The Best Reads for Traders
Krueger, Diane, Modern Trader
Many of those new to trading wonder where to begin and often start with a book to bone up on the basics. The confusion begins by trying to decide where to start. Here we look at some books recommended by those familiar with trading and some titles that made it onto several best seller lists.
Whether you're new to trading or have been trading for 20 years, chances are you read some books about trading before you started. If you did, you probably know how easy it is to get lost in the abundance of titles available on the subject. Maybe you perused the aisles of a bookstore, sorted through the hundreds or thousands of entries at online shops, or received a personal recommendation. Whatever the situation, once you started reading you probably realized just how many books exist on the different aspects of trading. From historical to psychological to various forms of analysis, it seems you can find a book about any topic related to trading.
"When it comes to information, one of the best places people should go to first is the exchanges," says Dan Gramza, president of Gramza Capital Management Inc. and a teacher at the Chicago Mercantile Exchange (CME). "People need to understand the markets they'll be trading and the best place to do that is at the exchanges. They offer lot of good information."
With the explosive success of the Internet, most exchanges provide a substantial amount of information online. From product and price information to the basics of what you need to know if you're interested in trading can be found on most sites.
The CME offers a variety helpful information on its Web site. Online courses, including "Introduction to Futures," "Before You Trade" and "Options on Futures for Beginners," are available. A library with a bibliography of suggested reading materials and an index of articles on futures and options also is provided.
In addition to requesting brochures, the New York Board of Trade allows visitors to its Web site to access "Live on the Web." This is a feature that lists upcoming and past seminars offered by the exchange with audio, full graphics presentations and a question and answer session in real-time.
Before reading any books about trading techniques, it is important to understand the basic foundation and nature of the markets. By understanding how the markets behave, you can better understand how and when to make a move.
"I recommend Against the Gods: The Remarkable Story of Risk by Peter Bernstein," says Mike Wesley Covel, director of research at Turtle Trader. "Against the Gods is a book about risk. It takes an often elusive subject and places some numbers on it. Because futures trading is a zero sum game, no trader will ever really excel unless he is grounded in the numbers," Covel says.
Against the Gods tells the story of a group of famous scientists who discover risk and scientifically link the present to the future. The book explains such concepts as probability, uncertainty, the difference between chance and skill, the connection between gambling and investing and rational vs. irrational decision making. The book describes a group of thinkers who learned how to understand, measure and weigh risk and its consequences. The discoveries about the nature of risk are the basis of the modem market economy.
"Reminiscences of a Stock Operator," recommends a 15-year veteran futures trader (currently at the Chicago Board of Trade). "It introduces a trader to the whole game of trading, including risk management, and the psychology of trading gives great guidelines for what you should and should not do as a trader. These guidelines still hold true today," says the trader. Written in 1923, by Edwin Lefevre, the book follows the life of Jesse Livermore and captures the inner workings of the trader's mind, along with recalling mistakes made and insights about the market and trading.
Market Wizards by Jack D. …