Favorite Trading Books

The Brainwashing of the American Investor , by Steven R. Selengut. Subtitled "The book that Wall Street does not want you to read", this is an unusually honest and wonderfully practical treatise on how to invest for long-term success. Steve gives his readers insight into how the game is played by the Wall Street insiders, and how you can protect yourself from numerous pitfalls and indeed profit handsomely. The first few chapters are a no-holds-barred view into the practices, products and tactics that the Wall Street crowd (brokers, investment houses, advisors, etc) proffers to the investing public. Steve then proceeds to outline a very practical long-range investment model, the Working Capital Model, for any investor to implement. All investements are made either in (1) high-quality dividend-paying stocks, where trading profits are frequently taken or (2) quality income producing vehicles (read the book for the best of these) . The plan focuses on long-term growth in working capital and growth in base (spendable) income, while avoiding comparison to common market "benchmarks". For additional information visit Steve's website at www.sancoservices.com
Mean Markets and Lizard Brains, by Terry Burnham. This book has been available since 2005 and, in my opinion, is already a classic. The central thesis of this book is that the more primitive parts of our brains (i.e. our “lizard brains”) are ill-equipped to be highly successful in the markets. The author suggests that the way to profit is to act when most everyone else is acting irrationally. He suggests that people generally underestimate risk. By being aware of our own lizard-brain tendencies, and controlling them by embracing a low-risk, well-thought-out investing plan, we can have a fighting chance in the marketplace.

Trading In The Zone, by Mark Douglas. Written in 2000, this masterpiece is all about developing confidence, discipline and a winning attitude in the trading and investing arena. He discusses the dangers inherent in trading, followed by becoming responsible to yourself and then developing consistency in trading. His “five fundamental truths of trading” are a distillation of trading wisdom anyone can benefit from.

Come Into My Trading Room, by Alexander Elder. The author, a psychologist and trader, outlines a realistic, systematic and practical approach to trading. He emphasizes that anyone desiring to trade should possess discipline, understand and come to grips with risk, and have a facility with numbers. Dr. Elder champions the 3M’s of trading: Mind, Method, and Money. His book, published in 2002, is, in my opinion, the best of several he has written. It is a favorite trading book of many.

Trend Following, by Michael Covel. In a highly readable style, the author details how many great traders made millions - by getting on a trend early and riding the trend until it is spent. Sounds easy, but for many it is quite difficult. Not the least reason being that not everyone has the patience to ride out the big trends. I suspect you will enjoy this book.

Fooled by Randomness, by Nassim Nicholas Taleb. As humans we tend to see patterns in everything. Taleb pokes holes into that assumption and suggests that plain old luck is important too. His thesis is that the hidden role of chance impacts our results in the markets…and in life. From the back cover of the book: “…an irreverent, iconoclastic, eye-opening, and endlessly entertaining multidisciplinary exploration of one of the least understood forces in all of our lives”

Super Trader, by Van K. Tharp. Here’s a book that distills the business of trading down into its critical components. Tharp describes the Five Steps to consistent profits: Working on Yourself, Developing a Business Plan, Developing trading systems that fit your personality, Using proper position sizing, and Eliminating mistakes. By the way, according to Tharp, a mistake is not following your plan. So if you don’t have a written trading plan, everything is a mistake. This book is clear, straightforward and highly illuminating.

Your Options Handbook by Jared Levy, with a forward by Mark Douglas. Jared Levy takes you on a guided tour of the stock and options market. For the safe-options-traders readership, this book covers put selling and covered calls beautifully. In addition, other option techniques are reviewed in detail. Special treatment on trading psychology is covered. Bullish, bearish or neutral, this book will help you craft your strategy.

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