Alex's top 10 trading books 📚
In this article, I want to share the top 10 trading books which I used to learn everything I know on trading & investing. It never seized to amaze me how easily we have access to previous traders brain, failures, success and lessons to build upon and shorten our own learning curve.
I hope you’ll find them as insightful and highlighting as I did.
Enjoy! ✌️
1) How to Make Money in Stocks - William O’Neil
HTMMIS is in my opinion the bible that every aspiring swing & position trader should start their journey with. William O’Neil really laid out a complete system, based on both fundamentals & technical analysis to beat the market consistently.
You’ll have re-read this one a couple times. I myself re-read probably each year and discover something new each time based on my recent experience.
What I learned & applied from this book:
I developed my own PrimeTrading fundamental scoring system based on this CANSLIM system.
The importance of having the wind at our back and only trade during good market environment.
The importance of using tight stop losses and letting our winners run
2) Trade Like a Stock Market Wizard - Mark Minervini
Mark Minervini has been the second biggest influence on my trading. Mark detailed in his first book his trend tremplate which helps you stay on the good side. He also talks about the important fundamentals metrics that tend to historically move stocks. Most importantly, he brings forward the VCP concept (Volatility Contraction Pattern), which everybody should incorporate in their technical analysis skills.
What I learned & applied from this book:
I use the trend template of Mark to find and trade only stocks in stage 2 uptrend.
I incorporated some of his fundamental metrics into my PrimeTrading model
Mark does a really good job of explaining the red flags you should look for early in a trade. (early violations)
I also use the VCP pattern that Mark explains in this book, but adapted a bit the concept for my own system.
3) Think & Trade Like a Champion - Mark Minervini
The second book of Minervini series has different concepts and focus than the first one, but still have some overlap. What I really like in this one is the emphasis on risk & money management, which were a bit lacking in his first one.
What I learned & applied from this book:
I developed my own risk & position management system based on Mark’s concepts.
Progressive exposure (finance next position risk with open profits)
4) Insider Buy Superstocks - Jesse Stine
Jesse’s book is a must read. Apart from O’Neil & Mark, Jesse had the biggest impact on my trading. He has a style that don’t correspond to everyone, but you have to take and leave a bit based on your personality. He talks a lot about the psychology of trading and how you must develop an independent mind and block any news and trade in isolation to really perform. He tries to find fundamentally undervalued momentum stocks right as they breakout from stage 1 base on a big technical catalyst.
One part that I really appreciated is the section where he detailed his notes prior to big winning trades. You can really understand what he was looking for in the fundamentals, technical, etc.
What I learned & applied from this book:
Many valuations metrics that I incorporated in my PrimeTrading model
P/E run rate
A concept he explains which led to my Rocket Ratio
The concept of a jump in sales & EPS
Being able to go big on a single position when the time is right
Many buy & sell rules
Looking for insider transactions to confirm a thesis
5) How I Made $2,000,000 In The Stock Market - Nicolas Darvas
There’s a lot of lessons to take from this book, but the main one for me was the realization that trading at a high level and out performing the market was possible even having a full time job. Nicolas explains how he was able and even be at his best while he was travelling the world for his job, and only having access to delayed end of day quote via telegram each night. Nicolas had a pretty simple system were he traded breakout and was looking for Relative Strength.
What I learned & applied from this book:
The possibility to trade at a high performance level while having a day job.
Base breakout
Looking for relative strength during pullback & corrections.
Amazon.com: How I Made $2,000,000 In The Stock Market eBook : Darvas, Nicolas: Kindle Store
6) The Mental Game of Trading - Jared Tendler
For a very long time, my favorite psychology book was “trading in the zone”…until I found Jared’s book this year. What I like most in this one is that he’s talking about understanding where your emotions comes from and working on the root cause instead of trying to block our emotions and trade like a robot. (which is impossible imo) On top of everything, Jared’s book is perfect for any trader for the reason that this book is super practical and offers a very clear step by step guide to work on improving your trading mental game.
What I learned & applied from this book:
End of day emotions analysis
Finding the root cause of my emotions & mistakes
I found many mistakes this year with the help of this book
I can tell you that this book as paid himself 1000x already. ;)
Working on my C-game
7) Secrets for Profiting in Bull and Bear Markets - Stan Weinstein
Stan’s book is a classic and a must read for any new trader/investor. He lays a complete system based on technical analysis. He has a very top/down approach where he looks for strength in specific sectors, before drilling down into individual names. He also bring in his 4 STAGES concept where he details the different phases any stock goes through from his boom to burst.
His book is also either for swing or position trader, depending on your timeframe.
What I learned & applied from this book:
4 stages concept which I use to concentrate in stage 2 stocks only.
Industry & Sectors analysis to find the True Market Leaders.
Using weekly charts instead of only daily
8) Reminiscences of a Stock Operator - Jesse Livermore
When you talk about a classic. Jesse Livermore was probably one of the greatest trader of all time, so being able to pick his brain his simply awesome. I would only recommend this book to more advanced trader or later in your reading journey, as this is harder to read and the concepts & lessons are hidden in the story and sometimes hard to get at first. Still a very good read that every trader as to read imo.
9) Trade Like an O'Neil Disciple - Gil Morales & Dr. Chris Kacher
Gil’s book retake some very important CANSLIM concepts, but adapted the system and added some very useful techniques which I use today. He stresses again the importance of cutting your losers short and letting your winners run, but also bring a very important concept, the pocket pivot, which give very often an early entry before the classic pivot explained by O’Neil.
He also talks extensively about short selling stocks, which can be pretty useful if you’re interested by this operation yourself.
What I learned & applied from this book:
Pocket pivot technique
10) Pit Bull: Lessons from Wall Street's Champion Day Trader - Martin Schwartz
To end this top 10, I have to talk about my favorite entertaining trading book. This one is not about a system or trading techniques, but a story about famous day trader Martin Schwartz. My key takeaway from this one, is the toll that managing other people money took on his health. After reading this book, I promised myself to aim only at managing my own money, despite the money that can be left on the table. FAMILY, HEALTH AND FREEDOM is too important for me. Overall a very entertaining book that I eat up in a weekend.
I really hope that you enjoyed. If you did, please share it so that more folks can be reached and this Newsletter can grow. :)
Based on this article, and multiple reviews, I bought Jesse Stein's book. Thanks a lot for the recommendation!
A real gem. The issue I am right now, is that it contradicts with many of my rules, mainly CANSLIM, and I feel really tempted to drift.
Besides that "small problem :)", with this book, I am better understanding the psychology behind the technical charts. Also, interesting his value investing + momentum approach which I had never heard anyone attempting. E.g. Oneill or Minervini would find low p/e ratios an irrelevant criteria to enter a position.
Only other person I know who's mentioned Jesse's book. Not only did I enjoy the book but the format. Every book that includes any charts should be the same size