How To Trade and Invest: Some Key Books to Read

Are you new to trading or investing in financial markets? A LOT of resources exist these days to help traders and investors of all types – daytraders, swingtraders, investors – and across a full range of risk spectrums. Below I post several books that teach how to trade and invest. These books (and much more!) helped give me a good grounding in market mechanics, investing philosophies, and trading methods. They form the basis of my musings on financial markets in One-Twenty Two: a different narrative for students and fans of financial markets.

No magic trading system exists to guarantee profits and a comfortable retirement. Every trader and investor needs to construct their own well-informed plan tailor-made for their goals and objectives. Each person must ultimately construct how to trade and invest for themselves. Every well-informed trader and investor studies the wisdom of those who came before us and can speak to the highs and lows of financial markets.

If you have any questions about any of these resources on how to trade and invest, feel free to leave a question in the comments. Each of the links below go directly to Amazon for easy ordering. I wish you much success!

Short-Term Trading

Every trader (and even investor) must have a favorite method for reading and interpreting charts in financial markets. Candlestick charting opened my eyes to a world I never knew existed. I recommend this book (or any other related resource) as a key starting point.

Bollinger Bands (BBs) define a price band a number of standard deviations from a moving average. BBs are key for assessing entry and exit points for short-term trades.

Trader Vic is/was an old school traders. He talks about trading in simple and direct terms.

“Rules of the Trade” is a good reference book for understanding how traders think and behave.

William O’Neil is famous for the “CANSLIM” method of investing and trading. O’Neil has a lot of market insights cultivated over decades.

Galgani wrote an “updated” version of O’Neil’s classic. Pick one or the other, no need for both.

Traders should know about options even if they do not trade them. Options trading can generate key buy and sell signals. Options can also help mitigate risk.

Every trader should read the stories of those who came before. “Reminiscences” is a CLASSIC story about a character named Jesse Livermore and is a must-read.

Trading psychology is an important dimension of success. Trading in the “zone” helps traders identify healthy mindsets critical for managing through the ups and downs of financial markets, profits and loss.

Investing and Longer Time Horizons

Full-time traders need to have a plan. Read about what it takes to make a living from trading. The lifestyle is NOT for the casual market observer!

With a longer-term horizon, financial markets can offer a broad range of profit opportunities. Fisher provides a good intro.

Benjamin Graham is famous for long-term investing, particularly in value investing. This method looks for under-priced assets to hold until at least the rest of the market recognizes the true value of the stock.

Greenblatt’s book fascinated me with all the myriad ways in which investors can find untapped value in financial markets, including companies resurrected from bankruptcy and spin-offs.

Every long-term investor needs to understand how to read a company’s earnings report. These data are key to understanding intrinsic value and anticipating analyst upgrades and downgrades.

Options are typically used for short-term trading and risk mitigation. However, options can also be used strategically to enhance long-term investing. The book below is like a bible of options techniques. Treat it like a a reference book.

Investors must mind the trends. Sometimes following the trend is the easiest and hardest thing to do at the same time. Look for updated versions of Covel’s writing. Covel also has a “Trend Following” podcast.

Another value investing classic.