Want to learn how to trade? Here are some must-read books

Conventional market wisdom and various studies have indicated that most people lose money in trading. Some studies suggest that 9 out of 10 individual traders faced losses. So, before entering into trading, it is important to gain adequate knowledge. And it is better to start with a good book. In this article, we will be listing the top 5 books for a trader. We have divided the same into two sections: Beginners and Intermediate.

For beginners

1. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications - by John J. Murphy

• Technical analysis philosophy
• Trends and charting basics
• Charting techniques and pattern recognition
• Technical analysis for F&O
• Using moving averages, indicators, and oscillators
• Understanding Japanese candlesticks
• Time-series analysis

2. Reminiscences of a Stock Operator - by Edwin Lefèvre

• Study price action deeply, plan your strategy and stick to it through market fluctuations
• Accept unexpected price moves, close trades timely, and aim to win more than you lose.
• Value investing and index funds are better long-term strategies than active trading.
• Benefits of keeping a trading diary.
• Do your research and trust your decisions.
• Avoid impatience, fear, and overly optimistic views on bad stocks.
• Identify trends and trade accordingly.
• Always have an exit plan for every trade.
• Accept small losses early to avoid larger ones.

3. Bulls, Bears and Other Beasts: A Story of the Indian Stock Market by Santosh Nair

• Insider trading practices
• Stories of Harshad Mehta and Ketan Parekh
• Transition to screen-based trading
• Impact of global/domestic events
• Evolution of NSE and SEBI
• Key IPOs and stock manipulation

For intermediate investors

4. The Candlestick Course - by Steve Nison

• Fundamentals of candlestick charting
• Application of techniques in trading
• Understanding complex patterns

5. Market Wizards: Interview with Top Traders - by Jack D. Schwager

• The necessity of discipline and clear trading plans
• The role of psychology in managing emotions and maintaining balance
• The significance of risk management and adaptability
• Diverse trading techniques and systematic approaches
• Continuous learning and the characteristics leading to success

6. The Complete Turtle Trader - by Michael W. Covel

What is this about? This book is about the Turtle Trading experiment conducted by Richard Dennis and William Eckhardt in 1983. This research aimed to prove that anyone could be taught to trade successfully using a specific trend-following strategy.

• Trend-following strategy and its implementation
• Importance of risk management and position sizing
• Significance of entry and exit planning
• Challenges of false breakouts and deep drawdowns
• Historical success and real-world applications of the Turtle Trading method

Closing remarks

The above-listed books are not the end of the learning, but just the starting point. By reading the above books you will gain insights from top traders' wisdom and avoid common pitfalls.

Beginners can start with foundational texts, while intermediates will delve into psychology and advanced trading techniques. Remember, knowledge precedes profit. So, equip yourself well before diving into the markets.