Every person enters into the stock market with the aim of making it big overnight. Earning large sums of money in a small period of time is a dream of the stock trader. This very dream punishes many traders as they lose huge money in the market and become bankrupt. The major reason for why so many fail to achieve decent return by trading in stocks is the lack of knowledge about the stock market. They do not possess required skills and system to operate in the market.
Trading in stocks without proper knowledge about what you are doing is like going into war with guns and bullets without the skills to use them. However, this is exactly what many traders do. It is essential to know about the market you will participate into, its behavior, trends and psychology before you jump into the action of trading. Here are some of the books which will be beneficial even if you are a pro or a beginner in the stock market trading. Some of these books will provide insights into the market psychology and behavior. Some will equip with the chart reading skills. Others will teach you about the risk management in trading. You will gain different aspects from each book which will guide you successfully in your trading career.
10 Best Stock Trading Books For Beginners
1. Reminiscences of a Stock Operator
Author: Edwin Lefevre
Edwin Lefevre wrote this book Reminiscences of a Stock Operator in 1923. The book is revolving around the story of Jesse Livermore, who was a great speculator of the stock market in the 1920s. The book provides great insight for the Livermore’s life about how he started his trading work and accomplished so much success with his great speculations.
It is a good book for investors to understand that why investors lose money, and how they can avoid doing so by following some common and useful habits.
“The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.”
2. How to Make Money in Stocks
Author: William O’Neil
This books explains how to make money reading the daily financial news pages, pick the best industry groups in the market, read charts like an expert to improve stock selection and timing, and reduce losses and mistakes. William O’Neil has elaborated his famous CAN SLIM system of investing in this book.
The main theme of this is that you should choose growth stocks that have great earnings that revolutionizes the world with their products. This book is superior when it comes to filtering companies that have the fundamental characteristics of a winning stock. However, when it comes to technical analysis knowledge, you need to learn it from somewhere else.
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.”
3. Market Wizards By Jack D. Schwager
Author: Jack D. Schwager
In this bestselling book, author Jack D. Schwager interviewed dozens of top traders across most financial markets. While their responses differed in the details, all of them could be boiled down to the same essential formula for trading successes- solid methodology and proper mental attitude.
Through this book, you’ll learn how Michael Marcus ensured a 2,500-fold return in just 10 years, how Bruce Kovner went about creating a 87% annualized compounded return in the course of a decade, how Paul Tudor Jones made triple-digit percentage returns five years in a row, and others. Amidst all these amazing stories of riches are a lot of valuable lessons.
“Being wrong is acceptable, but staying wrong is totally unacceptable.”
4. Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude
Author: Mark Douglas
In 2000 Mark Douglas wrote the book ‘Trading in the Zone’. It is considered a classic in books on trading psychology. Douglas uncovers the underlying reasons for lack of consistency and helps traders overcome the ingrained mental habits that cost them money. He takes on the myths of the market and exposes them one by one teaching traders to look beyond random outcomes, to understand the true realities of risk, and to be comfortable with the “probabilities” of market movement that governs all market speculation.
Mark 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.
“If there is such a thing as a secret to the nature of trading, this is it: At the very core of one’s ability 1) to trade without fear or overconfidence, 2) perceive what the market is offering from its perspective, 3) stay completely focused in the “now moment opportunity flow,” and 4) spontaneously enter the ‘zone,’ it is a strong virtually unshakeable belief in an uncertain outcome with an edge in your favor.”
5. Trade Your Way to Financial Freedom
Author: Van K. Tharp
Trade Your Way to Financial Freedom covers both the psychological and system-development aspects of trading. This book is filled with the kind of information that will help virtually all traders and investors substantially increase their income. Dr. Tharp covers it all: The psychological biases against good system development of ingenious concepts of orderliness that help you accurately predict turning points in the market and work them to your advantage.
Trade Your Way to Financial Freedom will introduce you to entry techniques used by the masters, show you how to develop a high expectancy system through efficient exits and teach you how to achieve your objectives through proper position sizing strategies. You’ll learn the concepts that will help you build an exhaustive trading system based on the objectives that you can trade confidently and profitably.
“When you understand what’s involved in winning, as do professional gamblers, you’ll tend to bet more during a winning streak and less during a losing streak. However, the average person does exactly the opposite: he or she bets more after a series of losses and less after a series of wins.”
6. Trading for a Living: Psychology, Trading Tactics, Money Management
Author: Alexander Edler
Dr. Alexander Elder wrote the classic book “Trading For A Living” in 1993. This book is about investment psychology. This book is perfect for all including beginners.
Trading for a Living helps you discipline your mind, shows you the methods for trading the markets, and reveals you how to manage money in your trading accounts so that no string of losses can kick you out of the game. Elder sums up by saying that you should scan the fundamental information, read technical signals and implement rules of money management and risk control.
“When a beginner wins he feels brilliant and invincible Then he takes wild risk and loses everything.”
7. How to Trade in Stocks
Author: Jesse Lauriston Livermore
Written shortly before his death in 1940, How to Trade Stocks offers traders their first account of that famously tight-lipped operator’s trading system. Written in Livermore’s inimitable, no-nonsense style, it interweaves fascinating autobiographical and historical details with step-by-step guidance on reading market and stock behaviors, analyzing leading sectors, market timing, money management and emotional control.
It presents the overall trading methodology (top down trading, industry groups, sister stock), elaborates on the tools (pivotal points), goes deep into how pivotal points are determined (Livermore Market Key), presents applicable money management advice, and explains in logical detail many of the trading philosophy (need for patience, focus on a selective group rather than any other stocks, etc.)
“Don’t become an involuntary investor by holding onto stocks whose price has fallen.”
8. How I Made $2,000,000 in the Stock Market
Author: Nicolas Darvas
This book tells the fascinating story of Nicolas Darvas who made two million dollars in the stock market, in less than two years. Starting with a purchase of only $3000 worth of stock, Darvas amassed a fortune of over $2.2 million dollars. Nicolas Darvas was not a professional investor, but a dancer. The book tells his story from his beginnings with many mistakes to the successful. The book describes his unique “Box System”, which he used to buy and sell stocks.
“All a company report and balance sheet can tell you is the past and the present. They cannot tell future.”
9. Encyclopedia of Chart Patterns
Author: Thomas Bulkowski
Bulkowski tells you how to trade the significant events such as quarterly earnings announcements, retail sales, stock upgrades and downgrades.
This book covers 63 chart patterns that signal whether a stock is in bullish, bearish, or neutral mode. It identifies each chart pattern, explains how and why each chart was formed, and where it will go next.
Encyclopedia of Chart Patterns presents the technical analysis tools, then reveals the secrets such as average failure rates, most likely gain or loss, volume trends, and surprise findings-as you use the tools to build a portfolio of wealth.
10. The Disciplined Trader: Developing Winning Attitudes
Author: Mark Douglas
In this book, Douglas explains that trading is merely not a game of methodology and strategy. It is largely dependent on the psychology of the individual. Self discipline, emotional control and learning to adapt are characteristics that one should absorb within before beginning to trade.
This book will help you get to grips with the psychological stresses of trading . Author Mark Douglas demonstrates how the mental matters that allow us function effectively in society are often psychological barriers in trading. After examining how we develop losing attitudes, this book prepares you for a thorough “mental housecleaning” of deeply rooted thought processes.
“If, in fact, you can’t control or manipulate the markets and the markets have absolutely no power or control over you, then the responsibility for what you perceive and for your resulting behavior resides only in you. The one thing you can control is yourself. As a trader, you have the power either to give yourself money or to give your money to other traders.”