It is often argued that the best way to learn any craft or occupation is to be mentored by people who have already attained success in the field. Schwager's books offer readers the opportunity to pick up some mentor-like advice from very successful traders. The interviews offer both interesting biographical information on the interviewees and exposure to a wide variety of investing strategies. Although many other books have since been published on this subject, Douglas' book is still considered a "must read" classic text on trading psychology.
One of the strengths of the book is the fact that, although it addresses a subject that might appear dauntingly complex to some, it is a very clear and easy read. Douglas does an excellent job of describing the basic mindset and attitudes that are essential for traders. Douglas subsequently penned another very popular book on trading psychology , "Trading in the Zone.
This book, written by Victor Sperandeo, is not as well known as many books on trading but is a favorite of many traders who have read it. In the book, Sperandeo puts forth an investment strategy that is based not on specific market events or company-specific metrics but on analysis of the general direction of the economy as driven by factors such as the fiscal policies implemented by the Federal Reserve and tax policy.
Sperandeo argues that identifying the basic direction in which such policies will inevitably drive the economy enables traders to determine the most probable overall market direction, as well as specific market sectors that will thrive. HarperCollins Publishers. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways Becoming a successful trader can be a difficult achievement, with several ups and downs along the way.
There's no one right way to become a great trader, but reading about how others have done it can point you in the right direction for your personality and trading style. Several classic books exist that not only document real-world traders and how they rose to the top, but also relate strategies you may not learn in finance class. Reminiscences of a Stock Operator. Buy on Amazon. The Intelligent Investor.
Leeson had the completely wrong mindset about trading. He saw the markets as a giant slot machine. Sometimes you win sometimes you lose. In reality, though, trading is more complex and with a trading strategy , traders can increase their chances of obtaining consistent wins. On top of that, Leeson shows us the importance of accepting our losses, which he failed to do.
Leeson hid his losses and continued to pour more money in the market. He was effectively chasing his losses. Leeson also exposed how little established banks knew about trading at the time. His actions led to a shake-up of many financial institutions , helping shape the regulations we have in place today.
What he did was illegal and he lost everything. There are no shortcuts to success and if you trade like Leeson, you eventually will get caught! Famous trader, William Delbert Gann, has a lot to teach us about using mathematics on how to predict market movements. Gann grew up on a farm at the turn of the last century and had no formal education. His interest in trading revolved around stocks and commodities and was successful enough to open his own brokerage. Most importantly, what they did wrong.
This is where he got most of his knowledge of trading. Gann went on to write numerous articles in newspapers with recommendations, published numerous trading books and taught seminars. Such critics claim that he made most of his money from his writing. Despite passing away in , a lot of his teachings are still relevant today. Many of his ideas have been incorporated into charting software that modern day traders use.
What can we learn from Willaim Delbert Gann? Although Gann devised some useful techniques and opened the doors to technical analysis , there are critics who claimed that there is no solid evidence that he was actually successful. Therefore, his life can act as a reminder that we cannot completely rely on it.
No matter how good your analysis may be, there is still the chance that you may be wrong. Further to that, some of the ways Gann tried to analyse the market are questionable, such as astrology, and so some of his teachings need to be looked at carefully. That said, he put into place ideas of geometry, which is still used today particularly triangle patterns which can be used to predict market breakouts.
More importantly, though is his analysis of cycles. Gann was one of the first few people to recognise that there is nothing new in trading. He believed in and year cycles. Essentially at the end of these cycles, the market drops significantly. This happened in , then in and some believe a year cycle may come to an end in Each time he claims there is a bull market which is then followed by a bear market.
It was a global phenomenon with many fearing a second Great Depression. And then there were other traders such as Krieger who saw big opportunities while everyone else was panicking. He was already known as one of the most aggressive traders around. Kreiger was quick to spot that as the value of American stocks plummeted to new lows, many traders were moving large sums of money into foreign currencies.
This then meant that these foreign currencies would be immensely overvalued. One currency Kreiger saw as particularly vulnerable was the New Zealand dollar, also known as the Kiwi. His trade was soon followed by others and caused a significant economic problem for New Zealand. The Kiwis even tried to ban Krieger from trading their currency and it also rumoured that he may have been trading with more money than New Zealand actually had in circulation.
Krieger then went to work with George Soros who concocted a similar fleet. What can we learn from Krieger? The biggest lesson we can learn from Krieger is how invaluable fundamental analysis is. Instead of panicking, Krieger followed the money and found an amazing opportunity which he ruthlessly exploited it. In fact, many of the best strategies are the ones that not complicated at all.
His strategy also highlights the importance of looking for price action. Funds were being lost in one area and redistribute to others. What Krieger did was trade in the direction of money moving. Why trade stocks when the market is on a steep decline and foreign exchange is on a steep rise? While it may be a great time to buy stocks, you have to be sure that they will rise again. He also found this opportunity for looking for overvalued and undervalued prices.
This can be done with on-balance volume indicators. Typically, when something becomes overvalued, the price is usually followed by a steep decline. Krieger would have known this and his actions inevitably lead to it. There are issues with Sykes image though. The life of luxury he leads should be viewed with caution. Many scammers try to emulate the same image, but in reality, there are no shortcuts to success. Despite this, he is also highly involved in philanthropy, referring to himself as a financial activist and is highly interested in educating others in trading.
Sykes is also very active online and you can learn a lot from his websites. From his social platforms, day traders can learn a lot about how to trade. These platforms include investimonials and profit. Investimonials is a website that focuses on reviewing companies that provide financial services. You can also use them to check the reviews of some brokers. What can we learn from Timothy Sykes?
Sykes has a number of great lessons for traders. One of his top lessons is tha successful day traders should focus on small gains over time, not on huge profits, and never turn a trade into an investment as it goes against your strategy.
He also believes that the more you study, the greater your chances are at making money. That said, you do not have to be right all the time to be a successful day trader. It is still okay to make some losses, but you must learn from them. Andrew Aziz is a famous and super successful day trader and author of numerous books on the topic. Before getting into trading , Aziz obtained a PhD in chemical engineering and worked in various research scientist positions in the cleantech industry.
For day traders , his two books on day trading are recommended:. He also is the founder of Bear Bull Traders which he works on with a number of other like-minded traders. They also have a YouTube channel with 13, subscribers. What can we learn from Andrew Aziz? According to How to Day Trade for a Living , Aziz uses pre-market scanners and real-time intraday scanner before entering the market. Look for opportunities where you are risking cents to make dollars. Aziz also believes in the importance of understanding candlestick patterns but stresses that traders should not make their strategy too complicated.
Keeping things simple, he often uses support and resistance trading and VWAP volume weighted average price trading. Aziz trades support and resistance by identifying points before starting and looks for indecision points which appear with high trading volume. Essentially, once he has worked this out, buy at the lowest points you identified and sell at the highest. VWAP takes into account the volume of an instrument that has been traded.
If prices are above the VWAP, it indicates a bull market. If the prices are below, it is a bear market. Lawrence or Larry Hite was originally interested in music and at points was even a screenwriter and actor. Later in life reassessed his goals and turned to financial trading. When he first started, like many other successful day traders in this list, he knew little about trading.
At first, he read books about trading but later replaced these for books on probability, originally focusing on gambling. One of these books was Beat the Dealer. He concluded that trading is more to do with odds than any kind of scientific accuracy. He was also interviewed by Jack Schwagger, which was published in Market Wizards. What can we learn from Lawrence Hite? With this in mind, he believed in keeping trading simple. His trading strategy is more focused on what you can afford to lose instead of what you are looking to make as a profit.
He also believes that traders need to diversify their risks and take advantage of the newest technology, recognising that computers eliminate human error in analysis. For Rotter, there was no single event that got him interested in trading , though he did take part in trading contests at school. That said he learnt a lot from his losses and he is the perfect example of a trader who blew up his account before becoming successful.
He says he knew nothing of risk management before starting. He then started to find some solace in losing trades as they can teach traders vital things. What can we learn from Paul Rotter? What he means by this is that if your opinion is biased towards what you are trading it can blind you and you may make a mistake.
In reality, you need to be constantly changing with the market. He is also known for placing buy and sell orders at the same time in order to scalp in several highly liquid markets. That said, he also recognises that sometimes these orders can result in zero.
Rotter also advises traders to be aggressive when they are winning and to scale back when they are losing , though he does recognise that this is against human nature. He also advises having someone around you who is neutral to trading who can tell you when to stop. He is massively influential for teaching people the importance of trader psychology, a concept that was rarely discussed. Before opening the debate about trader psychology , making good or bad trades was linked to conducting proper market analysis.
You may enter or exit a trade at the wrong time and deal with the failure in a negative way. During his lifetime, Douglas worked with hedge funds, money managers and some of the largest floor traders. Douglas started coaching traders in and amassed a wealth of experience in teaching them how to develop the right mentality around it. What can we learn from Douglas? We can learn that traders need to know themselves well before they start trading and that is a very hard thing to do.
While technical analysis is hard to learn, it can be done and once you know it rarely changes. Psychology, on the other hand, is far more complex and is different for everyone. These problems go all the way back to our childhood and can be difficult to change.
Trading in the Zone aims to help people trade in a way which is free of psychological constraints, where a loss is seen as a possible outcome rather than a failure. Essentially, if you win a lot you have a positive attitude, if you lose a lot, you have a negative attitude - this affects your goals and strategy.
Mark Minervini is perhaps one of the most successful day traders alive today and his list of achievements is astounding. What makes it even more impressive is that Minervini started with only a few thousand of his own money. He also has published a number of books, two of the most useful include:.
Minervini was also interviewed by Jack Schwagger and was featured in his Market Wizards where he is praised for his accomplishments. What can we learn from Mark Minervini? His book Trade Like a Stock Market Wizard has many key points that are highly useful for day traders.
Minervini urges traders not to look for the lowest point to enter the market but to try to enter trends instead. He explains that firstly it is hard to identify when the lowest point will occur and secondly, the price may stay at this low point for a long time. Minervini also suggests that traders look for changes in price influenced by institutions too. They often lead trails that traders can follow and a ride along with them.
Another great point he makes is that traders need to let go of their egos to make money. Lastly, Minervini has a lot to say about risk management too. He suggests that when markets enter difficult conditions, you need tighter losses and look for lower profits. Along with that, the position size should be smaller too. Jack Schwager is one of the most well-known trading writers has released enough books to fill an entire library. His most famous series is on Market Wizards. They are:. Many of the people on our list have been interviewed by him.
Other books written by Schwager cover topics including fundamental and technical analysis. On top of his written achievements, Schwager is one of the co-founders of FundSeeder. What can we learn from Jack Schwager? Quite simply, read his trading books as they cover strategy, discipline and psychology.
He also talks about the polar opposites of traders ; those that focus on fundamentals and those that focus on technical analysis. Though they both think that the other is wrong, they both are extremely successful. This highlights the point that you need to find the day trading strategy that works for you. Like many other traders , he also highlights that it is more important not to lose money than to make money. Something repeated many times throughout this article. Finally, the markets are always changing, yet they are always the same, paradox.
Known as Trader Vic, he has 45 years of experience as a trader on Wall Street and trades mostly commodities. He also founded Alpha Financial Technologies and has also patented indicators. What can we learn from Victor Sperandeo? If intelligence were the key, there would be a lot more people making money trading. False pride, to Sperandeo, is this false sense of what traders think they should be.
Most of the time these goals are unattainable. Our goals should be realistic in order to be consistent. Sperandeo started out his career as a poker player and some have drawn a correlation to the fact that poker is similar to trading in how you deal with probability. More importantly, though, poker players learn to deal with being wrong.
Sperandeo says that when you are wrong, you need to learn from it quickly. Lastly, Sperandeo also writes a lot about trading psychology. Specifically, he writes about how being consistent can help boost traders self-esteem. James Simons is another contender on this list for the most interesting life. Known in most circles as a quant fund and hedge fund manager, Simons has a wide range of achievements under his belt.
Took his code-cracking skills with him into trading and founded Renaissance Technologies , a highly successful hedge fund that was known for having the highest fees at certain points. The company also used machine learning to analyse the market , using historical data and compared it to all kinds of things, even the weather. Along with his wife, Simons founded the Math for America non-profit organisation with the goal of improving mathematics in schools and recruit more qualified teachers in public schools.
What can we learn from James Simons? Simons is loaded with advice for day traders. When this happens we leave ourselves open to making mistakes and effectively bring ego into trading. Simons also believes in having high standards in trading and in life. As a trader , you should always aim to be the best you can possibly be. Another thing we can learn from Simons is the need to be a contrarian.
At times it is necessary to go against other people's opinions. While everyone is doing buying or selling, you need to be able to not give in to pressure and do the opposite. A wordplay on the common phrase that states the opposite often used as a disclaimer for brokers.
But what he is really trying to say is that markets repeat themselves. He started his own firm, Appaloosa Management , in early What can we learn from David Tepper? Market uncertainty is not completely a bad thing. We need to accept it and not be afraid of it. When things are bad, they go up. He likes to trade in markets where there is a lot of uncertainty. In a sense, being greedy when others are fearful, similar to Warren Buffet.
Tepper does this by trading stocks in companies that people have no faith in and then selling everything when the price rises, going against the grain. Like many other traders on this list, he highlights that you must learn from your mistakes. For Tepper in particular, it is important to go over and over them to learn all that you can.
One last thing we can learn from Tepper is that there is a time to make money and a time not to lose money. Risk management is absolutely vital. Not all opportunities are a chance to make money. He got interested in trading through his interest in poker which he played at high school and for him, it taught him valuable lessons about risk.
What can we learn from Steven Cohen? This is important because even if you have a stock that is doing well, it will not perform if the sector and market are down. Think of the market first, then the sector, then the stock. This rate is completely acceptable as you will never win all of the time! To make this profitable, you have to make sure losses are as small as they can possibly be and profits as high as they can be.
By this Cohen means that you need to be adaptable. The way you trade should work with the market, not against it. His Turtles were a group of 21 men and two women that he taught a trading strategy based on following trends in a bet that he had with another trader. Despite his successes, he did quit trading twice, once after Black Monday and the dotcom bubble and some have suggested that his strategies are most effective in bull markets.
What can we learn from Richard Dennis? He also follows a simple rule that when everyone starts talking about an instrument and the price is continuing to rise, it can be a sign that the market is about to go down. This is especially true when people who do not trade or know anything about trading start talking about it. Another thing Dennis believes is that w hen you start to day-trade , start small.
Make mistakes and learn from them. Always have a buffer from support or resistance levels. Ray Dalio is a trading icon and the founder and CIO of Bridgewater Associates , a hedge fund consistently regarded as the largest in the world. He first became interested in trading at the age of 12 when he worked as a caddy at a golf course and listened to the conversations of the golfers, many of which worked on Wall Street.
Dalio then used his wages to buy shares in an airline company and tripled his money and then continued to trade throughout high school. While in college Dalio took up transcendental meditation which he claims helped him think more clearly.
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This is the first book that got me started on Trend Following. It explains the concept of what Trend Following is about and how hedge funds use this approach to. If you want to learn how to trade the Forex markets, Charlie Burton is the that the BBC has approached him to film a documentary on his trading methods. Many people would like to learn how to become successful traders, whether via stocks, commodities, options, foreign exchange (forex), or all of the above.