Where O’Neil offers the nuts and bolts of a real trading system, in Trend Following, Michael Covel gives us a wide view of the trend following mindset. This book focuses predominantly on the mindset that it takes to be a successful trader. Probably the most interesting section of this book is where Covel gives real life examples of trend followers who have had enormous success and then provides their trading results, which speak for themselves.
2. How To Trade in Stocks – Jesse Livermore
How To Trade In Stocks is the most in depth work published by Jesse Livermore, who is probably the most famous trader of all time. Livermore has some of the most famous trading quotes of all time, and most of them can be found in this book. Much like Trend Following, How To Trade In Stocks is more of a big picture, concept book. Livermore paints the general guidelines that govern almost any form of trend following or momentum trading.
3. How I Made $2,000,000 in the Stock Market – Nicholas Darvas
How I Made $2,000,000 in the Stock Market is the book that originated the term “Techno-Fundamentalist.” Darvas discusses his trading evolution from “Gambler” to “Fundamentalist” to “Technical Trader” to finally combining those aspects into what he called “Techno-Fundamenalist Trading.” Darvas also originated the “Box Method” where he was able to identify trading ranges. This book formed the foundation for a lot of what William O’Neil later expanded upon.
Jack Schwager’s entire Market Wizards series gives us insight into the minds of some of the best, most insightful, traders of our time. Each of these books is full of interviews with legendary traders. One thing I noticed is that while their methods differ tremendously, each trader implements a trading system, some form of risk control, and a strict discipline to stick to both their system and their risk management.
5. Reminiscences of a Stock Operator – Edwin Lefevre
Although I prefer How To Trade In Stocks, Reminiscences of a Stock Operator is the Jesse Livermore book that shows up at the top of most lists of trading books. This books does a wonderful job of telling the story of Livermore’s trading career and gives brilliant insight into some of his guiding principles.
6. How Legendary Traders Made Millions – John Boik
In How Legendary Traders Made Millions, John Boik walks us through the history of the stock market one decade at a time and profiles the key traders who were the most successful during each time period. This books serves as a great introduction into the lives and work of Jesse Livermore, Bernard Baruch, Gerald Loeb, and William O’Neil. After you finish this, you will feel compelled to read each of their books.
7. Come Into My Trading Room – Alexander Elder
When you combine Alexander Elder’s expertise in trading pshychology with his clever and witty writing style, Come Into My Trading Room is nearly impossible to put down. I found his chapters on tracking your trading history and equity curve to be particularly interesting.
8. The Complete Turtle Trader – Michael Covel
It wouldn’t be right to have a top ten list of trading books and not include a book about the Turtle Traders. Michael Covel’s The Complete Turtle Trader is my favorite out of those books. I think Covel does a phenominal job of telling this fantastic story of a group of traders who were trained by Richard Dennis. This book provides the proof that anyone with average intelligence can learn to trade successfully.
9. Trading In The Zone – Mark Douglas
Trading In The Zone forces a trader to really examine the motivation behind their actions. This is the deepest, most comprehensive book I have come across covering the importance of a trader’s personal psychology. Read this one slow, give it some time to sink in, and really analyze why you are taking the actions you’re taking and how those actions factor into your results.
10. Following The Trend – Andreas Clenow
Following The Trend explains the process of building a trend following system from scratch. Anyone who has read Covel’s books and wondered “Where do I start?” should move right into this book.