In this section, we are going to review resources and books which corresponds to the methods used on Market Chart Pattern for charting the markets. Also, as a trader what is very important is to develop the psychology of a trader. We also list some really good books on this topic.
Lets start with the MUST READ book list:
Is a fictionalized account of the biography of Jesse Livermore. Jasse Livermore is one of the most famous speculators of the financial markets perhaps of all times. This is must read for any one serious about trading or even investing. This book is found in the personal libraries of many of the famous Wall Street Traders and Hedge Fund managers. Some speculate, Jesse Livermore wrote the book himself under the pen name. This book, even to this day, continue to provide important learning lessons, which are equally applicable to life as they are to trading. The book describes how Jasse Livermore started in trading as a young boy, updating the stock prices on the board. This helped him to read the tape. Aged 15, made a $1000 which was a lot back in the day, maybe around $25000 in today’s money. The book also describes how he made and lost fortunes and offer lessons, which are applicable to the very trader even today!
Click on the link below and hit the buy button if you don’t already have this gem of a book in your library and read the preview written by the modern day legendary trader Paul Tudor Jones about the book.
Profits in the Stock Market by H.M. Gartley.
This book was published in 1935. Remember it was the time of the Great Depression. The book was sold for $1500, a large sum of money especially in those days. That sort of money would have bout you more than one Ford vehicles. The pages 200 to 222 are of the most interest. On the page 222 H.M.Gartley described a pattern formation which described when might be the opportune time to sell rallies or buy the declines. Later on this pattern formation became popular as the Gartley 222 pattern. Not sure how one can obtain this book these days, a mentor lent me one. The below Amazon link provides a version of the book. Worth checking it out.
Market Wizards: Interview With Top Traders by Jack D. Schwager:
Is a collection of interviews done with some of the world’s best traders. This gives a glimpse into the ways some of the world’s best traders for example Paul Tudor Jones evaluate markets and trade. What is interesting to note is that, each trader interviewed have his or her own methodology to approach the market. This also represents a key fact that there are many ways to approach and trade the markets successfully. What one needs to understand as a trader is most importantly their own psychology, a trading method which could perhaps later be developed into a system and a trade plan based on the principle of strict and viable money management.
Click on the below image to purchase the book and get the insights into some of the world’s best trading minds.
New Market Wizards by Jack D. Schwager:
A sequel to the Market Wizards book mentioned above written y Jack D. Schwager. Interesting interviews with many of the world’s great traders and listen into their psychology for trading.
Trade What You See: How to profit from Pattern Recognition by Larry Pesavento and Leslie Jouflas.
This book is an excellent read on pattern recognition and also emphasis on the fact to trade what you see happening in the marketplace rather than what you think might happen. This is an excellent read, Larry Pesavento breaks down the pattern recognition process using the Fibonacci ratios which are the only leading indicator available to traders in the toolset, gives an introduction to the Fibonacci numbers and also on the trade management from entry to exit. A very good read for the technical traders.
The Gartley Trading Method: New Techniques To Prodit from the Market’s Most Powerful Formation by Ross Beck foreword by Larry Pesavento.
The book covers in detail a key pattern formation that I mention a lot in my articles when looking at what the Market is going to do next. This book provides an excellent description and many examples of this pattern formation.
Fibonacci Trading: How to Master the Time and Price Advantage by Carolyn Boroden
This is a very good book which explains the Fibonacci ratios, how these are derived. The book presents many examples on how to use these concepts. Also discusses how to use these on the time axis and not just the price axis. The book describes a setup called symmetry, which is moves of similar magnitude in price or time which is particularly valuable to look into. Also the book describes a two step pattern, which is very similar to the Gartley pattern formation if not the same thing.
Fibonacci Analysis by Constance Brown
A good book on Fibonacci application and also discussed some advanced Gann material in the later chapter. Although, did find it a little bit of dry read due to the author’s writing style but valuable information inside the book. Not an easy read and perhaps not beginner’s material either especially in the later chapters.
Books on Trading Psychology:
It is very important that a trader and even an investor focus on the process of psychology. Understanding yourself will help you to become better at the process of trading or investing. It is very interesting to know that we spend a lot of time understanding many complex things that surround us or are forced to learn in the traditional careers but pay very little attention to understanding ourselves. This also leads to much failure in the trading arena. In this section I will highlight some of the books, which do an excellent job at understanding psychology and how you might approach the markets.
Trading in the Zone: Master the Market with Confidence, Disciple and a Winning Attitude by Mark Douglas
This is an excellent book to read to understand what goes on between the 9-inch space between the right ear to the left ear as soon as we put on a trade. Mark Douglas presents the concept of risk and explains that once we have truly understood the risk and accepted the risk before entering the trade, the outcome doesn’t really matter and the trader can manage the trade without bringing in the emotions. Also the author bring in the concept of thinking in probabilities, after all a trade when put on has a probability of either working out and hitting the target or stopping us out by hitting the stop loss. Get comfortable with this concept. Pattern recognition helps to find trading opportunities with low risk involved.
A must read and must have book in the library for any serious trader or even an investor! Probably the best way to use this book is to read it once and then read it on daily basis by reading a few pages for example 3 or 5 a day. This way the message will sink it, as there are golden nuggets in the book, which do not become that, obvious at the first read. I think it has to do with the Author’s writing style. Hit the Amazon link below and do yourself a favour and purchase the book.
The Disciplined Trader: Developing Winning Attitudes by Mark Douglas
It is another really good book on trading psychology by Mark Douglas. I think purchasing either this book or Trading in the Zone be fine. Mark Douglas discuses similar ideas and concepts.
Keep on watching this space, I will updating the resources page with some useful Software related to trading, Data feeds and other links.