To be a successful trader and make money in the stock markets, newbie traders need to learn the nuances of the stock market and what influences it – how it responds to geopolitical news or financial reports, how it changes during the calendar year, what happens during business cycles and during the presidential cycle, etc. In essence, one needs to learn the trading secrets of successful traders.
In the words of Sir Francis Bacon, English author & philosopher (1561 – 1626),
“Knowledge is power”.
Here I have compiled a list of books and online resources that, I believe, will help newbie traders learn how to cultivate the right mindset (of rich folk, millionaires and successful traders and investors) as well as practical books and websites that will explain the mysteries that seem to surround successful traders.
The first few are (seemingly) simple but (in my opinion) crucial to developing the right mindset! The later ones are essential for developing a practical approach that works. Some may be found in public libraries or purchased for less than $10/=, while others may be more expensive.
All in all, money spent on one’s education is money well spent – In the words of Derek Bok (American Educator, 1971-1990), “If you think education is expensive, try ignorance”. One wrong trade or investment will easily cost one the money one tried to save many times over.
Some books on developing the right mindset:
1. The Richest Man in Babylon [Paperback] by George S. Clason (Author)
This book is a ‘modern-day classic’, and one of the most inspiring books I’ve ever read. It is extremely easy to read, and offers a deep understanding of some of the most profound truths to becoming wealthy. Although it is written in the form of an ancient “Babylonian parable”, it offers an understanding of-and a solution to many of our current day personal financial problems. Learn more about it here.
2. Think and Grow Rich [Paperback] by Napoleon Hill (Author)
Another all time classic – a must for anyone wanting to improve their lives and their positive thinking. There have been more millionaires and indeed, billionaires, who have made their fortunes as a result of reading this success classic than any other book every printed. This book is the COMPLETE reference book covering the fundamentals of the Success philosophy. Read more here.
3. Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth [Hardcover] by T. Harv Eker (Author)
Eker is a multimillionaire, who teaches us how to become rich. He shares the insights into how rich people (millionaires) think, believe and act. Since he believes that thoughts lead to feelings, which lead to actions, which lead to results, he emphasizes that to attain great wealth we should begin by changing the way we think. Most importantly, he believes that “Success is a learnable skill.”, and then gives us his 17 principles for amassing wealth. Read more here.
Some books on the practical aspects of trading:
Wouldn’t it be nice to be able to predict when the stock market will rise and when it will fall? Is there a ‘crystal ball’ that will give the newbie trader and ‘inside edge’?
Alas! There is no way to predict the markets for definite! However, there IS a way to give yourself an ‘inside edge’ – one merely has to pick the ‘high-probability’ setups that make it more likely to be right. Indeed, there is a seasonal bias to the stock market, and by paying attention to the seasonal market tendencies you can gain an edge in the stock market over the long haul.
These following books contain “secrets” that increase the likelihood of success in the stock market. In essence, one needs to learn how to put the probabilities of winning on your side, and combine this high-probability approach with winning more on winning trades and losing less on losing trades (“letting your winners run, and cutting your losses quickly”).
1. Seasonal Stock Market Trends: The Definitive Guide to Calendar-Based Stock Market Trading [Hardcover] by Jay Kaeppel (Author)
Jay Kaeppel, a master in the analysis of seasonal trends, provides you with insights into how you can make the calendar work for you in trading – his analysis is based on real market data from the past 70 to 100 years. Read more here.
A few of the trends he touches upon include:
- Holiday Seasonal Trends, which looks at the trading days surrounding market holidays to reveal some surprising results
- Monthly Seasonal Trends, which focuses on a variety of intramonth market trends and breaks the month down into clearly defined favorable and unfavorable trading days
- Repetitive Time Cycles of Note deals with the performance of the stock market in relation to three specific, repetitive, time cycles—the 212-week cycle, the 40-week cycle, and the 53-day cycle
- Sell in May and Go Away thoroughly analyzes the advantages and disadvantages of breaking the year into two six-month periods for investment purposes
2. High Probability Trading Strategies: Entry to Exit Tactics for the Forex, Futures, and Stock Markets [Hardcover] by Robert C. Miner (Author)
In this excellent book, Robert Miner presents a very practical and simple trading plan that allows traders to define exactly when to enter a trade that has a high-probability of profit, how long to stay in the trade, and when to anticipate that the ‘trend’ has reached its end. His book has an accompanying CD-ROM/DVD and other supplementary materials that allow the serious trader to study the materials with real (albeit historical) data. His methods can be applied to not only the stock market, but also the forex and futures markets. Read more here.
3. Trading for a Living: Psychology, Trading Tactics, Money Management [Hardcover] by Alexander Elder (Author)
This book actually combines both the needed psychology for trading as well as practical strategies to trade successfully. Dr. Elder’s book, which is based on three M’s: Mind, Method, and Money, helps you discipline your Mind, shows you the Methods for trading the markets, and shows you how to manage Money.
Trading for a Living helps you master all of those three areas:
* How to become a cool, calm, and collected trader
* How to profit from reading the behavior of the market crowd
* How to use a computer to find good trades
* How to develop a powerful trading system
* How to find the trades with the best odds of success
* How to find entry and exit points, set stops, and take profits
Read more here.
Some Websites of Interest about Practical aspects of Options Trading:
The following websites may be of interest to newbie traders wishing to learn how to trade stock options, and are listed to complement information found on 123stockoptionstrading.com I plan to keep adding to this list as I find sites that might be useful to either lay the foundation for more sophisticated strategies to be discussed here or to point readers to discussion of strategies that are beyond the scope of this website.
Websites on Options Basics
Website resources on Trading Strategies
Check out the free webinars on different trading strategies.