min read
Jun 15, 2024
What Books Should a Beginner Trader Read?
To start in the world of trading, you need to have a solid knowledge base. But don't worry, although it may initially seem like a challenging topic, there is a lot of information that can help you gain enough knowledge to operate in financial markets.
One of the best ways to acquire knowledge to get started in trading is by reading trading books that will help you embark on this exciting path more securely. When someone is starting in the trading world, the books should match this level of initiation. Save for later those books that explain in greater detail aspects that require more advanced knowledge.
In this article, we'll give you some advice on trading books for beginners that we hope will be helpful to you.
Essential Trading Books to Begin
For any beginner, it's essential to have a solid knowledge base. Some of the most recommended books include:
“Scalping on the DAX40: Secrets to Achieve 100 Points a Month on M1” by Jonathan Menéndez Fernández: This book, my book, focuses on specific strategies to trade on the DAX40 index, aiming to consistently achieve profits on the one-minute (M1) time frame. I share techniques and tools that have proven effective in the market, and that can help traders improve their precision and results in scalping. It's a must-have.
“The Intelligent Investor” by Benjamin Graham: Although its focus isn't exclusively on trading, it's a book that, from a practical approach, can help you identify and offer some keys on how to acquire assets since its principles are applicable to the trading world.
“Technical Analysis of the Financial Markets” by John J. Murphy: It's undoubtedly another reference point for starting in trading. This book acts as a kind of guide that gathers information about key tools like chart patterns, technical indicators, trend analysis, etc. It explains concepts of certain complexity in an accessible way.
“A Random Walk Down Wall Street” by Burton Malkiel: Malkiel presents the theory that markets are unpredictable and suggests that anyone can achieve results similar to those of analysts. This book offers valuable basic investment advice, index funds, and diversification.
“Trading for a Living” by Alexander Elder: This book provides keys to professional trading and teaches effective trading and capital management methods, in addition to techniques for reading the market, identifying opportunities, and setting stop orders.
“Learn to Trade the Stock Market” by Ivan Thompson: A good guide for beginners in the stock market that teaches from basic concepts to practical strategies and explains the workings of the stock market, types of assets, and the mechanics of stock transactions.
Trading Psychology Books
The mind plays a key role in trading. Precisely because it's such a fundamental aspect, we recommend some books that can help you work on this important part:
“Trading in the Zone” by Mark Douglas: A classic that addresses trading psychology. This book explores topics such as managing expectations, discipline, risk management, and the importance of accepting uncertainty in every trade.
“The Disciplined Trader” by Mark Douglas: This book explores how beliefs and emotions can impact a trader's performance. Although from the same author as “Trading in the Zone”, this title delves into the creation of habits and routines to establish an appropriate mental framework for decision-making.
“Breaking the Habit of Being Yourself” by Joe Dispenza: While not exclusively focused on trading, it delves into how to modify mental and emotional patterns that limit performance. Dispenza explains how changing habits and beliefs can transform how challenges and uncertainty are faced. It's especially useful for traders looking to strengthen their self-awareness and build a resilient and adaptable mindset amid market fluctuations.
“Mind Over Markets” by James F. Dalton: Although it focuses on market analysis, this book also addresses the psychology behind trader behavior and how understanding market dynamics can improve mental focus.
Basic Trading Strategies Books
If you're looking for specific strategies, these books are a good starting point:
“Swing Trading for Dummies” by Omar Bassal: A simple and practical book designed for beginners in swing trading. It offers various strategies and techniques, and combines theory and practice in an accessible manner.
“Quantitative Trading Strategies” by Lars Kestner: This book focuses on quantitative trading strategies designed to help traders avoid significant losses in a highly volatile environment.
Available Formats of Trading Books
Trading Books in PDF
Nowadays, many trading books are available in PDF format, allowing easy accessibility and storage.
Physical vs Digital Trading Books
Free trading books are an affordable option, although the content quality can vary. Paid books usually have higher quality and depth of content.
Free vs Paid Trading Books
Although you can find good free educational resources, paid books often have higher quality content. These books usually include additional information and advice that can enhance your learning experience.
Where to Find Free Trading Books
There are many sources of free trading books, including websites, digital libraries, and trading forums. Some recommended sites are:
Project Gutenberg: Offers a selection of public domain books.
Amazon Kindle: There are often promotions for free books in the finance and trading category.
Trading Forums: Many traders share resources and books in online communities.
Advantages of Investing in Paid Trading Books
Paid trading books usually offer higher quality content and are up-to-date. They also include additional resources, practical exercises, and proven strategies.
Types of Trading for Beginners
What Type of Trading is Best to Start?
For beginners, “swing trading” and “long-term trading” are recommended as they require less time and experience and are simpler.
Day Trading vs Long-Term Trading for Novices
Day trading involves quick trades and isn't recommended for beginners, while long-term trading allows for holding positions for longer, which provides tranquility.
How to Start Trading from Scratch
Steps to Get Started in Trading
Learn and read a lot about trading and finance.
Develop a trading plan.
Practice on demo accounts.
Start investing with small amounts.
Additional Resources for Learning Trading
Besides books, there are other resources like courses, videos, and webinars that can help you learn.
Psychological Aspects of Trading for Beginners
The Importance of Mindset in Trading
The psychological aspect is key in trading. Successful traders usually have a high capacity to control their emotions, manage risk, and maintain discipline.
How to Manage Emotions in Trading
To improve emotional management, techniques like meditation and self-awareness are useful. Staying calm, accepting losses, and avoiding attachment to immediate results are essential aspects for a process-focused mindset.
Basic Trading Strategies for Novices
Fundamental Technical Analysis for Beginners
Technical analysis in trading is a key tool, as it helps interpret charts and make decisions. Essential concepts include:
Price Charts
Trends
Supports and Resistances
Basic Technical Indicators
Trading Volume
Candlestick Patterns
Risk Management and Limits
Common Trading Patterns
Some patterns that beginners should know include:
Double Top and Bottom
Triple Top and Bottom
Rising and Falling Wedges
Recommended Trading Platforms for Beginners
Features to Look for in a Trading Platform
When choosing a platform, it's important that it's easy to use and has low fees.
The Best Platforms for Novice Traders
Some recommended platforms are:
eToro: Simple interface and demo account.
Robinhood: Commission-free investment platform.
MetaTrader 4: Popular for Forex and CFDs.
Freedom 24: Ideal for investing in stocks and ETFs.
Frequently Asked Questions About Trading Books for Beginners
How Long Does It Take to Learn Trading with Books?
The learning time depends on each person, but with dedication, in a few months you can grasp the basic learning.
Can You Live from Trading Only by Reading Books?
Although books are an excellent source of knowledge, living from trading requires practice, experience, and a disciplined approach.
Written by
Jonathan Menéndez
Trader and Product Director
Follow us on:
