There’s no shortage of books available on investing, trading, and the financial markets. Are you finding it tough to separate the signal from the noise? Here are a few key books that have the potential to change the way you think about money, investing, and chart reading. What's on your bedside table? Go ahead, dive in.
1. The Richest Man in Babylon by George S. Clason
First published in 1926, this book demonstrates that the rules that govern wealth-building are the same in today's modern world as they were in the times of prosperous Babylon, the capital of southern Mesopotamia, six thousand years ago. The book is rich with parables; you’ll hear the advice given to chariot builders, which still applies to anyone seeking to build wealth today. Learn how to develop your plan to building wealth by following time-honored and true guidelines. It’s a quick read and well worthwhile.
2. How to Make Money in Stocks by William J. O'Neil
A classic. Bill O'Neill is considered one of the most influential stock market investors of our time. His book details a methodology for identifying stocks with long-term growth potential combined with a price momentum strategy. In this book, investors will find a rules-based investing approach that includes buy criteria, sell criteria, and risk management guidelines. First published in 1988, the book has seen frequent updates in recent years, and the timeless primer gives investors a stock-picking system.
3. The New Trading for a Living by Alexander Elder
Take a hard look at emotions and probabilities in this insightful and essential book for investors and traders. Learn how to battle against emotional mistakes such as counting profits in open trades. Learn a 2% rule for money management; take it a step further with the 6% rule. A must read.
4. Technical Analysis of the Financial Markets by John J. Murphy
There are many books on technical analysis and charting, but if you are looking for just one—comprehensive, easy to read, and a complete overview—this is it. This is the one-stop shop that includes everything a beginning chartist will need to understand about the philosophy of technical analysis, Dow theory, chart patterns, indicators, volume, and more. It's on my desk today.
5. Japanese Candlestick Charting Techniques by Steve Nison
For active investors looking to take charting a step further, this classic by Steve Nison offers a complete overview of the unique insights that candlestick charts can offer over bar and line charts. Learn the fascinating history of the financial market's "first charts," used in the 1600s and 1700s by Japanese rice traders in Osaka. In rich detail, with pictures galore, readers can learn and see the impact of doji stars, bullish engulfing candles, hammer bottoms, shooting stars, and many more patterns. For the serious visual trader, this candlestick book is a must-read.
6. The Market Wizards by Jack Schwager
The original Market Wizards was one of the first investing books that I read early in my career. The series offers insight into the minds of some of the greatest traders of our times, with key lessons that individual traders and investors can apply to their own approaches. For instance, it explains how successful traders learn from their mistakes. Other nuggets of market wisdom include the concept that money management is more important than methodology, and that investors and traders need to embrace and utilize a trading methodology that matches their personality. The books are full of fun interviews with legendary traders.
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