Let's talk books
When people step into the trading world, aside from wanting to turn into millionaires overnight, they also think that the best way to learn is to just pay someone hundreds or even thousands of dollars for a course. Now, there is nothing wrong in doing so, sure the fact that one wants to learn is already good in itself however there are tons of other ways to learn than just "wasting" your hard earned money for a course. What other better way is there than just reading a nicely put together book. This way the money you would have spent on a course, you can just save them to fund your trading account when you feel ready to make the switch onto a live account.
Picking the right books can be just as hard as finding the right trading course, as there can be tons of misleading and wrong information out there, which is why I have decided to compile this little list of the books that I have read and found the most helpful.
1. How To Trade in Stocks - Jesse Livermore
This is basically where it all started for me, this was the first ever trading/investing book I ever got my hands on. Before this I had no idea who Jesse Livermore was, but after picking up the book I thought it was a good idea to find out a little more about him.
So, just a brief background about him, Livermore was often regarded as one of the greatest traders to have ever lived to date, because of the legendary trades he took. Livermore called not 1 but 2 major stock market crashes. In the crash of 1907 Livermore had placed huge short positions which could have brought him in a crazy amount of profits. Despite that he was requested by JP Morgan, who had already bailed out the entire New York Stock Exchange during the crash, to not continue with further short selling for the interests of the national economy. Imagine how cool that must've felt! You have JP Morgan itself giving you a call to stop trading for the good of the whole US economy. Livermore, thankfully, came to terms and instead profited to about $3 million by simply buying into the rebound. It doesn't end there however. In what was regarded as possibly his greatest known trade it was the one during the stock market crash of 1929. Livermore had accumulated a monstrous short position before the market plunged, and he did that by using more than 100 stockbrokers in order to hide what he was actually doing. When the crash eventually came he amassed around $100 million and was also personally accused by bankrupt members of the public following a series of articles which declared him the Great Bear of Wall Street. Due to these 2 trades he was also given the nickname The Boy Plunger.
I am extremely pleased that I got my hands on this book because it gives you an idea on some of the tools that Livermore used in his trading, which still play a significant role to this day. Some of the tools he used and stressed a lot about were: 1) Volume, 2) Ticker tape (Time & Sales today). Other than that it will also touch on sector and individual stocks correlation and what factors you should consider before taking a trade.
2) Forex for Beginners - A complete Guide to Volume and Price Analysis - A 3D Approach to Forex trading
Now I decided to put all these 3 books in one point as all 3 of them are from the same author namely, Anna Coulling. All these 3 are great books for starters as it will go on to explain a lot about price action patterns / currency correlations / risk management / chart patterns etc so if you are just getting started with trading these books will give you a good foundation on which to stand firm on.
3) Trade What You See - Larry Pesavento & Lesley Jouflas
This is a book focusing on one specific type of analysis, namely Harmonic Patterns. It will of course go on to cover a few more stuff further than that however the core around it is Harmonic Patterns. The authors will go really in-depth to explain different variations, rules and more concerning those so I recommend this only if you feel like Harmonic Pattern recognition is your go-to methodology. Fibonacci levels are really heavy on this one so make sure you are already pretty comfortable with those first as well.
4) Elliott Wave Principle - Frost & Prechter
Probably my own personal favorite so this might be a little biased. So the core of my own methodology to this day is Wave analysis. This doesn't go to say that it is the only right one, of course not, I just found this one to make the most sense to me and which is why I stuck with it. If you have been already studying the markets a little bit you will realize that markets move in waves. They either move in waves up, down or sideways and that is pretty much all there is to it. The book itself made me realize how simplistic market movements can be, simply by putting them in 2 categories:
1) Impulse waves
2) Corrective waves
That is all you have to know. You're welcome. You've just found out about the holy grail of trading. Just kidding. All jokes aside however after reading this book I realized that my mission is to simply identify what sort of Corrective Wave I am in and try to catch the impulse. Markets are either, expanding or contracting and just like a slingshot, it will have to "contract" first before it expands and releases all of its momentum. Since I personally want to be on the side of the trend I just try to identify the type of correction and anticipate the next impulse (expansionary wave). Does it work all the time? Heck no but once you identify its edge then you can slowly start exploiting it to see what gives you more edge. I have found that by analyzing waves I started becoming a lot more accurate in regards to what direction the next move will be.
To sum up I greatly suggest you pick up this book. (unbiased opinion)
5) Japanese Candlestick Charting Techniques - Steve Nison
If you want to learn about the majority, if not all of the candlestick patterns out there (and trust me it really helps) then I suggest you pick up this book. Just like the book title suggests it has to do with Japanese Candlesticks and since it's most probably going to be the first kind of chart type you will come across with then this book will really serve you a good purpose.
6) Trading in the Zone - Mark Douglas
Read this book... Now! Period. Good old, overlooked, trading psychology. If I would have done something differently when I started reading about trading, I would have picked up this book first before everything else. Let's be honest no-one is thinking about psychology when first stepping into trading. You think that you don't even need it, you are a very calm person and emotional management has always been one of your core strengths. You are the definition of Zen. In a parallel universe maybe, but in trading? Definitely not. Trading will teach you more about yourself than what you could ever think of and it could even teach you more about psychology itself than what psychologists will (no offence). And I am not just talking about trading psychology, but overall emotional management. Believe me emotional control sits at the top of the pyramid along with Risk Management for me so by reading this book you have already taught yourself something that a majority of other traders will not ever think about learning. It will take a lot of time and effort until you can master your emotions, I myself have read this book about 4 months ago from the date of this article and still getting to grips on how to do that which is again why I suggest you have a read as early as possible in your trading journey.