Rather than coming up with yet another rehash of the greatest hits of trading books I want to highlight some that I’ve found valuable but rarely seen mentioned. I’ve read hundreds, if not thousands, of trading books over the years and gotten rid of most of them. These are all still on my shelves.
Outbreak! The Encyclopedia of Extraordinary Social Behavior, Hilary Evans and Robert Bartholomew. Besides being a fascinating read, it’s a great reminder that if you think things are crazy, they can almost always get crazier. Conveniently organized so you can read in bite sized chunks.
The Psychology of Finance: Understanding the Behavioral Dynamics of Markets, Revised Edition, Lars Tvede. Great book on the psychological underpinnings of market behavior and price patterns. A more qualitative view of technical analysis.
Business Cycles: History, Theory and Investment Reality, Lars Tvede. If you read one book on economic cycles this should be it. Comprehensive coverage of the subject in a way that is useful to traders and investors, and an enjoyable read too.
Super Trader, Expanded Edition: Make Consistent Profits in Good and Bad Markets, Van K. Tharp Really a condensed and far cheaper version of his Peak Performance Course. As helpful as I’ve found NLP over the years I often find the way it’s presented enough to gag a maggot. But once you get past the late night infomercial tone it has a lot of useful information in a very condensed presentation, most importantly on understanding and controlling yourself in the markets.
Anatomy of the Bear, Russell Napier. This one makes some lists, for good reason. As the title implies it provides a summary of the characteristics of bear markets and how they end. Good information to have when the financial media is calling a bottom almost every day.
How To Become A Successful Trader: The Trading Personality Profile: Your Key to Maximizing Your Profit With Any System, Ned Gandevani. This is a questionable inclusion but I’m putting it on the list since it’s the only book I’ve read that uses a personality test to determine what type of system will work best for you. There’s really no science behind the method but taking the tests and thinking about the results and recommendations provides a different angle on system selection and view of yourself.
Security Engineering: A Guide to Building Dependable Distributed Systems, Ross Anderson. Not at all trading related on the surface, but the key to penetrating security is being able to see what others don’t, so I find reading about security and social engineering very useful for learning how to think about problems in a different way. Worth reading for the anecdotes alone.
Human Action, The Scholar’s Edition, Ludwig von Mises. One of the most impressive works of the human mind I’ve ever read. Ultimately the economy drives the stock market so if you don’t understand economics you will missing a big piece. Based on a number of ignorant mainstream economists’ critiques I think the less you know about what is passed off as economics the better you will do at understanding what Mises was trying to say. Either way it’s a difficult read which will highlight the deficiencies of your education within the first 10 pages, but definitely worth your time.
Options Trading: The Hidden Reality (“Options: Perception and Deception” & “Coulda Woulda Shoulda” revised & expanded, Printed in Color) (“Options: Perception and Deception” & “Coulda Woulda Shoulda” revised & expanded, Printed in Color), Charles M. Cottle. It very badly needs a good editor but if you can’t get through this book you really shouldn’t be trading options. It’s not pitched as an introduction to options but I wish I had skipped all those and read this first.
Unexpected Returns: Understanding Secular Stock Market Cycles, Ed Easterling. Frequently makes the lists but it really is the best book around for long-term investors.
Lastly, read all the market history you can get your hands on. History doesn’t repeat but it definitely rhymes so there is really little new under the sun when it comes to markets. Beyond the well-known ones like Kindleberger, etc. there are dozens of books on the subject that are well worth your time to read. My favorite recent one is Devil Take the Hindmost: A History of Financial Speculation. The sections on the earliest uses of derivatives are especially interesting to me. Current “financial innovation” doesn’t seem innovative at all when the majority of what they are pitching was done over 300 years ago.
Feel free to add your own hidden gems in the comments.