Books

Why Forex Books for Beginners Worth Reading

Rapid development of information and computer technologies made forex trading affordable for a wide range of people.

Trading on the foreign exchange market has a high degree of risk. Considering the facts, it is strange that many forex newcomers completely ignore the theory, in other words, they do not read books on Forex trading.

After taking a look at the principles of graphical analysis and mastering the technology of setting orders, these “traders” open accounts and “beetle off towards a glut of wealth”. Alas, such a journey appears to last not long and always has the same ending. A beginner might be lucky and to carry out a few successful transactions, but there is no hope for further success without basic knowledge about the money management or methods and ways to analyze trading conditions.

Traders who do not read forex books look like people who drive a car without any knowledge about road traffic regulations. It should be noted that the “driver” is much likely to survive. Other road users, saving their skin might help him. The trader’s situation is opposite – the environment is originally unfriendly to him.

Therefore, it is meaningless to start trading on the forex market without learning the “rules of the game”.

The must-read minimum for every trader includes books on the following topics:

  • books on technical analysis of the Forex market;
  • fundamental analysis books;
  • trading psychology books;
  • money management books and others.

It is necessary to read at least one book on each topic.

Technical analysis books are the most spread, usually written in a simple language and abound with real-world examples. However, remember that most of these examples lost its relevance long time ago. The forex market is changing constantly.

Working with textbooks on fundamental analysis (general economics and financial analysis) requires knowledge of the terminology and at least slight understanding of macroeconomics basics. So, if you do not have skills listed above, you shouldn’t pay too much attention to this type of books. For a trader it is enough to learn the basic indicators of fundamental analysis and its influence on change of the market conditions.

Topics of money management and risk management are closely related to the psychological aspects of trading. Often traders, especially beginners, are likely to underestimate the importance of this knowledge which is a big mistake.

As for the books on the forex trading psychology, the more books will be read, the more self-confident the trader will be. Don’t expect that one of these books will answer to all the questions, but basic knowledge of trading psychology and familiarity with solutions on the disturbing questions will help to develop optimal behavior strategies on one or another changes in market conditions.

Forex Books on Fundamental Analysis

Development of understanding a big financial data and effective usage of this data is the main goal of most fundamental analysis books.

Special attention should be paid on work of Michael Brett called “How To Read The Financial Pages”. The main advantage of this book is practical orientation on the matter. 23 chapters book is useful for traders and everyone who is interested in the principles of global financial market functioning.

Book “The Essays of Warren Buffett: Lessons for Investors and Managers” gains attention thanks to author’s name (it has happened in my case, anyway). There is no telling that this work is fully devoted to the financial markets. In some chapters the author presents his discourse on the mutual impact of the stock exchange and real sectors of the world economy. But mentioned digressions do not diminish the worthiness of the book. Reading the book carefully allows to expand horizons and understand the connection between at the first sight completely independent events.

Forex Books on Technical Analysis

Numerous technical analysis books completely cover the topic. Most of them contain a large amount of practical examples and the description of real-life situations, which may be no longer relevant, but help a newcomer trader to digest the material better.

A monograph by Jack D. Schwager “Technical Analysis, Study Guide” should be mentioned among the fundamental works on the subject of technical analysis. This is the best fundamental work which so clearly and vividly describes all the technical aspects of trading on Forex. Some sections contain an excessive academicism, but in general the book is written in a plain language.

If Jack D. Schwager is a well-known economist and a marker researcher, Linda Bradford Raschke is the most famous woman trader. Her book “Street Smarts: High Probability Short-Term Trading Strategies” is written in a plain language, deals mostly with the developing of trading strategies.

Jack K. Hutson, in book “Technical Analysis of Stocks and Commodities” offers an unusual point of view on the trading issues, trying to adapt them to the basic laws of nature. Even not to adapt but to determine their precise relationship. This book cannot be found on the top of the rating lists, but it allows you to reevaluate some seemingly sacred concepts.

Top 5 Best Forex Books

Before listing the most valuable books on the Forex topic, traders should know the fact that any rating list suffers from conventionality that is explained by subjectivity. However any trader, regardless of experience or skill level, should pay attention to the following books:

  1. Jack D. Schwager “Market Wizards” (2 books). It’s a classified section of interviews with well-known stock traders for last 30 years. I use this material as a table-book, rereading it from time to time;
  2. Linda Bradford Raschke “Street Smarts: High Probability Short-Term Trading Strategies”. The book deals with the development of trading strategies;
  3. The Trading Game: Playing by the Numbers to Make Millions by Ryan Jones. A selection of practical materials relating to the management of the capital;
  4. Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders by Curtis M. Faith. In my opinion, this is the best forex book for the beginner traders. Easy and imaginative presentation fascinates the reader. Each of the case studies is comprehensively reviewed, taking into consideration the psychological and technical aspects of trading;
  5. Barton Biggs “Hedgehogging”. Many traders consider this book as a masterpiece. The information is provided in the best traditions of classical literature. An interesting plot and a large set of descriptions of market situations make this book interesting and what is important – useful. It is more accurate to consider this book as a textbook for investment managers but it also will be useful for private traders to get familiar with the book.

The Best Book on Forex Trading

The rating list is quite relative, so making an attempt to name the best forex book is not only meaningless, but it also carries a hidden danger. The Forex market is contradictory by definition. And there cannot be a book which would have an equally effective impact on all the “traders’ minds”. In brief, the best forex book is the one that brings the pleasure of reading and provides knowledge which you can effectively use.