1) Technical Analysis of Stock Trends
Technical Analysis of Stock Trends is the Vaagwat Gita, the bible, Namaz (whatever your religious affiliation is) for those who want to use technical analysis.
If you have applied for a few IPOs and now want to dive into the secondary market, you might first want to learn a strategy. Otherwise, after you run out of your beginner's luck, the market will test everything and take everything from you.
And if you have heard gossips and confusing discussion about trendlines, support, and breakout, and want to learn about technical analysis, you should grab this book. This book is so integral to understanding technical analysis that we think less description about it is more.
Moving on to the next book now.
2) Think, Trade, and Grow Rich
Candlestick charting isn't at the top priority of most technical traders and investors in Nepal. However, when the western financial market understood this visually appealing and highly efficient tool used in the rice markets of Japan, there was no looking back.
After one has learned about support and resistance, head and shoulders, triangles, double tops, and other technical analysis tools, candlestick charting is the only skill left to complete your arsenal.
Think, Trade, and Grow Rich is the simplest book on candlestick charting. Although there are hundreds of candlestick patterns out there, there is only a handful that is superior in terms of percentage accuracy and frequency of occurrence. A frequently seen pattern with 51% accuracy and an accurate pattern that almost never forms are both useless.
Although candlestick charting is visually appealing and easy to understand in itself, this book makes the tool incredibly accessible for beginners.
Even though Think, Trade, and Grow Rich boasts of providing a self-sustaining investment strategy in itself, it works the best when combined with technical analysis tools.
3) Trading in the Zone
Do not try harder than necessary to beat the market. Try to play along with it. The market is neither your friend nor your enemy because it presents everything from a neutral standpoint.
Also, an investor's perception of risk is dependent on the outcome of the last three of his trades. If he lost in the last three trades, he will see risks that are not present and will be wary of the market. And if he won in the last three trades, he will be overly exuberant and will place irrational and overconfident trades.
All the wisdom above is derived from the book Trading in the Zone. The book is more about trading psychology rather than buying and selling. Unlike other books that only talk about a particular method of investing, this book revolves around how investor psychology is the reason why most people lose, and not because of an ineffective strategy.
Read this book after profiting from the stock market. Go back to the pages of this book after a loss. You will learn great things both times. Trading in the Zone will help you stay humble and focused irrespective of your portfolio gains/losses.
4) Reminiscences of a Stock Operator
"Bulls and bears make money; pigs get slaughtered."
The quote above is commonly used in the investment world to reflect on how stupidity and ignorance can cost one dearly in the financial market. Everyone who sticks to a working strategy can make money, irrespective of the type of strategy used. However, it is those who do not use a rigid investment plan, ones who invest in whims and impulsions, the pigs, that are ultimately punished by the market.
This quote originated from this very book Reminiscences of a Stock Operator. Today, it is a worldwide investing adage.
Listed by Fortune magazine in the "The Smartest Books We Know about business" category, this book is written in the first person by a character inspired by the life of stock trader Jesse Livermore.
Its take on crowd psychology and market timing is valuable to this day. This is indeed a timeless tale that will enrich your life―and your portfolio. If there is a book that teaches more about people and markets than the experience itself, it surely is this one.
5) Trend Following: Learn to Make Millions in Up or Down Markets
Any reader who superficially scans for the holy grail might be disappointed by this book because they can't think long enough about why this book was written. A lot of chapters are anecdotes, famous quotes, and even baseball analogies that seem awfully far stretched from trading.
However, if you ask a star football player to completely summarize what makes one a great football player, he can't do that. Becoming good at one thing isn't always a step-wise process. Success comes with the adaptation of new ways of thinking and the maturity gained by experience.
This is a book that provides the mindset and process to become a successful trader, rather than give a "winning strategy." What's more, it goes against the grain of "buy and hold" philosophies.