Trade like a pro: 10 of the best trading books that will help make you a better investor
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Many investors and traders spend their days looking at trading screens, focused on executing their strategy to beat the market.
But when you can find the time, it pays to be a good reader.
This quote from Warren Buffett – one of the best investors of all time – neatly illustrates the central role reading has played in building his $US85 billion fortune.
“I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life.”
The good news for investors is that when it comes to financial markets, there’s a treasure trove of great books that both improve your skills and also provide a unique historical perspective.
And if you’re looking for a good title, the latest interactive feature from IG Markets is a great place to start.
We’ve summarised a list of 10 books that come personally recommended by IG Markets’ team of leading analysts and traders.
Read below to find out more:
A modern classic in finance literature, this book was the definitive account of the 2008 global financial crisis – widely regarded as the most serious market downturn since the 1930’s Great Depression.
Lewis is recognised globally for his ability to describe complex financial concepts in a simple way, and his fast-paced recap of how close the world came to financial disaster was shortlisted for numerous awards.
Click here for an interactive video recap of the book by IG Markets’ Client Manager Bianca Fischer.
While Warren Buffett is widely regarded as the leading proponent of value-investing, he didn’t learn all the tools of the trade by himself.
Buffett had a teacher, Benjamin Graham, who was also the author of Intelligent Investor – the famous instruction manual on how to find stocks that are priced below their “intrinsic value”.
While he’s probably read every book on this list, Buffett has also gone on the record with the following piece of advice: “If you read just one book on investing during your lifetime, make it this one.”
While many finance books are written for long-term investors, this one is for the traders – people who want a more active approach based on technical analysis and chart patterns.
Murphy’s book includes more than 400 charts with plenty of tips on how to recognise key changes and set up your portfolio to match your risk profile.
DailyFX analyst Martin Essex has more in the video at this link.
Being a good trader is about more than just a natural affinity for numbers and calculations. You need to be able to manage your emotions, or a bad situation can quickly become even worse when things don’t go to plan.
DailyFX currency analyst James Stanley says Trading in the Zone is the first great book on the profession that he read.
“It hits on the very core and important elements of psychology and probability, and stands as one of the best practical guides to becoming a better trader,” Stanley said.
Schwager’s book illustrates the point that if you want to know how to succeed in a given field, ask the best how they do it.
Market Wizards is made up of 17 interviews with elite traders across multiple asset classes, and its real value is in how it reveals common traits that all the best traders share.
Of course, there are also some fun anecdotes along the way, such as the story of a US futures trader who turned $US25,000 into $US2 billion in a single day.
A great piece of finance storytelling, this book tells the tale of Long-Term Capital Management, the famous US hedge fund that made a killing before its unexpected collapse in 1998.
The fund posted annual returns of more than 40 per cent making huge bets on low risk sovereign debt trades, but the strategy came undone when the Russian government defaulted.
Given LTCM’s huge size and complex integration with global markets, the fund’s undoing risked sparking an even bigger financial collapse, and it eventually had to be bailed out by the New York Federal Reserve.
Jim Rogers is an investing legend on Wall Street, but he’s also not afraid to go off the beaten track.
A mix of travel and investment advice, this book is his account of a 22-month motorcycle trip across six continents and 52 countries. Along the way, Rogers provides unique insights into the strengths and weakness of different countries and what makes the global economy tick.
“Twenty-five years later, Jim Rogers’s book still reveals insights into the populism sweeping Western economies. If you want to understand more about why the global economy is in the shape it is, this is a must-read,” DailyFX strategist Christopher Vecchio says.
Peter Lynch is a famous investor who made Fidelity Investments a household name in global asset management.
But importantly, he says investing isn’t just for the experienced finance professionals – anyone can achieve outsized returns simply by taking a disciplined approach to good research.\
In this book, Lynch highlights the key traits that allowed him to achieve annual returns of 29.2 per cent over a period of almost 15 years.
After years as a successful trader on Wall Street, Martin Schwartz earned the nickname ‘Pit Bull’.
As the name suggests, you don’t become the top dog in that environment without a bit of a ruthless streak.
But in his revealing book, Schwartz also doesn’t shy away from going into detail about his mistakes as well, providing a well-rounded narrative for what it takes to be a successful trader.
First published in 1923, this first-person narrative describes a character based on the life of legendary stock trader Jesse Livermore, who made and lost millions on Wall Street in the early 20th century.
Although it’s almost 100 years old, the lessons learnt from Livermore’s hits and misses are still invaluable – so much so that the book was recommended by more IG analysts than any other book on this list.
IG markets dealer Ludwig Chodzko-Zajko offers an interesting perspective on what makes the book so important in this video recap.
So there you are, the top 10 Investment books as nominated by IG market’s team of investment experts. And once you’ve read them all and want to test your new strategies head to their demo trading account to hone your newfound skills.