Reading is an essential part of learning how to trade the forex market. The problem is, knowing which books you should read to further your understanding of the market can be quite challenging, especially if you’re new to forex trading and have little knowledge of how the market works. To make things a little easier for these people, I’ve decided to give you my list of what I think are the best price action books you should read if you want to learn how to become a price action trader. Not all of the books in this list contain information specific to price action trading, but they do all have information which I think will help you understand the market much better than you did before, so without further ado let’s get into the list..
1. The Market Wizards Series By Jack D Schwager
I was just going to include one of the Market Wizards books in this article, but I decide to put them all in, as I think that really the whole series is worth a read due to the insights they give about how some of the world’s top traders trade. For those of you who don’t know, the Market Wizards books are a collection of trading books that focus on a series of interviews a guy by the name of Jack D Schwager conducted with some of the most famous and successful traders of all time.
In total there are four books which make up the Market Wizards series:
Market Wizards – Interviews With Top Trades (Get it on Amazon.com)
The New Market Wizards (Get it on Amazon.com)
Stock Market Wizards (Get it on Amazon.com)
Hedge Fund Market Wizards (Get it on Amazon.com)
The first two books consist of interviews with all types of traders who trade in a range of different markets, whilst the last two contain interviews with just stock traders and hedge fund managers. All in all I’d say that each one of the books is definitely worth reading at least once, especially the first two as despite the fact they are now quite old, the lessons and insights given inside them are still very applicable to today’s markets.
2.Candlestick Charting For Dummies By Russel Roads
One of the primary skills you’ll have to master as a price action trader is the ability to read candlestick charts correctly, so you can understand what’s going on in the market and what may end up taking place in the future. The problem is learning how to read candlestick charts when you’re a beginner trader is incredibly difficult. I remember being completely overwhelmed when I first looked at a candlestick chart, I didn’t have a clue what the chart was supposed to be showing me, the only information I could gather from it all was that there were times when prices moved up and times they moved down.
The reason I recommend reading this book over more well know candlestick charting books, is because everything in this book is explained in a very simple easy to use way, which makes it ideal for beginning price action traders. No complex language is used in the book, and Russel doesn’t talk about trading concepts he assumes the reader already has knowledge on, like I know a lot trading authors frequently do. If there is one downside to the book, it’s that at the end Russel spends a bit of time talking about indicators and shows you how to use them in your trading. In my opinion this is unnecessary because indicators are not something which can really help you with your trading. They just make reading charts more complicated than they already are, so if I were you I’d skip this last section of the book as it’s really not needed to be honest.
3.Methods Of A Wall Street Master By Trader Vic
Methods Of A Wall Street Master By Victor Sperandeo is one of the few trading books I’ve read that has actually been written by a successful trader ( he shows his track record at the beginning of the book ). Victor had been a money manager for 24 years by the time this book was released and he had managed assets for some of the most successful traders of all time. In fact the foreword of the book contains a piece written by Paul Tudor Jones ( another really famous trader ) in which he says “Investment strategies from the man Barron′s calls “The Ultimate Wall Street Pro” Victor Sperandeo is gifted with one of the finest minds I know. No wonder he′s compiled such an amazing record of success as a money manager. Every investor can benefit from the wisdom he offers in his new book. Don′t miss it!”
What I’ve always liked about this book is the focus on the inner mechanics of how financial markets works. Victor doesn’t give you trading strategy to use in the book, (he does give some setups) but he does teach about why certain things in the market happen they way they do. Plus, if you’ve wanted to begin learning about the fundamental side of trading, I definitely suggest reading this book, as Victor spends some time explaining fundamentals in a simple way that every trader can easily understand.
4. The Psychology Of Trading By Brett Steenbarger
I’ve read quite a few books on trading psychology in my time, but the two which stick out most to me are The Psychology Of Trading By Brett Steenbarger and Trading In The Zone By Mark Douglas. Both are really good books, but the reason I’ve chosen The Psychology Of Trading is because it actually gives you methods to prevent making psychology related mistakes in your trading.
Trading In The Zone is a great book to understand why your psychology causes you to make mistakes, but it doesn’t really give any actionable advice on what to do to stop making these mistakes. I know Mark does suggest to start thinking about trades in terms of probabilities not certainties and to treat every moment in the market as being unique, but I think that every trader who had read Trading In The Zone knows that it’s very easy to say your going to start doing these things but another thing entirely actually doing them when trading.
With The Psychology Of Trading, Brett teaches you how to stop mistakes from happening not by understanding what causes them to occur in the first place, (although he does spend part of the book talking about it) but by physically doing things to prevent them. For example, Brett says that one way for an overly cautious trader to stop being so cautious is to do a small work out before starting the trading day. A small workout gets the blood flowing around the body and puts the trader in a pumped up mind state where they’re ready to act on the signals they see forming in the market, instead of being so hesitant and cautious about which trades they should take.
The book is filled with little tips like this that will help you overcome some of the common psychological issues that arise when trading the forex market. If you find yourself to be someone who is constantly making the same thinking related mistakes over and over again, I highly recommend you take a read of this book, as it will allow you to overcome these issue and become a better trader.
5. Reading Price Charts Bar By Bar: The Technical Analysis Of Price Action For The Serious Trader By Al Brooks
Reading Price Charts Bar By Bar is the book you need to read after you’ve read the Candlestick Charting For Dummies book we looked at earlier.
It’s a book similar to Candlestick Charting For Dummies, in that they both talk about some of the same price action concepts. The main difference between the two is in Reading Price Charts Bar By Bar these concepts are discussed in much greater detail than they are in Candlestick Charting For Dummies. In Candlestick Charting For Dummies you learn what candlesticks are and what some of the different patterns signal when they form in the market. In Reading Price Charts Bar By Bar, you’ll learn about things like what the size of the candlestick bodies and tails tell you about what’s taking place in the market, and the relationship between the current price action you see forming and the price action that has formed in the past. These are all critical things you need to understand if you are to become proficient at reading the price action you see form in the market.
Brooks also teaches you how to use trend lines and moving averages in your trading, which I’m not a big fan of, but it’s okay because they’re not critical components of his trading system. He’s way more focused on the candlesticks and what they’re telling him about the market environment. The trend-lines and moving averages are simply tools just he uses to confirm whether or not certain things have actually took place in the market, they’re not the main things he uses to make a decision on when to buy or sell.
At the end of the day I think Reading Price Chart Bar By Bar is a great book to read if you wish to learn about some of the more advanced price action concepts that exist in the market. Brooks has got a few books on price action trading but I really only recommend reading this one, as the others, although providing good information about the market, aren’t really necessary reading if you want to become a price action trader.
6. Getting Started In Chart Patterns By Thomas Bulkowski
Getting Started In Chart Patterns is another book I highly recommend you read if you plan on becoming a price action trader. Chart patterns appear all the time in the market and knowing what they signal when they form can help you better anticipate which direction the market may be about to move in. Unfortunately, because so many different chart patterns exist in the market knowing what each pattern is indicating when it forms on the charts can be quite difficult. Which is why I highly recommend this book, because not only can you use it as a quick reference guide to identify which chart pattern has formed in the market, you can also use it to find out what that pattern is likely to cause the market to do, which makes you better prepared to take advantage of whatever trading opportunities it may present.
7.Currency Trading For Dummies by Kathleen Brooks
I thought I would include this book on the list as it’s a really good book for beginner forex traders, traders who literally know nothing at all about the forex market.
To learn and understand the basics of forex trading is a daunting task when you’re a new trader. It’s made all the more difficult when you don’t exactly know where to go to learn what the basics are. Sure you could go the internet and search google but what exactly are you going to search ? You not going to know what to put in to find the information you want, because you don’t anything about forex trading. This means you’re going to have to spend a lot of time searching through different forex trading websites trying to locate the information you need just to get started as a trader.
With Currency Trading For Dummies you won’t have to spend any time searching the net, because all of the critical information you need to have as a beginning forex trader is contained inside the book, allowing you to get the basics out of the way quickly so you can move onto the more important stuff like creating a trading strategy and learning how to properly read charts.
Well there you have it, that’s my list of the top 7 books you need to read if you’re a price action trader or if you plan on becoming one in the future. If you have any thoughts on the books mentioned in the article or would like to recommend a book you’ve read yourself, feel free to say so in the comment section below.