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Are you interested in buying and selling stocks? What are essential must-have books on stock trading?
Stock trading involves buying and selling shares in various companies. To avoid potential risks, stock traders need to have a certain level of understanding of the financial market so they don’t end up losing money.
We’ve compiled a list of the best books on stock trading to help you get started.
Top Books on Stock Trading
Getting involved in stock trading can be risky. You could end up losing money if a company’s profits fall or market conditions change. However, there are several books on stock trading written by experts that can help you minimize these risks so you can make as much money as possible.
Check out these books on stock trading to begin your investment journey.
Have you always wanted to invest in the stock market but felt too uninformed or inexperienced to do so? In One Up on Wall Street, legendary investor Peter Lynch argues that you not only have all the tools you need to become a savvy investor but that you actually have a better chance of investing successfully than professionals and firms: You can act independently and based on your own good information. Lynch describes a no-nonsense approach to the stock market that involves examining your daily life for investment opportunities, doing your research, and diligently monitoring your portfolio over time.
The cynical view of the financial world says that Wall Street is run by a special breed of traders who exploit investors’ collective fear and greed to enrich themselves however they can, without any care for the havoc they might wreak. In Liar’s Poker, Michael Lewis backs up this opinion with a first-hand account of the pursuit of ill-gotten riches at the Salomon Brothers investment firm during the 1980s. As a Salomon employee, Lewis took part in its wealth-chasing culture and witnessed the start of its downward spiral.
In Flash Boys, best-selling author Michael Lewis explores high-frequency trading—a poorly-understood threat to your investments, whether you’re investing in a retirement account or day trading. High-frequency trading is electronic trading that uses automated computer algorithms to very quickly buy and sell large quantities of stocks, leading to significant financial pay-offs—often at the expense of regular investors who can’t trade in microseconds as the algorithms can. Flash Boys unpacks high-frequency trading—and Wall Street’s greedy response to it—and details one group of traders’ efforts to protect investors from its tactics.
In The Man Who Solved the Market, business journalist Gregory Zuckerman tells the story of Jim Simons, a former mathematician who became one of the most successful hedge fund managers in history. He founded his hedge fund, Renaissance Technologies, in the late 1970s. What set Renaissance apart was Simons’s insight that price fluctuations within financial markets followed recognizable and predictable patterns. When identified, these patterns could be used to strategically buy and sell the right stocks, bonds, currencies, and other financial instruments at the right time.
The Little Book of Common Sense Investing
With various companies vying to manage investors’ money, investing can feel overwhelming. John Bogle, however, argues that the winning strategy for novice investors is simple: Invest in traditional index funds, and hold them indefinitely. In his 2017 book, The Little Book of Common Sense Investing, Bogle outlines the reasons why investors typically make more money with index funds than the primary alternative—actively managed mutual funds. Because the costs of mutual funds vastly outstrip those of index funds, Bogle argues that mutual funds deliver reduced returns, and those relative losses compound over time.
The world’s greatest investor Warren Buffett read this book when he was 19 years old, and he still calls this “by far the best book about investing ever written.” The Intelligent Investor by Benjamin Graham covers timeless ideas of how the market behaves, how investment is different from speculation, and how to identify profitable investments. Learn whether you’re a defensive or an aggressive investor, why most trading strategies don’t work, and how to maintain control of your psychology in any type of market condition.
To the uninitiated, investing can seem daunting and inaccessible. But, according to investment professional Robert G. Hagstrom, it doesn’t have to be. Hagstrom argues that novice investors should emulate the greatest investor in history—Warren Buffett—so that they too can earn above-market returns. In his 2013 book The Warren Buffett Way, Hagstrom outlines and explains Buffett’s approach to stock market investing. Hagstrom argues that, rather than deferring to financial analysts, investors should follow suit with Buffett and assess companies along four dimensions—their financial prospects, their market value, their business model, and their management—to identify promising companies to invest in.
Warren Buffett is the world’s most successful investor, but he also thinks of himself as a teacher in the field of investing and economics. Compiled from Buffett’s annual reports to Berkshire Hathaway shareholders, The Essays of Warren Buffett provides a glimpse into the mind of a man whose ideas contrast with those of the typical Wall Street mogul. His insights on investing are simple yet difficult to put into practice, while his thoughts on the culture of the wider business world shine a light on the values that shape modern finance.
Charlie Munger is Warren Buffett’s long-time partner at Berkshire Hathaway. Content to being the lesser known of the two, Munger is no less impressive. Bill Gates says that Charlie Munger “is truly the broadest thinker I have ever encountered,” and Buffett calls him the ideal partner who is “both smarter and wiser.”
Poor Charlie’s Almanack is a collection of Charlie Munger’s best advice given over 30 years—in the form of 11 speeches given as commencement addresses and roundtable talks. He covers a wide range of topics, including rationality and decision-making, investing, and how to live a good life.
Are you struggling to achieve consistent success as a financial trader? Trading consultant Mark Douglas says you don’t need more knowledge or better advice to improve. He claims one factor distinguishes successful traders: a winning mindset. In Trading in the Zone, Douglas explains that, when trading, we often mistakenly embody a fear-based mindset instead and, as a result, avoid risk. So, no matter how much time we spend studying the market, we’ll fail to establish a pattern of winning. To achieve consistent success, we need to train ourselves to think differently and embody the winning mindset. Douglas tells us how.
A Random Walk Down Wall Street
A massive bestseller now in its 13th edition, Burton Malkiel’s A Random Walk Down Wall Street provides a comprehensive and entertaining introduction to the world of finance. Malkiel leverages his experience as an academic economist and former Wall Street portfolio manager to explain to the lay reader the intricacies of security analysis, asset valuation, and investment theory. He also offers a wealth of practical investment principles that will be useful for novice and seasoned investors alike.
In Fooled by Randomness, former options trader Nassim Nicholas Taleb examines the outsized role that luck plays in success, how and why people don’t generally understand luck, and how we can accommodate randomness in our lives once we’re aware of it. Taleb primarily focuses on examples from the world of investing, but his principles apply to any field ruled by unpredictability (such as economics or politics) and demonstrate how we’re fooled by randomness in many aspects of our lives.
In The Simple Path to Wealth, blogger and financial expert JL Collins offers a simple road map to achieving financial independence and a secure retirement: Spend less than you make, avoid debt, save “F-You Money,” and invest in stock index funds. He demystifies stocks and bonds as well as a plethora of investment plan options. In addition to explaining basic concepts such as asset allocation, Collins answers key questions such as how to live on your investments and how to avoid major tax hits.
Final Words
Jumping into the market can be scary for beginning traders. Needless to say, you won’t become a millionaire right away. However, these books on stock trading will help you slowly increase your profits if you stay patient and keep your eyes on the prize.
What are other great books on stock trading? Let us know your recommendations in the comments below!
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