The Books
Over the years, these books have remained my constant trading companions, ones I revisit time and time again. I’d recommend reading them multiple times to extrapolate the overlapping trading concepts until they become second nature in both fundamental and technical analysis.1
The list below is skewed towards topics related to technical analysis. This is because I typically trade options that expire within a year, and it aligns with my trading style and risk tolerance.
*UPDATED: 1/6/20242
My book recommendations assume that the reader already possesses a foundational understanding of fundamental analysis, including basic macroeconomics. Not in any particular order of importance:
1. Trader Vic: Methods of a Wall Street Master, by Victor Sperandeo
No other book has had a more profound impact on my trading behavior than Sperandeo’s. As a legendary options trader, his method transcends a singular approach, offering a multifaceted view of trading. Incorporating elements of options trading, fundamentals, technical analysis, economics, Fed policy, risk, and market psychology, his book serves as a comprehensive guide that resonates with my own trading philosophy.
2. Technical Analysis of Stock Trends, 6th Ed. or earlier, by Robert D. Edwards and John Magee
The 'Bible' of technical analysis. Period. I'd recommend earlier editions in hardcover for their enlarged charts and better print quality.
3. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy
Expanding on Edwards and Magee’s textbook, the combination of Murphy’s chart analysis techniques detailed in the book with StockCharts.com has been a set of arsenals tried and tested throughout the years in my trading. Furthermore, it delves into Dow Theory and volume-price analysis in depth. It’s a reference book that always sits next to my trading desk.
4. Get Rich with Options: Four Winning Strategies Straight from the Exchange Floor by Lee Lowell
I read this book more than 20 times, and it’s the book that taught me how to trade options properly. Lowell dispels the myth that options trading is inherently risky, difficult to understand, and for solely “professionals.” He keeps his recommended strategies to the classic four that I routinely use in my portfolio and details examples and explanations on how to apply them to real life trading scenarios.
5. The Battle for Investment Survival, by Gerald M. Loeb
I initially found this book dull, not realizing that it laid the foundation for many finance books to come. How wrong I was upon re-reading it a few years ago. Loeb’s thesis hinges on preserving capital and emphasizes short-term trading, in contrast to many books that advocate for the buy-and-hold approach. There’s nothing wrong with the long-term approach, but I already have multiple retirement accounts that invest in low-cost index funds. I don’t need to duplicate my position in my trading account.
6. Fundamental Analysis for Dummies, 3rd. Ed. by Matthew Krantz
Understanding fundamental analysis does not happen in a vacuum, nor is there a single text book that encapsulates every concept. However, I do believe that the finance academia community has led us to believe that it’s much more complex than it needs to be. Some might suggest starting with Benjamin Graham’s The Intelligent Investor, but it’s merely a book one should read as a value investor.3 Without judging the title of this book, it does an exceptional job of breaking down some of the most elusive fundamental concepts in layman’s terms and provides a comprehensive checklist before going long.4
7. Quality of Earnings by Thornton L. O'glove
Recommended by a very good friend, this is a book I wish I had read many years ago that could have saved me many headaches. O’glove critically asks how much money a company is really making behind closed doors and whether there are any skeletons in the closet. He teaches how to analyze quarterly earnings and publicly available materials so that an investor alone can make buy and sell decisions. I’m often an advocate of trading options around earnings if I believe that there’s a high likelihood that my expectations are to be in line with the results.
8. Encyclopedia of Chart Patterns by Thomas N. Bulkowski
Bulkowski would say, “chart patterns are the footprints of smart money.” And these patterns repeat themselves over and over again because human nature hasn't changed for thousands of years. The book is organized by chart patterns and event patterns, dissecting each pattern by its success rates and statistical attributes. As with chess patterns, the more you see them, the better you recognize them in real life trading scenarios.
Bulkowski’s Getting Started in Chart Patterns is another book I’d recommend for his broader take on the market and trading techniques in general.
9. Candlestick Charting Explained: Timeless Techniques for Trading Stocks and Futures by Gregory L. Morris
This has been my go-to book on candlestick charting for more than 15 years because it focuses on short-term trading sentiment—generally less than seven days—which is immensely helpful for options trading.
10. How to Make Money Selling Stocks Short by William J. O'Neil and Gil Morales
I’ve been a huge fan of O’neil and Investor’s Business Daily for years. I was surprised to find this book published several years ago, given his general attitude towards selling short and his view that it’s immensely difficult to time such positions. Likewise, I don’t usually sell short. However, this book has been very useful in identifying when to sell, buy puts, or sell calls on my long position. I highly recommend it.
11. Trading in the Zone by Mark Douglas
This is the original “self-help” book on trading psychology. I turned to this book after imploding my account for the first time in the early 2000s. I am personally not a fan of his writing style but can assure any trader that no other book has articulated the psychological toll that accompanies stock trading.
12. How to Trade in Stocks by Jesse Livermore
While many are familiar with Edwin Lefèvre’s Reminiscences of a Stock Operator, not everyone knows that Livermore wrote his original stock trading book in 1940. In his own words, he dissects the three pieces of the puzzle that fascinated him: timing, money management, and emotional control. There must be a reason why I keep coming back to it.
Fundamental and technical analysis are not mutually exclusive, despite each group's tendency to criticize the other. I can't imagine trading a stock without understanding the health of the underlying business, and vice versa. It would be negligent not to also examine the trading volume and the chart across various timeframes. The latter can also provide clues about its potential future direction.
While reorganizing my library recently, I rediscovered some of my all-time favorites that have greatly influenced the way I trade.
No doubt this is a classic but times have changed since the pure asset-based companies. I’d read this book solely for Jason Zweig’s commentaries after each chapter that distinguishes many concepts in today’s new economy.
I've come to realize, after reading many trading and finance books, and as showcased above, that the worse the title, the better the book generally.