Sometimes it seems that there are about as many books written on the stock market and trading stocks as there are stocks in the market. Not all are great reads, and some should be outright avoided. (I’ll refrain from mentioning those.) But, to a certain extent, you can learn from many stock trading books out there in the market.
Out of the thousands of titles out there, there are a select few that I find to be particularly illuminating. These books offer insightful, practical, and proven advice about stock market trading, and do more than just tell you what to do and when to do it. They help you to really understand the stock market inside and out at the same time, so you can approach the market holistically.
Here are four books in particular that can give you this kind of useful insight and knowledge that any trader can use.
The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham
First written in 1949 by British economist and investing guru Benjamin Graham, The Intelligent Investor is viewed as the bible of value investing, or choosing stocks with strong fundamentals that appear to be underpriced or undervalued by the market.
With this book, and his other teachings, Graham laid the foundation for one of the two major schools of thought when it comes to investing – an approach that Warren Buffett follows and borrowed from this work.
The Intelligent Investor teaches you about the fundamentals of stock trading, goes into stock history, explains how the market behaves (or doesn’t), gives you a formula for several different trading scenarios, demonstrates how to find an undervalued company, and explains how to manage your portfolio.
Any investor who is interested in value investing – and at some point, every trader should be – should start by reading The Intelligent Investor and soaking up what it has to offer.
One Good Trade: Inside the Highly Competitive World of Proprietary Trading by Mike Bellafiore
This tome, published in 2010, is written by Mike Bellafiore, a successful proprietary trader who reveals the techniques and principles he and his firm used for stock trading success.
As the book explains, a proprietary trading firm is a firm of traders that trade for themselves. They don’t invest other peoples’ money; they invest their own, and the sole source of revenue comes from their gains.
Because of this high-pressure environment, successful proprietary traders have finely-honed skills and techniques that can be used by individual traders for success in their own trading careers.
Bellafiore, in the book, not only gives you a psychological insight into what makes a successful trader tick, but also shares technical tools for making solid trade decisions, including a section on reading tape – or tracking buy and sell orders as they come in.
The best thing about the book, though, are the stories of being in the thick of the action and making high-pressure decisions using proven methods of analysis – methods that you can adapt for your own use.
One Good Trade is a great choice for anyone looking for a real-life example of trading success.
Technical Analysis of Stock Trends, by Robert D. Edwards and John Magee
If you are at all interested in technical analysis – and you should be! – This book is perhaps the epitome of technical knowledge about the market and trading in general.
Edwards and Magee do a masterful job of explaining charts, technical theory, market cycles, reversal patterns, and virtually every other major concept behind technical analysis – which you can use to try to “predict” what the market will do.
I won’t get into the debate between fundamental analysis and technical analysis and which one is better, because personally, I believe both are incredibly important.
What I will say, though, is that Technical Analysis of Stock Trends is a must-have book for those wanting to become familiar with what technical analysis is and what it has to offer.
Common Stocks and Uncommon Profits by Philip A. Fisher
This last book was originally published in 1958 by one of the all-time great investors, Philip A. Fisher. Since its publication, it has never gone out of print – and for good reason. Common Stocks explores the basis behind growth investing, or investing in stocks that have potential for upward growth and price appreciation.
Warren Buffett and countless others have used the fifteen points for choosing a good growth stock in their investment strategies – and we can all see how those have turned out.
All of these books are great reads and can add tremendously to your trading knowledge and performance. If you need supplemental information, like how to use one specific method or system, feel free to read those as well. But make sure you read early and often and expand your knowledge at every opportunity.