Anyone with more than 5-10 trades in a live trading account knows that trading psychology is just as important as trading strategies. Because controlling emotions in the live market is vital to successful trading.
If you're looking to improve your trading performance, it's essential to understand the psychology of trading. Several excellent books on this topic can help you do just that. This blog post will look at the 18 best books on trading psychology and how they can help you become a more successful trader.
Content:
1 - Trading in The Zone by Mark Douglas
You will see this book in most categories in the stock market. You could say that it is necessary for trading success and becoming a successful trader in general. That's how excellent it is.
The book starts with an introduction to fundamental and technical analysis and how we can use it in trading. This information alone was enough for me, as I have always struggled to understand this topic.
However, reading about the other methods, such as the dangers of trading, taking responsibility, and the impact of our beliefs in trading really helped my confidence grow.
Trading in the Zone will teach you how to set yourself up for success by developing powerful mental habits and attitudes towards your trading.
2 - Reminiscences of a Stock Operator by Edvin Lefevre
Jesse Livermore is one of the most famous and debated traders in history. This book follows his life from his childhood, who he becomes a top trader, to gaining fame as "The Greatest Bear of Wall Street." Earlier, he was known as "Boy Plunger" for his ability to make money in the bucket shops.
Jesse made several million dollars during the 1907 and 1929 market crashes. He was carrying a massive short position during the 1929 crash and made over 100 Million Dollars, which is equivalent to 1.5 Billion in today's dollars.
Reminiscences of a Stock Operator is a must-read book to understand the thought process of a successful trader.
3 - Market Wizards by Jack D. Schwager
This book is an interview with some of the most famous traders with a long proven track record of success. Some notable name includes Paul Tudor Jones, Ed Seykota, William O'Neil, Richard Dennis, etc.
But Schwager wants to know what they share in common so he can learn more about how best to approach his trading strategies.
The factor that stands out most among these experts' insights? It's important not only having your own personal style when it comes time to make trades in the market.
Market Wizards has many series with different successful traders, all of which are equally good.
4 - Trade Like a Monk by Harneet Singh Kharabanda
This is the first and only book by an Indian author and wholly dedicated to trading psychology.
Four primary emotions revolving around trading are greed, fear, regret, and hope. We must develop little extra control over these emotions to develop good trading psychology.
This book conveys the importance of these emotions in trading through different stories from day-to-day life.
Trade Like a Monk helps develop strong trading psychology, which is essential in the trading business.
5 - Trading Psychology 2.0 by Brett N. Steenbarger
The book Trading Psychology 2.0 by Dr. Brett Steenbarger is a must-read for traders who want the best chance at success in this highly competitive industry, especially when it comes to proprietary trading firms like SMB Capital, run by Mike Bellafiore and Steve Spencer, which are famous throughout Wall Street due their extreme profitability rates.
Brett is a verified expert on mental health, and his work at SMB was highly successful. He has taught as a professor for the State University of New York, emphasizing solution-focused therapies to help those who are mentally well (or not).
Trading Psychology 2.0 gives a detailed guide to applying the science of psychology to the art of trading.
6 - Market Mind Games by Denise Shull
One of the most insightful books on trading I have ever read, "Market Mind Games" by Denise Shull, is an exhaustive study into what drives human emotion and thought processes when faced with uncertainty.
The book goes deep inside the science behind psychology - from biological/physiological academia as well as psychological research--to explain how traders are mentally affected before they make decisions for their financial future or lose all sense of hope in doing so!
Market Mind Games will show you how your mind and emotions function so that we can use them effectively when it comes time for decisions.
7 - New Trader, Rich Trader by Steve Burns & Holly Burns
We can't ignore the masterpiece work of Steve Burns and Holly Burns when discussing trading psychology. This can be divided into two sections - First half covers Steve's experiences as a beginner trader, and the second half explains the stages he becomes a successful trader.
Read this book, and you will know what it takes to be a successful trader. It's not an easy journey, but the author has been there before with his years of experience as a trader. He knows how difficult success can seem when everything seems lost until you suddenly find yourself living your dream!
New Trader, Rich Trader's message is clear: "if I could do this, then so too may others." All that needs to be done now are honest efforts to taste success in this field.
8 - Mastering Trading Psychology by Andrew Aziz & Mike Baehr
Andrew Aziz is a famous trader and best-selling author of many day trading books. This time he came up with a simple yet compelling book on trading psychology.
Trading is a roller coaster ride that will take you up and down. Still, if your goal has been to learn from all of the ups and downs to make better decisions next time, then it's worth every mistake!
The great thing about trading is those moments when everything aligns just right, so there isn't much risk involved. You'll often fail on this path; hence this book suggests following OODA stands for Observe, Orient, Decide, Act. We should repeat these four steps again and again in our trading.
Mastering Trading Psychology recommends focusing on implementing and executing the strategy as it is, rather than the potential outcome of the strategy."
9 - High Performance Trading by Steve Ward
High Performance Trading is an efficient book that offers 35 steps to fix the trader's psychology in small, realistic steps.
The author has personal experiences as well as advice from expert traders. This guide can be relevant for any trader with style or level of expertise because it deals with one issue at a time while encouraging readers not to worry too much about their finances.
The high-performance system offered by HPT helps individuals deal confidently with whatever situation they may find themselves facing without getting overwhelmed before looking into other aspects like preparation, execution & evaluation, which will allow them to take control over what happens next.
10 - Come into My Trading Room by Alexander Elder
Come into My Trading Room is a book by the noted trader and author Dr. Alexander Elder that aims to take readers from the technical analysis all the way up through identifying money management and timing the trade for success.
With his background in both psychiatry and trading, ALEXANDER ELDER has become one of the most sought-after experts on Wall Street. He founded Financial Trading Inc., which provides intensive training programs for traders worldwide.
The three M's (Mind, Method, Money) is essential when it comes time to managing our trades and achieving success in the market.
Come into My Trading Room provides many valuable lessons for all types of traders.
11 - The Disciplined Trader by Mark Douglas
This is the first book by Mark Douglas, and it helps develop Winning Attitudes. It is an excellent guide for anyone who wants to become a trader.
This book was published in 1990, yet the lessons still apply in the current world. It perfectly compliments Trading in the Zone as a guide to understanding the psychology of self-discipline and the personal transformation to become a successful trader.
The Disciplined Trader is a must-read book if you struggle to control your emotions while trading.
12 - The Daily Trading Coach by Dr. Brett N.Steenbarger
This is another book by Dr. Brett n. Steenbarger, so he needs no further introduction. He is an active trader and coach for hedge funds and props trading groups.
This book was published in 2009 and provides 101 practical, clear instructions and daily assignments to work on your psychology.
The Daily Trading Coach contains insights from 18 successful traders who share their work online. It offers a range of methods to change problematic attitudes, such as psychodynamic therapy and cognitive behavioral therapy for fixing bad habits.
13 - Sway: The Irresistible Pull of Irrational Behaviour by Ori Brafman & Rom Brafman
This book is not directly related to trading. But it presents an exciting journey into the hidden psychological effects that control our decision-making. Sway will definitely change the way you think about the way you think.
This book takes traders on a journey through social psychology, behavioral economics, and organizational behavior to discover how these dynamic forces affect every aspect of our personal lives.
Why is it so hard for anyone to get out of a losing trade? What are traders really feeling when they stay with an imperfect strategy long after others have left due only because their minds wander or fear kicks in.
The authors take on some of the most common problems in trading and offer insights that can help you avoid them.
Sway also teaches about loss aversion, which causes us to go to great lengths to avoid perceived losses; The diagnosis bias prevents us from reevaluating initial diagnoses for people or situations we haven't fully understood yet but want too much anyway.
14 - Atomic Habits by James Clear
The author of this book is so confident in its methods that he believes they can change your life. Even for those not interested or ready to make significant changes, there's still much worth learning from reading about what habits work best and how we form them with such certainty.
The habits we form can be powerful and detrimental to our health. Developing the right ones is essential, but breaking bad habits should not go overlooked to get success in the stock market.
Atomic Habits contains valuable insights into what causes us to act in specific ways and how you might find yourself forming new positive routines.
15 - The Psychology of Money by Morgan Housel
'The Psychology of Money – Timeless Lessons on Wealth, Greed and Happiness' by award-winning author Morgan Housel is one the best books I've ever read.
This book is a must-read for anyone who wants to improve their financial situation. It offers a lot of wisdom with crisp writing that makes it hard to put down once you start reading!
Morgan Housel shares 19 stories exploring the strange ways people think about money - from why we're so obsessed with making more than others (it has something to do with our brain) or how being rich can change your personality.
The Psychology of Money is a quick read that will help you understand your thoughts about money. It's engaging and informative, so it won't take long before you're finished!
Conclusion
Mastering your emotional state while trading can make you a more successful trader. Psychology is an important factor in affecting the outcome of trades, so it's crucial to understand how we feel at different points daily and use that knowledge to our advantage when we take the trades.
Best Trading Psychology Quotes
“If you can learn to create a state of mind that’s not affected by the market’s behavior, the struggle will cease to exist.” - Mark Douglas
"Beginners focus on analysis, but professionals operate in a three-dimensional space. They are aware of trading psychology their own feelings and the mass psychology of the markets." - Alexander Elder
“If an increase in price makes you happy, surely a price drop will make you sad.”
― Naved Abdali
“Trading is not about being right or wrong. It’s a probability game.” Mark Douglas
“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.” - Bill Lipschutz
"Never let a win go to your head, or a loss to your heart." Chuck D
"Win or lose, everybody gets what they want from the market. Some people seem to like to lose, so they win by losing money." Ed Seykota
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