Stock Market Analysis - Learn to trade stocks online

Thursday, January 1, 2009

Top 10 Stock Trading books (Technical Analysis)

I read over 100 books on stock trading, including technical analysis, fundamental analysis, general investing books, mechanical trading systems. The following 10 are the best technical analysis in my opinion.

1. Trading for a Living: Psychology, Trading Tactics, Money Management
- The book is divide into major parts, Psychology, Trading Tactics, Money Management. You will learn many popular technical indicators and how to use them efficiently to generate trading signals.
It also helps you discipline your mind to be successful in the stock market. The book also covers money management skills. One thing I never follow from the book is the author's 2% stop loss, I think that is way too little in today's volatile market.

2. High Probability trading
- This book is quite interesting as it offers a few unique points that you won't find in other books. One of them is the discussion on overbought with stochastic. He suggested that we should not sell a stock while it is in the overbought area. Instead we should wait until it pulls back from the overbought area or you miss a lot opportunities. I agree with the author as I backtest with my own mechanical trading system.

3. Profitable Candlestick Trading: Pinpointing Market Opportunities to Maximize Profits
- This is the best book I read on candlestick. Unlike other candlestick books, this books introduce candlestick and how you trade them in simple steps. For each pattern, there is a chart and the steps that you need to follow. I finished the book in 2 days and fully understand all the patterns and how they work.

4. Come Into My Trading Room: A Complete Guide to Trading
- This is the first book I read on technical analysis. I read the book 3 times for about 1 month to digest everything presented in the book. It will be much easier if you read the "Trading for a living" before reading this one as they are written by the same author. I followed the techniques presented in the book when I first started trading, but I didn't make much profit. That does not mean this is a bad book. There might be thousands of people following his technique and make fortunes. Currently, I'm only using daily charts to make my trading decisions. I don't need to use the weekly chart because usually I don't hold a stock for over a week. hold my stock no more than 1 week.

5. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
- This book is perfect for beginners. It is a very comprehensive book that covers almost every technical indicator that you need to know. However, if you already read the top 4 books and understand each book well, then you don' t need this book as you won't learn much new. I finished the book in 2 days skipping 2/3 of the book as I already knew the concepts and indicators presented in the book.

6. Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis (Wiley Trading)
- This is a book to read if you are a programmer and knows how to build your own trading systems, or at least you should be able to program tradestation to backtest trading signals in order to read this book.

7. Short-Term Trading in the New Stock Market
- This books covers trading skills and strategies and the author's 7 steps approach to the stock market. It also covers how to set stop loss and when you should not buy a stock, when the risk-reward ratio is less than 1:3. The book offers some interesting point and history stock market events that seem to repeat itself.

8.A Beginner's Guide to Day Trading Online (2nd edition)

- If you plan to day trading online, you should read this book as it shows you different trading strategies base on technical analysis and how they apply to day trade. If you have never trade online, it also gives you step by step on how to setup an online trading account and how to read the screen.

9. Encyclopedia of Chart Patterns (Wiley Trading)
- A great book no technical analysis and chart pattern for both beginners and experienced traders.

10. Entries & Exits: Visits to 16 Trading Rooms (Wiley Trading)
- This book is written by the same author as Trading for a living and Come into my trading room. This is a great book if
a) You are a beginner
b) You read Come into my trading room
c) If you don't fully understand Come into my trading room.
This book is like a practice book on what you learn from Come into my trading room. The author interviewed 16 different people and see how they trade, he then gives his own opinion on each trade base on the author's trading method which is first presented in "Come into my trading room". You won't learn much new from this book, because you can see how other people trade in any trading blog or forum.

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