Trading is something humans have done since the beginning of time. Ever since people discovered that things have value, they have been quick to use that to their advantage. But what are the tricks of the trade, so to speak, when it comes to trading?
You and I want the same thing; we both want that secret wisdom legendary traders have. While reading through the best trading books won’t necessarily guarantee that, it will offer a great start and some considerable knowledge on what to do to improve your skills.
Like many of the traders before you, you’ll get to where you need to be with sufficient experience. You may stumble and fall, but, when properly guided, you should be able to learn from your mistakes and eventually achieve success.
What’s great about my compilation of books is that there’s always one that will cover the current level of your trading skills. We’ve all got to start somewhere, right?
If you’ve only dabbled in trading before and enjoyed it, now’s your chance to get serious. It may seem like a game of luck that you’re not willing to bet on, but words from our experts should convince you otherwise. For the authors of most books in this collection, luck doesn’t just happen for anyone; it happens to those who work hard for it.
Trading books help you think more clearly so that you can make better decisions. They’re also the type of books you should read again and again so you can ingrain in yourself the lessons they teach. Don’t move from one book to another without truly understanding the purpose of the book.
So, without further ado, let me introduce you to a compilation of essential reads on trading. May these books take your trading skills to the next level and help you win at life.
Best Trading Books
The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History
As a speculator I learned to take the best from books and ideas without arguments (many readers seem to be training to be shallow critics)--good insights are hard to come by. One does not find these in the writings of a journalist. There are some things personal to the author that might be uninteresting to some, but I take the package. The man is one of the greatest traders in history. There are a few jewels in there.
The man did it. I'd rather listen to him than read better written but hollow prose from some journalist-writer.
Comic-Con and the Business of Pop Culture: What the World’s Wildest Trade Show Can Tell Us About the Future of Entertainment
I am relieved to finally find a book that deals with Black Swan Events in a new way. Ayache brings a reverse-probabilistic perspective: instead of considering that a price is the result of probabilistically derived expectation, he reverses the issues and investigates these artificial constructs as probabilities and expectations as secondary, derived, fictitious concepts that we bring about to explain prices, decisions, and other things.
This, of course, is just the beginning, so one has to be understanding about the speculative aspect of the effort --so view this as a gutsy look at the end of probability and how we will need to envision the world once we get rid of this artificial, antiquated tool. I am also glad to see that those of us trained in the trading of options can have views original enough to influence the philosophy of probability and the philosophical understanding of contingency.
Question: What books would you recommend to young people interested in your career path?
- Anything by Peter Senge.
- The Hard Thing About Hard Things – Ben Horowitz
- Once you are Lucky, Twice you are good – Sara Lacey
- Revolutionary Wealth – Alvin Toffler
- Black Swan – Taleb
- Reset: My Fight for Inclusion and Lasting Change, by Ellen Pao.
- Creative Class – Richard Florida
- Creativity Inc. by Ed Catmull & Amy Wallace
- Liar’s Poker by Michael Lewis
- American Government 101: From the Continental Congress to the Iowa Caucus, Everything You Need to Know About US Politics – Kathleen Spears
- The Tao of Pooh by Benjamin Hoff.
- Anna Karenina by Leo Tolstoy.
- Any book by Herman Hesse
- The Art of War by Sun Tzu.
Boom Town: The Fantastical Saga of Oklahoma City, its Chaotic Founding… its Purloined Basketball Team, and the Dream of Becoming a World-class Metropolis
Sam Anderson is a visionary artist who sees what others can’t; he’s a master wordsmith who creates beauty and light from confusion and plunging darkness; he's our tour guide to a better tomorrow because he understands a complex and foundational history that is our launching pad to new and unexplored universes.
The entire company has organized around Playing to Win which is a book written by A.G. Lafley and a colleague of his.
Listen, there are many ways to deploy strategy in companies. This is one I found to be particularly helpful because organizations have a lot of trouble making decisions, particularly at our scale.
So this notion of where to play, what countries, what market segments, what products, and where not to play because we can't do it profitably, has been a very good discipline. ...
And then once you determine where you're going to play, how to win. That is through a combination of where you are going to excel versus competitors.
It's actually been a really good common framework that we can apply across HP. It's easily understandable and actually forces the tough trade-offs.
Storms of My Grandchildren: The Truth About the Coming Climate Catastrophe and Our Last Chance to Save Humanity
This summer, Mackenna is learning more about the birth of behavioral economics, the psychology of white collar crime, and the restoration of American cities as locations of economic growth.
I read this book after completing my exposition of overcompensation, how a stressor or a random event causes an increase in strength, in excess of what is needed, like a redundancy. I was also looking for evidence of convex reaction to stressor, or the effect of a mathematical property called Jensen's inequality in domains and found it exposed here (in other words, why a combination low dose (most of the time) and high dose (rarely) beats medium dose all the time. The authors presents the evidence for the phenomenon in the following: 1) acute stressors cum recovery beat both absence of stressors and chronic ones (this includes thermal variations); 2) stressors make one stronger (post traumatic growth); 3) risk management is mediated by the deep structures in us, not rational decision-making; 4) winning causes an increase in strength (the latter are more complicated effects of convexity/Jensen's Inequality).
Great book. I ignored the connection to financial markets while reading it. But I learned that when under stress, one should seek the familiar.
All Marketers are Liars (Tell Stories): The Underground Classic That Explains How Marketing Really Works – and Why Authenticity Is the Best Marketing of All
Question: What books would you recommend to young people to be prepared for the future workplaces?
Answer: So many! So many by Seth Godin (Linchpin, The Icarus Deception, Purple Cow) Essentialism by Greg McKeown, Deep Work by Cal Newport, The Choice by Og Mandino, Rich Dad Poor Dad by Robert Kiyosaki, The Total Money Makeover by Dave Ramsey, No More Dreaded Mondays and 48 Days To The Work You Love by Dan Miller, The 12 Week Year by Brian Moran, Will It Fly by Pat Flynn, The Traveler's Gift by Andy Andrews, QBQ by John Miller, The Four Hour Workweek by Tim Ferriss. Wow, there are so many more, but that’s a start.
The Enlightened Capitalists: Cautionary Tales of Business Pioneers Who Tried to Do Well by Doing Good
The Opposable Mind by Roger Martin had the biggest impact on my thinking and viewpoint towards decision making.
Among many other themes, the book stressed the idea that successful leaders (the top 10%) had one distinguishing characteristic: they took traditional two-option decisions (both with pros and cons) and found a winning alternative, we’ll call it C. The winning alternative (C) comes from creative thought and generally minimizes the cons while maximizing the pros of any option. This kind of thinking had a profound impact on my decision making outcomes.
It probably seems weird to recommend books on pickup artists, pick pockets and con men (nor am I necessarily equating the three groups) but it fits. Though I would accept that most of what these guys do is tactical rather than strategic–they are still quite excellent at identifying opportunities and weaving such flawless, enveloping plans that the marks often have no idea that anything is actually occurring. A favorite con example is the one where the con man sets up a fake boxing match that he agrees to “fix” with his mark.
Taking the marks money, he then fakes the fake boxing match so that it appears that one boxers kills the other in the ring. He and the mark then flee the scene in opposite direction to avoid the police–the mark thinking he got away with murder, when really he was robbed. The Game is about seduction, literally, but the other two books are about seduction in their own way as well. These books are all classics and will help you, no matter what you do.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
Gladwell is not the first person to come up with the 10,000 hour rule. Nor is he the first person to document what it takes to become the best in the world at something.
But his stories are so great as he explains these deep concepts.
How did the Beatles become the best? Why are professional hockey players born in January, February and March?
And so on.
Like Charlie Munger once said: “I’ve long believed that a certain system - which almost any intelligent person can learn - works way better than the systems most people use [to understand the world]. What you need is a latticework of mental models in your head. And, with that system, things gradually fit together in a way that enhances cognition. Just as multiple factors shape every system, multiple mental models from a variety of disciplines are necessary to understand that system. You can read this book to start building a latticework of mental models in your head.
Bill McDermott has had a hugely successful career—from Xerox to SAP. In this very human book, he describes the secrets that led to this success.
One of the very few books I think about all the time is Robert Wright’s Nonzero: The Logic of Human Destiny.
Nonzero is an intriguing lens through which to view current events (which is why it’s often in my thoughts). As Chopra notes, cooperation isn’t always the norm…Trumpist Republicans and Brexit proponents are both veering towards the zero sum end of the spectrum and I don’t think it will work out well for either country in the long run.
It's important that we make this transformation, because of what Clayton Christensen calls the innovator's dilemma, where people who invent something are usually the last ones to see past it, and we certainly don't want to be left behind.
Here are some of the guests and some of their books, in no particular order. I recommend all of the below books. If I didn't like a book, I wouldn't have them on the show.