ teacher, Alexander Elder enjoys worldwide recognition and respect. Back in the day, Elder worked as a psychiatrist in New York City and taught at Columbia University. This experience let Elder explore trading from a psychological standpoint, which later led to a number of highly acclaimed publications on the topic with Trading for a Living as one of his best works.

5.   The Art of Thinking Clearly by Rolf Dobelli

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“No matter how much you have already invested, only your assessment of the future costs and benefits counts”, says Rolf Dobelli in his hit book titled The Art of Thinking Clearly. While not related strictly to trading per se, the book is a decision-making instruction, exploring ninety-nine of the most common thinking mistakes we must avoid.

Referred to as “eye-opening” by many readers, the book was a huge success when it was published in 2013 and to this day remains popular among those looking for an insight into what pushes us towards poor decisions and distorts reasoning.     

According to the author, by learning about cognitive biases and simple thinking errors, we can find a way to avoid them, thus becoming better at decision-making and dealing with personal problems and business challenges; we become better at making and saving money, realizing our true needs and goals, as well as how to achieve them. Simply put, thinking clearly is the art any trader should master.

Conclusion

A lot of things we could say to wrap up this review. Things like how important it is to educate yourself by reading books not only on trading various instruments like stocks, indices, or cryptos but on psychology, human behavior, and other related subjects. 

But instead, we will share one of the thoughts from Philip Fisher’s Common Stocks and Uncommon Profits. A thought that says it all about the market and how important it is to have independent thinking as you trade:

“The stock market has an inherently deceptive nature. Doing what everybody else is doing at the moment, and therefore what you have an almost irresistible urge to do, is often the wrong thing to do at all.”

So grasp knowledge, master your skills, and think for yourself to be an efficient and successful trader. The books from the list will definitely help you along the way.

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