21 Books That Taught Me How To Trade (And Changed My Life)

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21 Books That Taught Me How To Trade

This is the most unique “best trading books” list you have every read.

That’s because I am one of the few traders that hates trading books, so there are only two actual “trading” books on this list.

Why?

Because most don’t teach the skills necessary to become an effective trader. Instead, they are filled with basic outdated strategies that either never worked or no longer do. Those that do have some decent ideas are usually incomplete because they see don’t paint the whole picture and only focus on “setups”.

If you follow me, you know I believe to be successful you need to take in many different moving parts like market and sector analysis before even thinking about setups.

You only learn that by doing.

Each of these books made me a better trader, and person, not by teaching technical trading setups. Instead, they work on my mind. They taught me how to think like a trader.

3 Trading Traits

While only two of them are actually trading books, all of them focus on one of the following related themes:

  1. Decision making
  2. Self development
  3. Mental strength

Not having a strong foundation in these three areas is why most traders lose, even if they know how to trade.

That’s why I read everything I can on these topics.

These books are now a part of me. Each one changed me in some significant way.

21 Books That Changed Me

The Power of Habit by Charles Duhigg: This book taught me to fight my destructive programming and showed exactly how to create new beneficial habits that I use everyday in trading and life. My trading routines and processes were developed after reading this book.

Principles by Ray Dalio: On my Mount Rushmore of inspirational individuals stands Ray Dalio.  His life philosophy, which he calls “principles”, is basically a combination of everything in all of the books on this list. Thankfully, he wrote an exhaustive book that is part memoir and part life philosophy that he put out for one reason: to give back and help others. If you have any doubt you should read this book, Bill Gates counts him as a mentor.

The Obstacle is the Way by Ryan Holiday: This might be my all-time favorite book. Inspired by Stoic philosopher Marcus Aurelius, the central theme is that we are defined by how we react to obstacles. Most of the time, our greatest successes come from failure. This book is so impactful that New England Patriots head coach Bill Belichick had his players read this book, as did Seattle Seahawks coach Pete Carroll.

Blink by Malcolm Gladwell: Gladwell goes deep into thin-slicing: how we make snap judgements from limited information. It’s all about the accuracy of our “intuition” or gut-feel, which every trader needs to develop.

The Science of Fear by Daniel Gardner: If we boil market movements in a nutshell, price movement is not based on rational analysis, but fear and greed. Fear is irrational and more powerful than the data that is staring us in the face. This book digs deep into fear and how you can harness it as a trader.

The Daily Stoic by Ryan Holiday: Another great book on Stoicism (one of my own personal philosophies) by Holiday, it teaches you a stoic mindset by offering a quote along with an explanation of it’s meaning every day in calendar form. Not only will you read about the philosophy, by reading about it daily you will take action and put it into practice.

Essentialism by Greg Mckeown: If you boil this book down to one idea, it’s cut out all the fat from everything you do. Get to the essence. Humans tend to focus on the wrong things, which is why we are so damn inefficient. Not only did this book help me realize I needed to focus only on what’s most important, it gave me the tools and processes to do it. Anybody who has viewed my “simple” charts and “ugly drawings” knows this book had a huge impact on me.

Algorithms to Live by Christian and Griffiths: This book taught me that Spock was right, and now I live the Vulcan way. While that’s not totally accurate, this is another great book on rational decision making, this time using the same processes as computer algorithms. Algos are taking over trading, so we may as well learn how to think like them.

Art of Learning by Josh Waitzkin: The author is an optimal performer, having reached the very top of the game in chess (the movie searching for Bobby Fisher is about him) and martial arts. Waitzkin attributes his reaching the top in two very different disciplines to a principled approach to learning, often learning from failure.

Tools of Titans by Tim Ferris: Tim Ferris has had a huge impact on me. I never miss his podcast. It’s a self improvement must listen, because he focuses on action and performance, not bullish*t pseudo-psychology. Many of the authors listed here have been on the podcast. I’ve listened to Ray Dalio’s interview 3 times. This book is full of helpful tips, tactics and actionable ideas from hundreds of high performers who have been on his podcast.

Thinking Fast and Slow by Daniel Kahneman: One of the most popular books ever on human judgement and cognitive biases. We learn about system one and system two thinking, which is basically emotional versus rational, and how they impact our decisions. As traders we want to stay in system two mode most of the time. The problem is as hard as we try we often slip into system one.

Mindset by Carol Dweck: Most people have fixed mindsets, but success requires a growth mindset. This is especially true in trading. When you fail, and you will, those with growth mindsets take that failure and turn it on it’s head.

Drive by Daniel Pink: Successful traders are the most driven. In Drive we find out what motivates us. Those that focus on the extrinsic (money and things) likely will fail, while those with intrinsic drive will win. In trading, if your sole motivation is profits it will be tough to get ahead.

Deep Work by Cal Newport: Too many traders only research and trade at the surface level. To gain a more complex understanding of market movements you must dig “deeper”. In Deep Work, Newport gives us processes to avoid distractions and become a high performer.

Mastery by Robert Greene: Greatness requires mastery. The author poured countless hours studying masters like Mozart, Franklin and Einstein to come up with the common ingredients that lead to success. While this book is not about traders, will help you master the trading craft.

Quiet: The Power of Introverts by Susan Cain: Whether you are an extrovert, introvert, or like most of us a combination of the two, this book will help you realize that trading is not a collaborative effort. While we can discuss strategy and theory in groups and hangout in chatrooms, at the end of the day trading is a solitary pursuit. Use this to your advantage by employing “quiet” tendencies.

The Invisible Gorilla by Chabris and Simons: Reframe how you perceive the world. That’s the lesson from this book. Our intuitions fail us in life, and of course, in trading. Understanding this through the hundreds of studies in this book will make you a better trader.

The Psychology of Judgement and Decision Making by Scott Plous: This book had a huge impact on me because it was the first book on decision making I ever read. I can say it changed my life and I would not be the trader I am without it.

Trade Mindfully by Gary Dayton: While “Trading in the Zone” introduced us to the importance of mental training, Trade Mindfully is the most in-depth resource on trading psychology I have read. It’s insane (and shows how useful the book is) that my notes from this book has more pages than the book itself.

Trading in the Zone by Mark Douglas:  Let’s be clear. I you do not follow what is laid out in this book, you can not be a successful trader. Capice? It was reading this book that lead me on the road to my successful trading journey. It’s so important that I read it every single year. In 2018 I will have read it for the 16th time.

The Tao of Bruce Lee by Davis Miller: This is a coming of age book about a weak kid who overcame obstacles using Bruce Lee as his guide. I read this around the time I was coming of age and it had a huge impact on me. I’ll admit, it’s not a “great” book. However, if you need inspiration, this book puts into perspective how one man, as Bruce Lee would say, “became like water”.

The 52 Book Challenge

I read 52 books every year.

That’s one book every week.

I have a goal for you.

Read all 21 of these books this coming year. That’s less than two books per month.

If you put what you learn into practice, you WILL become a better trader.

Prove to me that you have read them. Once you do, contact me and we’ll jump on skype and we’ll discuss how these books impacted our trading.

Thanks for Reading!

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5 thoughts on “21 Books That Taught Me How To Trade (And Changed My Life)

Add yours

  1. Hi Paul. Happy New Year! The book “The Obstacle is the Way” by Ryan Holiday have two editions: 2012 and 2014. 2012 edition is The Ancient Art of Turning Adversity to Advantage and 2014 edition is The Timeless Art of Turning Trials into Triumph. Witch of two is the book you are speaking about?
    I like very much your idea. It will help 100%, I am sure.

    Like

  2. The Obstacle Is the Way by Ryan Holiday is on the list twice. Is there another title that got left off the list? Thanks for the great list. I will get started reading tonight.
    Gary

    Like

  3. How cool Paul! I like be this post. I’ve already read ‘The Power of Habit’ and am half way through ‘The Art of Learning’. Thanls for sharing these.

    Like

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