The 5 Books Every Trader Needs to Read

by Darrin Donnelly on December 21, 2010

The top 5 books for traders.

The top 5 books for traders.

If you’re looking for a last-minute gift idea for your favorite trader (who may or may not be YOU), how about giving him or her a must-read book?

Traders absolutely love books because we’re always looking to expand our knowledge base, always looking for an added edge.  

Here are five books that need to be on every trader’s bookshelf.

No. 1: How I Made $2 Million in the Stock Market by Nicolas Darvas

This is where the Darvas system was introduced to the world and it is truly a timeless Wall Street classic. 

Not only does this book reveal the Darvas Trading System in its infancy, but it’s also a great read.  Darvas is outstanding at telling his rags-to-riches story and letting readers in on his emotional roller-coaster and frustrating quest for “cracking” the market.  

How I Made $2 Million in the Stock Market is one of those books where, as a trader, you learn something new every time you read it.

(If this book already graces your trader’s bookshelf – as it should – consider Wall Street: The Other Las Vegas or You Can Still Make It in the Market, two others by Nicolas Darvas.  Or, for a more modern Darvas System adventure, check out How I Made Money Using the Darvas System by Steve Burns.  And of course, I’d be grateful if you checked out my own book on the Darvas System, Secrets of the Darvas Trading System.)

No. 2: Market Wizards: Interview with Top Traders by Jack Schwager

Actually, you should also buy Schwager’s follow-ups, The New Market Wizards and Stock Market Wizards.  These three books are a collection of interviews with the world’s top traders and they are each fascinating, informative, and motivating! 

Every trader needs to read Jack Schwager.  Period.

No. 3: How to Make Money in Stocks by William O’Neil

This is the book that introduced the world to Investor’s Business Daily founder William O’Neil’s powerful trading system.  O’Neil was a follower of Nicolas Darvas’ teachings and those familiar with the Darvas System will see many similarities. 

In many ways, O’Neil helped take the Darvas System to the modern Wall Street era.

No. 4: Trade like an O’Neil Disciple by Gil Morales and Dr. Chris Kacher

This is easily the best trading book of 2010.  Authors Morales and Kacher got their start trading directly under William O’Neil and they have since gone on to manage their own fund.

These two traders have taken Darvas/O’Neil trend trading to the next level.  In this book, which is a rather advanced textbook and certainly not for beginners, Morales and Kacher reveal decades of research that will improve you’re trading instantly. 

In particular, their advanced techniques for using accumulation and distribution days to time the overall market, their updated and honed “pocket purchase” buying tool, and their brilliant (and elaborately-tested) selling tool that I now refer to as the “Undercut Sell Rule” are perhaps the three most valuable takeaways from this book.

No. 5: The Complete Turtle Trader by Michael Covel

If you ever had any doubt that trend trading works, you need to read this book to alleviate such doubts.  In the process, Covel thoroughly tells one of the most famous stories in Wall Street history: Richard Dennis’ “Turtle Experiment,” where the legendary trader brought in a group of no-name traders from varying backgrounds and taught them how to trade.  It was all done in the name of solving a bet on whether or not successful trading could be taught.  The results were phenomenal. 

Covel also delves deep into the psychological aspects of what separates successful traders from failing traders.  Why did some succeed while others failed, even though they all received the exact same trading system rules?  This fascinating book is not to be missed.

(Trend Following by Michael Covel is another must-own.)

There you have it.  Five top trading books to finish off your holiday shopping with.  (Or, perhaps a way to reward YOURSELF.)

Of course, you could always give the greatest gift of all: a subscription to Darvas Trader PRO!  (Sorry, couldn’t resist.)

Happy Holidays!