Trading is a game of wits where the stakes are your sanity and the prize is money. It's a mental battle, and the person who can maintain composure under pressure will win.
But, here is the thing, the markets don't care if you're having a horrible day, feeling overwhelmed, or if you're just plain wrong. Due to the constantly shifting nature of the markets, it is important to have a mental game plan that is both sound and adaptable.
Sadly, this is where a lot of traders fail. Even the most well-crafted trading strategy will fail if you lack the awareness of your trading habits and tendencies as well as the discipline to manage them.
This is why it's important to have a strong understanding of the psychological aspects of trading. And that's where the psychology books come in.
To help traders get a head start, we've compiled a list of the 10 best trading psychology books available. These books have been handpicked because they have had a significant and lasting positive impact on traders' mental approaches to the markets.
Why Do You Need To Read Books on Trading Psychology?
They're your caddies, providing you with the mental tools and techniques to tackle any situation the markets throw your way. They're your life rafts, keeping you afloat when the waves of emotions threaten to drown you. And they're your coaches, helping you to identify what you’re good at, what you lack, and areas for improvement.
So, let’s get ready for a journey into the mind of the trader. You'll discover why discipline is king, how patience can pay off, and why being able to control your emotions is key to success.
You'll learn how to detect the warning signs of overconfidence, how to manage risk, and how to avoid the pitfalls of greed. And you'll be armed with the knowledge to trade with confidence, no matter what the markets do.
So, buckle up, because it's time to level up your trading psychology!
10 Best Books On Trading Psychology
1. Trading in the zone by Mark Douglas
“Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude" by Mark Douglas is probably one of the best books on trading psychology, and for good reasons.
If you ask any trader:
“What was the first book on trading psychology?”
The answer you'll likely hear time and time again is “Trading in the Zone.”
Many traders swear by this book, citing the wisdom it provides as a key factor in their success.
In this classic book, the author explores the thinking patterns and habits that set successful traders apart from the rest. According to Douglas, being successful in trading requires more than just a solid strategy - it also requires the right mindset.
But what does it take to get into the "zone"?
The key for traders is to adopt a trading strategy that is compatible with their personality. If you're looking to overcome the fear of being wrong, then this book is a must-read.
2. The Daily Trading Coach by Brett N. Steenbarger
“The Daily Trading Coach: 101 Lessons for Becoming Your Trading Psychologist” by Brett N. Steenbarger is a valuable resource not to be overlooked.
This book is jam-packed with 101 lessons, each designed to help you systematically improve your trading skills as if you had a personal performance coach by your side.
From identifying everyday challenges to offering practical solutions, the lessons follow a straightforward format, making it easy for traders to apply the advice and see results.
Think of "The Daily Trading Coach" as your mentor or "psychological instruction manual" for trading. If you're facing a roadblock in your trading, this book is guaranteed to have a chapter that will help you tackle it head-on.
So, if you're looking to up your trading game, The Daily Trading Coach should be at the top of your reading list. It's the equivalent of a trading bible, and it's just waiting to be cracked open!
3. Market Wizards by Jack D. Schwager
Looking for some trading inspiration?
Look no further than the classic, " Market Wizards: Interviews with Top Traders” by Jack D. Schwager.
This page-turner takes you on a journey through the experiences and strategies of some of the world's top traders. From hedge fund managers to forex traders, like Paul Tudor Jones, George Soros, Richard Dennis, or Bruce Kovner, Schwager dishes out wisdom and insights that are just as relevant now as they were upon the book's initial release.
But don't let the age fool you. "Market Wizards" is a reminder that the past has much to teach us still.
This book is a treasure trove of wisdom for serious traders covering a wide range of trading styles and does a fantastic job of giving actionable recommendations based on the traders' insights.
It's the first book we recommend to anyone who's starting in trading, as it gives a comprehensive overview of the many different paths to profit.
The key takeaway?
There are different trading styles, you just have to find what works for you. But, also good psychology plays a big part in the success of a trader.
4. Market Mind Games by Denise Shull
"Market Mind Games: Delving into the Depths of Trading Psychology" by Denise Shull is one of the best forex trading psychology books because it explores the science behind the emotions and thought processes that drive us into forex trading.
She layers her observations as a coach with research and literature from various academic disciplines, including biology, physiology, and psychology, to give readers a comprehensive look at the complexities of human behavior in the face of uncertainty and pressure.
Think of Denise Shull as the real-life counterpart to Wendy Rhoades from the hit TV show Billions. Like Wendy, Denise uses neuroeconomics and modern psychoanalysis to guide and mentor traders and athletes in making better decisions under pressure.
5. High-Performance Trading by Steve Ward
“High-Performance Trading: 35 Practical Strategies and Techniques to Enhance Your Trading Psychology and Performance” by Steve Ward got a place in our top 10 trading psychology books because it is more than just a compilation of trading tips, it’s a journey towards self-awareness and improvement.
Steve's a pro performance coach who's worked with top athletes and teams in over 30 sports.
See a pattern here?
Trading is a lot like sports, both demand mental and physical strength.
Steve helps elite traders with their risk psychology, stress management, and decision-making in high-stakes situations, and encourages mindfulness through practices like meditation and self-awareness.
The book breaks down 35 practical strategies that are spread into three easy-to-follow sections:
Preparation,
Execution,
Evaluation.
Ward’s words dance on the page, painting vivid images of the obstacles traders face and the path to overcoming them. He personifies the markets, portraying them as a tempestuous sea that requires a steady hand at the helm. And with his guidance, traders can navigate the rough waters and reach the calm sea of success.
By implementing Steve's actionable steps into your daily routine, you'll not only improve your profits but also your overall well-being.
6. The Disciplined Trader by Mark Douglas
"The Disciplined Trader: Developing Winning Attitudes" by Mark Douglas is a must-read for anyone looking to master the art of trading. This groundbreaking book, first published in 1990, was one of the first to delve into the critical role that self-discipline plays in a trader's success.
Unlike other trading books that can be dry and academic, Douglas brings a conversational tone to the subject, making it an engaging read for traders of all levels. In "The Disciplined Trader," Douglas explores the psychological and emotional issues that traders encounter daily while delving into his struggles with self-control.
He offers readers insightful advice and useful tips for cultivating the self-discipline required to thrive in the markets through his life experiences and wisdom.
As you read about Douglas' road to becoming a disciplined trader, get ready for some "aha!" moments.
7. The Psychology of Trading by Brett N. Steenbarger
“The Psychology of Trading: Tools and Techniques for Minding the Markets” by Brett N. Steenbarger is another best trading psychology books of all time.
The book does a good job of answering the question, "How do you master psychology?" in the world of trading.
Dr. Brett blends the science of psychology with the art of trading to provide practical steps to improve your trading results.
He's not only a performance coach at the highly successful prop firm SMB Capital but also teaches at the State University of New York. He knows his stuff and shares decades of research in this book.
8. Trading to win by Dr. Ari Kiev
Want to boost your trading confidence and overcome doubt?
Look no further than “Trading to Win: The Psychology of Mastering the Markets” by Dr. Ari Kiev.
Ari Kiev, a renowned psychologist, worked with top Wall Street traders like Steve Cohen, to help them reach peak performance.
Written in a conversational tone, it's a well-researched and practical guide to improving as a forex trader.
So, if you’re still asking yourself which book should I read for trading? The answer is clear: "Trading to Win" by Dr. Ari Kiev.
9. Reminiscences of a Stock Operator by Edwin Lefevre
"Reminiscences of a Stock Operator" by Edwin Lefevre is a timeless classic in the world of trading literature.
Even though it's not written by a psychologist or specifically focused on the psychology of trading, the book provides the answer to the question of “How important is psychology in trading?”
The book digs deeply into the practical side of live trading while providing a distinctive viewpoint on the importance of a trader's mindset. Published in 1923, Reminiscences of a Stock Operator offers a look into the life of Jesse Livermore, one of the best traders of all time.
The book is more than just a history lesson, though. The novel is expertly woven with time-tested trading teachings by Jesse Livermore, making it a must-read for anybody wishing to hone their trading skills.
One of the most important lessons from the book is that trading depends more on the mindset and discipline of the trader than it does on any particular trading strategy. The book places a strong emphasis on maintaining discipline and focus, despite market turbulence and the temptation to look for fast gains.
Therefore, "Reminiscences of a Stock Operator" is the book for you if you're looking for a classic that will give you a taste of the past while giving you insightful knowledge for the present.
10. Investment Psychology Explained by Martin J. Pring
“Investment Psychology Explained: Classic Strategies to Beat the Markets” by Martin J. Pring rounds out the best books on the psychology of trading lists with their unique insights.
Pring debunks the notion that there is a single, magic trading strategy or a “holy grail.” Instead, he highlights the importance of timeless values such as hard work, dedication, patience, and self-discipline for achieving success.
This book is not just about theory, but about real-life practical strategies that can be implemented immediately. Pring sheds light on the myths and delusions that traders and investors often fall prey to, and provides a roadmap for developing the right mental attitude and mindset for success.
Final Thoughts
These 10 best trading psychology books may be a great start, but don't forget about other influential authors like Van Tharp, the Rafman brothers with "The Sway: The Irresistible Pull of Irrational Behavior," or James Clear with "Atomic Habits."
Before you pick a book, ask yourself what you want to gain from your reading.
Are you looking to improve your mindset, manage your emotions, overcome fear and greed, tackle FOMO, or learn self-discipline?
Let's face it, nobody wants to be that trader who can't handle the market's ups and downs. That's why these books are such a game-changer.
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