Daniel Jeffries

I am an author, futurist, systems architect, public speaker and pro blogger.

The Greatest Trading Books Ever Written

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Everywhere I go people want the secret wisdom of legendary traders.
They’ve heard tales of private libraries, buried deep underground, guarded by telekinetic ninja monks where only the best traders dare to tread. Whether it’s in one of the forums I hang out in, or on Twitter, or right after I give a talk, everyone wants to know how to get access to these mysterious lairs of knowledge and light.
For years, I was sworn to secrecy. The trading monks jealously guarded these books on pain of death, only revealing them to those that proved worthy after decades of blood, sweat and suffering.
But today, I’ve decided to risk it all and reveal the sacred scrolls to you, my dedicated reader.
I can no longer sit idly by and let these master traders hoard the wisdom of the ages all to themselves. I might not make it out alive but if I die, I’ll die knowing that the ancient knowledge was set free forever.
I’ve given you some of these books already in my other articles but many of them I’ve never talked about until right now.
Yet before we go any further, a word of warning to you. Heed these words well or great peril awaits.
Many a warrior have come to dark ends because they failed to heed these words of divine wisdom:
There’s no book that will magically make you a better trader.
Of course, we love to believe there are great secrets hidden away and that if we could only get our hands on them everything would change in an instant!
It’s just not true.
But all is not lost!
Books absolutely can and do help!
The best books contain the crystallized wisdom of years of experience. Even if you can’t understand everything you’re reading as you read it, the ideas take root in your unconscious mind and over time they grow and flower.
Still, reading is only the beginning.
Books can point the way but they can’t take you there. The only way to go somewhere is to go there.
We learn best by doing.
Think back to when you first learned to ride a bike as a kid. Maybe you watched your friends or your older brother or sister for awhile? You tried to pick up on patterns. Then you got to phase two. Your mom or dad put training wheels on your bike and ran along side you as you learned to balance. That helped give you confidence as you raced ahead but little did you know it was a false confidence.
Eventually the training wheels came off.
Mom stood back nervously and let you go. You were on your own.
And maybe for a little while you managed to stay upright, surging along on your own for the very first time, the wind whipping your hair.
Then your worst fear happened.
You crashed.
Maybe you scraped your knee or smashed up a tooth like I did? Right afterwords you swore you’d never get on a damn bike again.
But you did.
And the pain of that memory lived with you. It kept you focused because you didn’t want to feel that pain ever again. Your pain became your motivation.
Say thank you to that crash. It was the best thing that ever happened to you. Nothing taught your more about riding a bike than that wipe out.
Our crashes in life our our best teachers.
And so it is with trading. It’s not until you climb into the arena and win and lose money that anything will ever make sense.
A second word of warning: Some of these books are unconventional choices. Not all of them are directly about trading.
That’s because trading is about more than trading.
Trading is about thinking. It’s about risk taking.
But most importantly it’s about seeing the world more clearly than everyone else.
You have to see things as they actually are to make good choices.
If you think an apple is a banana you won’t get very far.
Maybe you’re positive you can see an apple for an apple but most people see only a movie in their head instead of actual reality. Busting through that imaginary reality to the real world on the other side is the path of the great sage and the great trader.
Not a banana no matter how many people tell you it is.
That sounds easy but it’s not, so some of the books on this list are here to teach you to think more clearly.
Lastly, I’ve noticed that a lot of my students ask me for book after book after book. They finish one and they want to read ten more. I understand the desire but less is more.
Once you’ve found a book that really resonates, get into the arena again and try out your new ideas.
Sit with its wisdom for awhile. Work with it. Make its wisdom your own.
As I’ve gotten older I’ve started to look for clarity of information not quantity of information. You can read a thousand books on trading but if they’re filled with nonsense that doesn’t work you won’t be any better off than when you started.
All right, that’s all the disclaimers so let’s get to it.
The Books, In No Particular Order
This classic is one of the first trading books I ever read. It’s dated in some areas but still brilliant in others. If you’re a long term trader/HODLer this book will help you sniff out the winners like they were Tanqueray.
Most people tend to think of the best traders as math geniuses but that’s not always the case.
I’ve noticed that tons of the top market slayers come from eclectic backgrounds. They suck at math or only get the broad strokes at an intuitive level. They tend to try their hand at lots of things, have a zig-zag early career and study widely. That makes them interdisciplinary thinkers. They see things everyone else misses, a key to success in the markets.
Lynch was an average student of liberal arts before managing one of the most successful funds in history. He specialized in finding high growth stocks before anyone else.
A lot has changed since he was trading. He admits to being a technophobe and hates computers. Today nobody trades without a computer. A lot of your opponents on the battlefield are nothing but computers these days. No human need apply.
And there are more pros in the market than ever before, which means we’re up against smarter foes. But much of the common sense he brings to the table applies today as much as it did in the early 80’s.
Most importantly Lynch focused on using what you know to make decisions. He cultivated a strong curiosity and paid close attention to the world around him. If his wife or his kids came home with a brand new shopping bag, he wanted to know something about it. If he spotted a number of stores popping up in his area, he started digging.
Today information moves a lot faster and it may seem impossible to find a store that investors have never heard of but it’s not impossible. Many people struggle to see the future. Unless something is already big and popular they can’t imagine it taking off like a rocket. But if you want to find high growth stocks you have to develop a deep desire to see what the future holds and find it before everyone else does.
2) “Technical Analysis and Stock Market Profits by Richard W. Schabacker
Here we have another classic that tells you how to draw pretty lines on charts. It’s the only TA book recommended by pro trader and teacher Peter Brandt.
Peter sometimes has a contentious relationship with the crypto community after some ungrateful and arrogant young traders took to calling him a fraud as he called the crypto bubble pop. That’s ridiculous. He called Bitcoin’s rise at $800 and hung onto his win until it dropped to $18,000. He proved the power of classical charting and those fools who called him out are now broke and out of the market.
Quiet simply, you don’t last thirty years as a trader and have no idea what you’re doing.
A few things to note about this book. The first is that there is no eBook version. That’s unfortunate but it still deserves a spot in your trading toolbox despite its academic price point. If you can’t put $50 down on a book you have no business putting down thousands in the market.
The second thing you’ll notice is the book is ancient. It came out in 1932 with the second edition hitting the stands in 1937.
You’re probably already wondering if it still holds water eighty years later? It’s hard to believe it’s still relevant in today’s sophisticated computer dominated trading markets.
But the more things change, the more they stay the same.
The best traders often go back and study markets even in the 1800’s because markets regularly exhibit cycles that play out again and again and again.
The book is particularly relevant to crypto traders. A savvy reader will notice the date of publication right away. That’s right after the year of the biggest market crash in history, Black Thursday, October 24, 1929, the start of a four day blood bath that saw the market shed $30 billion dollars, equal to almost $400 billion today, totaling more than the cost of World War I.
When people say crypto markets are wild they ain’t seen nothing.
Studying the movements of stocks in the truly crazy period of crash and the Great Depression that followed is a study in real volatility and it looks very much like the insane highs and lows of today’s crypto markets.
Hands down my absolute favorite book on trading is Insider Buy Superstocks. The author made millions in the regular markets, delivering the kind of returns rarely seen outside of the modern crypto and Forex markets. It’s my current bible and it forms the foundation of any good trading education. This is an absolute must buy for anyone.
The most important parts of the book walk you through the author’s psychology and his big early wins and losses. It’s covers the complete journey of a trader, from the insane highs to the lowest lows, the kind I laid out in my article the Eightfold Path of the Legendary Trader.
Before you get into a single chart he talks through the mentality of a trader, how to deal with the emotional volatility that comes with risking money in the chaotic windstorm of the mad, mad markets.
But have no fear, he does get to charting in a few jam packed chapters that are better than most long books on technical analysis. He blends a bit of fundamental analysis and TA to divine his strategy and it shows in every carefully chosen example.
If you can learn these few chapters you may never need another TA book.
Finally, he delivers one of the most crucial chapters of all time:
How to sell.
Very few books cover selling. The author holds for five to nine months as a stock goes from basing to supernova but he does sell.
And selling may be the most underrated skill in trading.
People are wired to hold through all adversity, because mentally we’re still at the hunter-gather level, desperately trying to find out next meal. Trading is counter-intuitive and forces us to go against our nature, riding our winners instead of caching them immediately and getting out much, much later. No book covers when to sell better than Superstocks.
I don’t agree with Peter Brandt that all you need is Schabacker’s book on TA.
While it’s an amazing book that deserves a spot in your pantheon it suffers from the fact that it’s really, really old and there’s no math behind it. They didn’t have computers back then and so they had no way to run complex stats to see if any of their observations held up under scrutiny. The second big problem comes from its age. There’s a lot less pictures. Pictures were expensive to produce in books back then and so we get a lot of text and not as many charts as we want or need.
That’s where this book steps onto the scene. It’s one of the most comprehensive books on TA ever written. It’s chock full of pattern after pattern and enough statistical data to make your eyes bleed. I recommend everyone read it cover to cover.
And then promptly forget most of it.
One of the biggest eye openers is how many of these patterns fail time after time, or barely give you an edge over a coin flip. What this book gives you is the ability to dig deep and study your favorite patterns in depth.
Do they hold water?
Will that actually produce over time?
Are there other patterns that work better and more accurately?
What I recommend is going through it all with an open mind. After reading it you’ll be dizzy and overwhelmed and seeing patterns where nothing exists.
And that’s when you’ll realize it’s time to simplify and focus on just a few patterns that work well for you.
You don’t need to boil the ocean. Concentrate on support and resistance and trend lines and maybe a few other well formed patterns and you’re well on your way to trading more profitably.
5) Two for One: “Way of the Turtle” andThe Complete Turtle Trader
Here we have two books that I’ve recommended a few times in different articles. Both of them deserve to be read together as they offer a different perspective on the same reality.
Since I’ve talked about the Turtles many times I won’t waste more ink here going over their incredible story again but I will recommend you read it for yourself.
The first book is Way of the Turtle, the Secret Methods that Turned Ordinary People into Legendary Traders by Curtis M. Faith, one of the original Turtles. It’s a masterpiece of understanding market psychology. It’s not enough to conquer the fundamentals of entries and exits. Far more important is mastering your emotions and your ability to look deep into the future with great patience.
There’s one iron clad rule to trading:
To master trading you have to master yourself.
There’s also the companion to that book, The Complete Turtle Trader, by an author who studied the Turtle story extensively, Michael W. Covel. While Way of the Turtle is more about the emotional journey, Covel focuses on their mechanical trading system, which is a basically a heuristic rule set designed to take the emotions out of trading and put statistics to work in your favor over the long run.
Covel takes a more skeptical view of Curtis Faith in this book so it provides a sharp contrast to Way of the Turtle. He makes a good case that Faith was a wild card who bent the rules and got special treatment while other traders from the pack deserved more credit.
It’s hard to tell where the truth actually lives here but it’s most likely somewhere in between, so best to work it out for yourself because there’s no right or wrong answer.
Covel is one of two authors with two books on this list. Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets goes well beyond the Turtles and looks at other fantastic trend followers who made big money in the market.
Trend following is a very specific style of trading that doesn’t try to predict reversals in the market. It just looks to confirm them and run with them. Let others figure out if Bitcoin is going to $11,000, $8,000 or $4,000. A trend follower just hops back on the rocket after it turns around for good or shorts it when its going down.
This book is more about the mentality and mechanics of trading than anything else. You won’t find any details about breakouts or trend lines or chart patterns here. Instead you’ll find out what makes the best minds in trading tick. Covel is a great writer and he backs up a lot of his research with stats that you can follow up on yourself.
Here we have two books again, both by Jack D Schwager. Both are collections of interviews with some of the most legendary traders of all time, the first one written in the 80s before the rise of algorithmic and computerized trading and the second one written in the 90s with a new crop of digital traders.
These two books are packed with wisdom.
Some of the traders are cagey and closed off about their systems but most of them are wide open about their successes and failures. You’ll learn about a huge variety of trading styles. In one interview you’ll see a trader calling trend following dead and another calling it the king of the hill.
Nobody has all the answers.
There’s more than one path to trading glory. In here you’ll find obsessive compulsive risk managers, free wheeling gun slingers, and maniacal math quants.
The two books provide good counterpoints to each other. In the first one you get an interview with Richard Dennis, the risk taking rebel leader of the Turtles and in the other you get his calm, cool and collected partner, William Eckhardt, the math genius behind their system. It’s an odd couple to say the least but its easy to see why that kind of sharp contrast made for a rockstar team.
These books are a must reads for any trader of any stripe. Whether you’re trading FOREX, crypto, currencies, commodities, treasuries or equities there’s something in here for you to help understand the mindset that can take you to the top of the mountain.
8) “Sell and Sell Short by Alexander Elder
This one is exactly what it says on the tin. A lot of traders ask me about the mechanics of margin trading and short selling. This book covers all you need to understand about selling short and why you want to trade both the ups and downs of the markets.
It’s not for everyone, especially if you just want to buy and hold for huge lengths of time but if you want to learn to trade you better learn to sell short.
Without trading the down trends you have no choice but to watch your profits evaporate or sit on the sidelines when markets go into full on bear mode for months at a time, as we saw with the crypto market from December 2017 to March 2018.
Selling short helps you profit when everyone else is bleeding to death and this is where you learn to make the kill and make it fast.
I’ve said it before and I’ll say it again, the most underrated and essential skill in life is critical thinking.
If you just take everything you’re taught at face value you have no chance at becoming a successful trader. Frankly, you have no chance at becoming successful at anything without critical thinking.
What is critical thinking?
It’s simple: question everything.
Just because I told you something and I seem like a smart guy does not mean you should simply accept whatever I say without examining all the evidence for yourself.
Use your own mind. Look with your own eyes. See for yourself and make your own decisions.
We’re taught a lot of nonsense in life and most people ingest that nonsense as fact without ever bothering to do a single bit of follow up. They don’t think for themselves. They let other people do their thinking for them. That’s the death of a good trader.
It’s not enough to just vacuum up the opinions of a bunch of folks on Twitter and call it a day.
You have to figure things out for yourself and when you can do that you’re well on your way to making yourself into a powerhouse of a person.
10) “An Illustrated Book of Bad Arguments by Ali Almossawi
Hot on the heals of critical thinking comes this book on eliminating logical fallacies from your thinking.
What are logical fallacies?
Just listen to any politician for ten minutes and you’ll probably hear twenty of them in that short span of time.
Fallacious thinking is piss poor thinking most of the time. It’s easy to manipulate the weak minded with garbage arguments but if you want to pick the winners and losers in the markets you’ll need to learn to see beyond the veil of manipulative arguments to the clear light of the truth.
This is a lot easier said than done.
Everyone is prone to using and thinking in fallacies, even me. It’s almost impossible to eliminate this kind of thinking from our metal wetware but it is possible to minimize its impact and recognize when we’ve fallen into the trap of lazy and weak thinking so we can move beyond it and get to the bedrock of stronger ground.
I’m currently knee deep in building an auto-trading platform with a team and this book helped guide us to the right ways to test any system.
It’s state of the art.
All too often when we’re trying to create a trading strategy we test it totally wrong. Almost everyone builds a system and curve fits it to past data. That makes it brittle and weak so that it won’t survive when it faces a completely different set of trading circumstances.
This book goes over all the ways people have discovered to properly test a system from walk forward analysis to Monte Carlo simulations. Each of these methods are essential to making your system flexible and ready for any situation.
No system can perform perfectly under every circumstance but testing it properly ensures that it will survive in millions of hostile environments like an extremophile smoothly swimming through burning hot molten lava.
If you plan to let computers trade your money without you in the mix then you owe it to yourself to get that system humming to perfection before you turn it loose on the digital trading floors.
Most of us are not trained in probability and statistics. If you cheated your way through math class like I did as a kid then you missed out on a crucial piece of the trading puzzle.
I hated math because my teachers never applied it to the real world. But as I got older and studied artificial intelligence I realized it wasn’t me it was the way I was taught.
You don’t need to know everything there is to know about those funny little math squiggles to understand trading but a good background in understanding the nature of chance and how games of chance work will help you transcend the weaknesses of most traders who have zero understanding of how math works for or against you in the market.
This little book is easy, digestible and it uses extensive practical examples to bring it home. Maybe you won’t ever get a job as a quant on Wall Street but you won’t make the same mistakes as the herd anymore and that is one more step on the road to trading mastery.
Last but not least we have a book on how to learn. A lot of folks ask me how to learn faster and better.
I used to think that was a crazy question but then I realized most people are not taught how to think, only what to think.
Big difference.
How we go about learning and trying new things makes all the difference in the world. That’s what this book is about.
Forget the twenty thousand hour rule. You only have time to master a few things in life.
There are only so many hours in the day and in the year. You want to get up to speed faster on the rest of those things and this little yellow book shows you how to do it.
More than anything, learning is play.
You want to experiment, try lots of things and try them fast.
Don’t get bogged down and don’t give up. Fail fast and break things. Get your hands dirty.
It’s the only way to get up to speed on a brand new idea or concept or skill. There are no short cuts and you have to do this with every new skill, so get to learning how to learn.
Bringing It All Home
Maybe you’ve already read some of these books and missed a few of the others?
Some of them might even surprise you. That’s all right.
The hallmark of a great trader is fast, flexible thinking.
You need to synthesize a massive amount of information and make decisions that outwit, outlast and out think your competition in a brutal zero sum game that takes no prisoners and doesn’t care if you lose every single satoshi in your wallet.
But if you study hard and get into the arena and start battling it out, learning as you go, changing, adapting, adjusting then you’ve got a shot at winning in the game of life and money.
It’s not easy but it’s doable.
The foundation to success is a curious mind. Make yourself a life-long learner. Read until your eyes bleed. Suck up the wisdom of the past and then make it your own.
It’s up to you to make yourself a success. Nobody can do it for you.
But you’re not alone. The wisdom of the ages is out there, just waiting for you to pick it up. There are no secrets. It’s all right there in front of you.
All you have to do is reach out and grab it.
Be like water, my friend. You put water in the cup it become the cup.
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A bit about me: I’m an author, engineer and serial entrepreneur. During the last two decades, I’ve covered a broad range of tech from Linux to virtualization and containers.
You can check out my latest novel, an epic Chinese sci-fi civil war saga where China throws off the chains of communism and becomes the world’s first direct democracy, running a highly advanced, artificially intelligent decentralized app platform with no leaders.
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