Review of Best Forex Trading Books

Greetings, my dear friends!

Before reading the article and writing your questions in the comments section, I recommend to watch this video. It’s not long but covers the biggest part of questions on the topic.

 

We have picked the best trading books worth reading at leisure. We love reading since to switch off from the computers or just to spend some quality time. If you are tired of the huge amount of information, have a nice evening reading a good book, which will make the mind think differently. We believe that’s the best way to relax.

 

The list of the books:

1. Fundamental Analysis

2.  Technical Analysis

3.  Belles–lettres

4. Trading Psychology

5. Behavioral Finance

6. Biography, Interviews, and Stories

7. Varias

Fundamental Analysis

 

1. “The Handbook of Financial Instruments”  

Author: Frank Fabozzi

This is a scientific reference book to the investment world covering all the financial tools. You will find information about features of quoting of each tool, stocks, bonds and other derivatives.

2. “Investments”

Author: William F. Sharpe

Legend has it that any trader who reads and fully understands this book will make a whole lot of money off trading.

3. “Options, Futures, and Other Derivatives”

Author: John C. Hull

The book is devoted to the derivative market and risk management. It has become the traders’ bible and the most popular college textbook due to the exceptionally wide coverage and the well-thought style.

Technical Analysis

1. “Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications ”  

Author: John Murphy

This is a classic book devoted to the basics of technical analysis. John Murphy elaborates on the forming and methods of reading the charts. He defines the terms such as the trend, the time cycles and the market indices. I do advise you to read it carefully if you want to have a clear view of the market structure.

2. “The Art and Science of Technical Analysis”

Author: Adam Grimes

The book was published quite recently but it has already become popular among the English-speaking traders. Adam Grimes is the specialist in the US stocks and futures trading. I guess our subscribers will be extremely interested in this book since many of the things told by the author are very simple and applicable to the current market.

Belles-lettres

1. “The Big Short: Inside the Doomsday Machine”  

Author: Michael Lewis

The events of the book are unfolding during the global financial crisis of 2008 and touch on several stories of the real people who have found weaknesses in the world financial system and put a shirt on its collapse. Lewis’s style is simple and neat, he talks about complex things in simple words, which makes this book quick and easy to read.

2. “Reminiscences of a Stock Operator ”

Author: Edwin Lefevre

“This is the bulls’ market!”©

This book has become the classics of the stock market literature. Many traders have read it several times and each time they would learn something new. Lefevre tells us the story of an outstanding trader Jesse Livermore and describes his strikes and gutters. Despite the book was first published almost a century ago, it remains relevant nowadays since human psychology has not changed for centuries and the market players are still driven by the desire to earn easy money. As for me, I consider this book on trading the best one I have ever read.

3. “Hedgehogging”

Author: Barton Biggs

The book Hedgehogging written by a hereditary manager Barton Biggs became extremely popular right after its first printing. The author had been keeping diaries throughout his career and decided to make a complete book out of them. Biggs shares his experience in the investment business that he gained for over 40 years of work.

 

4. “God Is My Broker: A Monk-Tycoon Reveals the 7 1/2 Laws of Spiritual and Financial Growth”

Author: Christopher Taylor Buckley

A former Wall Street trader is looking for an opportunity to start a new life after a complete ruin and is going to the monastery. The protagonist is striving for spiritual life, a problem and trouble-free life. Not on your nelly! The Father Superior gets a book written by Deepak Chopra and the life of the monastery is changing. The prayer books are replaced with Stephen Covey’s books. The wealth of the monastery is growing at a fantastic speed as well as its expenses. If you feel like relaxing and having some fun, this book is a great choice for you.

5. “Flash Boys”  

Author: Michael Lewis

The last Michael Lewis’s book tells us about High-Frequency Trading in plain language. The author talks about such trifles as thousandths of a second and its role in trading. The book is a very funny story about the banks paying a world of money to place their “black boxes” closer to the stock exchanges’ servers and winning hundredths of a second by these actions.

6. “The predators’ ball”

Author:  Connie Bruck

Wall Street was a place of greed and cruelty in the 1980^th. It was the time of unfriendly takeovers, junk bonds trading, insider trading and other stuff. This is the story of Michael Milken and Drexel Burnham Lambert.

7. “A Hedge Fund Tale or Rich and Grasp”

Author: Barton Biggs

This book offers a unique story out of the horse’s mouth about the way an investment manager should be. It is about the barriers a trader will have to clear to succeed in the financial market and the things he will have to sacrifice for the sake of success. The peculiarity of the Barton Biggs’s books is that he lumps together fiction and real experience gained over the years of work at Morgan Stanley.

8. “Liar’s Poker: Rising Through the Wreckage on Wall Street”

Author:  Michael Lewis

Michael Lewis shares his experience gained during his employment at the Salomon Brothers in the 1980^th. The book describes the times of bond trading.

Psychology of Trading

1. “The Psychology of Trading: Tools and Techniques for Minding the Markets.”  

Author: Brett Steenbarger

We have mentioned Brett Steenbarger in our review on Twitter. This book is devoted to the most common psychological problems in trading such as outselling, fear of entering the market and silly investment decisions and the ways Brett Steenbarger offers to solve them. You will find the real stories and examples from medical practice that will help you to understand some of the subtleties of the traders’ psychology.

2. “Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology”

Author: Brett Steenbarger

The Russian translation of the title of the book slightly distorts its meaning, so I prefer the original one as it reflects the content of the book precisely. Steenbarger shares with the reader’s simple tools that may help to take advantage of the market such as keeping a diary, analyzing mistakes, forming the right attitude, etc. The author proves his words with real examples from his own working experience with the hedge funds traders.

3. “The Disciplined Trader”  

Author: Mark Douglas

The book written by a popular trader psychologist Mark Douglas became the classics in the USA a long time ago. Mark shares his trading experience in the futures market but from a psychological point of view rather than from the technical one. The author describes the most common mistakes in trading such as preliminary covering, outselling, fear, shifting away from the trading system and many other mistakes that each of us has made at least once.

4. “Trading in the Zone”

Author: Marc Douglas

This is another popular book written by Mark Douglas, in which he concentrates mostly on the very process of trading. You will learn about the reasons why we trade, the problem of taking responsibility for our actions, creating the environment for achieving the best trading and maximum profitability, and understanding the risks.

Behavioral finance

1. “Think, Fast and Slow”  

Author: Daniel Kahneman

The Nobel Prize Winner Daniel Kahneman expounds on the human behavior in general, he describes how our mind works and why we do what we do. Each of us takes impulsive actions and Kahnemann gives insight into this matter and explains why we act in a certain way.

 

2. “Fooled by Randomness”

Author: Nassim Nicholas Taleb

The books are devoted to the nature of chance and the way we accept the risks. It doesn’t claim to be a scientific work but the author shares his thoughts from the perspective of the person who lives alongside the uncertainty. Taleb worked as a trader and a hedge fund manager for a long time and experienced the chaos of the market firsthand.

3. “Irrational Exuberance”  

Author: Robert J. Shiller

The Nobel Prize Winner Robert Schiller analyzes the so-called stock market “bubbles” and how excessive optimism may lead to disastrous consequences. The largest part of the book is devoted to the financial turmoil in the US stock market over the last 20 years. In particular, he narrates about the technology market boom and the real estate market collapse. Robert J. Shiller has also taken into account human psychology in contrast to most scientific researches of this kind.

4. “Finance and the good society”

Author: Robert J. Shiller

Robert J. Shiller takes up an important question of the society’s attitude to finance. What role does finance play in the modern world and which way should they develop for the world to prosper and remain in balance?

5. “Predictably irrational”

Author: Dan Ariely

Dan Ariely conducted a large research concerning the problem of making decisions and the things that affect a choice. After you are done reading this book, you will understand a lot of things that you have been worried about before. You will find to learn how to stop taking impulsive actions and start to administer funds efficiently. The book does have answers to many of the questions you may ask.

6. “The Physics of Wall Street: A Brief History of Predicting the Unpredictable”

Author: James Weatherall

The author has written a book by taking all the important moments in the development of High-Frequency Trading. You will find the story of the great mathematicians and physicists who have grown tired of existing on the salary and decided to earn money on the stock market trading.

7. “The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It”

Author: Scott Patterson

This is a real textbook on the history of algorithmic trading as a separate business line of Wall Street. It shatters the myth that algorithmic trading is a miracle or an “easy-money-making machine”, and tells about the hard work and researches made by the scientists (the mathematicians and physicists) amidst the hard and unforgiving world of the stock market. This book will be interesting both for the budding algorithmic traders, and the scientists conducting researches in this field and their clients.

Biography, Interview, and Stories

1. “Market wizards”

Author: Jack Schwager

2. “Stock Market Wizards”

Author: Jack Schwager

3. “The new market wizards”

Author: Jack Schwager

The “Market Wizards” series is very popular and recounts about various traders from the hedge fund managers to the private traders, from the option and stocks traders to the complex derivatives traders. You will find the stories of the US most successful traders in this book.

4. “What I Learned Losing A Million Dollars” 

Author:  Brendan Moynihan

This is a story of a man trading soybeans at CME and losing one million dollars in just one day. The book consists of two parts. The first part is devoted to how he earned his capital on trading. The second part contains the conclusions he walked away with from losing the whole capital. Subsequently, he managed to turn his devastation and despair into a lesson he needed to learn.

5. “Too big to fail”  

Author:  Andrew Ross Sorkin

The events of the book are cutting across the financial crisis of 2008. The peculiarity of the book is that the author was conducting the interviews with the participants of those events such as managers of the largest banks, traders and politicians. The book has been used as the basis for the eponymous film.

6. “Extraordinary Popular Delusions and the Madness of Crowds”

Author:  Charles Mackay

The book was first published in 1841. It was the first book of its kind, in which the British writer decided to describe the crazy behavior of the crowd. He picked the most common mania of the past centuries such as the Tulipmania in Holland in the 17^th century when a tulip bulb cost a fortune. Charles Mackay has accurately described the state of a person in the age of general madness when a mentally stable person breaks under the pressure of the people. His madness grows and this person starts taking mindless actions such as selling his property and investing in the shares of the railway companies or the flower bulbs. I do advise you to read this book as you will find many correlations to the crisis of 1998 and 2008 despite the author’s lived two hundred years ago.

7. “Way of the turtle”

Author:  Curtis Faith

The book tells the story of the legendary “turtles” that appeared as a result of a dispute between two successful traders William Eckhardt and Richard Dennis. One said an outsider can’t learn to trade, while the other one thought that if you put enough effort and discipline, you can succeed in trading. Richard Dennis won the dispute since almost all the traders had managed to earn money. Thus, Dennis proved that anyone could learn to trade, even the one who didn’t have any market experience nor a theoretical basis.

8. “When Genius Failed: The Rise and Fall of Long-Term Capital Management”

Author:  Roger Lowenstein

Roger Lowenstein describes the rise and fall of the Long-Term Capital Management hedge fund. The book proves that genius cannot co-exist along with greed and cupidity since the thirst for easy money is fraught with huge losses.

Varias

1. “Mindset: The New Psychology of Success”

Author:  Carol Dweck

The content of the book is barely connected to trading but it describes all the difficulties we face in our work since we need flexible thinking to draw a lesson from our mistakes. If you have the right attitude, you will be able to get the most out of any situation. The book contains many examples from different spheres such as sport, business and life. I like the author’s phrase “not yet”. You can apply this philosophy in trading or any other kind of activity. It takes time, effort and patience to develop, get certain skills and succeed. Most people make gross mistakes and try to chase the big victories, money and eventually fail.

2. “More than You Know: Finding Financial Wisdom in Unconventional Places”

Author:  Michael J. Mauboussin

Michael J. Mauboussin describes his private judgment on the investment process and the management of capital. As the former Credit Suisse trader and currently a manager at Legg Masson Capital Management, he shares incredible stories from his career and unusual observations that most of us just lose sight of such as the comparison between gambling and trading, or why many hedge funds cannot beat the index in the long run, etc.

3. “One Good Trade: Inside the Highly Competitive World of Proprietary Trading”  

Author:  Mike Bellafiore

This is the first book describing in detail the concept of proprietary trading. Michael Bellafiore talks about the complexity of a day trader’s work and shares real stories from his life with the readers. This is a very useful and must-read book for any budding trader.

4. “A Random Walk Down Wall Street”

Author: Burton Gordon Malkiel

The book was first published in 1973. The author describes the basics of portfolio investment and analyzes the stock “bubbles” of the past years. The book is partly devoted to the critics of technical and fundamental analysis and the most popular delusions about trading.

More

1. “The Playbook”  

Author:  Mike Bellafiore

This is the second book written by Mike Bellafiore. We like this book because it doesn’t indulge in illusions about easy money. You can see the issue of hard work, passion and diligence for this business throughout the whole book. How to succeed and not to fail? How to become better than you were yesterday? You will find answers to these questions in this book.

2. “Trading Psychology 2.0”  

Author:  Brett  Steenbarger

The book was published quite recently but has already become popular in the US blogosphere. Many people speak highly of the book and find it very useful. Brett Steenbarger talks about the development of a trader throughout his life, proper self-training system and mistakes a trader may do while learning, etc.

3. “How to Trade in Stocks”  

Author:  Jesse Livermore

We believe you have already seen the Lefevre’s works about the great trader Jesse Livermore. However, almost none of you know that Livermore has written a book too. He explains his principles of making decisions in trading. However, he admits that he often violates these principles (Livermore lost his capital three times). This book consists of a small number of pages containing a huge amount of valuable information.

4. “Hedge Fund Market Wizards”  

Author:  Jack Schwager

This is the last Jack Schwager’s book devoted to the best hedge fund managers. They work at different hedge funds from the ones managing only $50 million to the huge ones managing over $120 billion and having a lot of employees. You will find the history of the best traders collected in this book.