Book Summaries on Technical AnalysisFind the stock trading books you want by reading book summaries On this page, I have written a number of book summaries on some of the better stock trading books which I have read. There are many traders writing books. Unfortunately, many of the books on the market are not that informative. The best books are the ones that are easy to understand, clearly give you some good advice, educate you and provide ways for you to improve your trading skills. Use these book summaries to guide you.You will find that many of the traders identified in these book summaries, use information provided by the stock market to identify their buying and selling targets. Like the chart shown in the image below, buying a breakout from an area of consolidation gives the trader a reasonable probability of a successful trade provided the trader sells at a reasonable time (2nd arrow).
In these book summaries, I have indicated the main areas which I thing the book is good and at least one weakness of the book. The best deals on books are likely found on eBay but you may have to wait until someone wants to sell the book. If you want to buy new or used, the links to these books on Amazon have been given below for your convenience. Amazon also offers book summaries and reviews on most of the books it sells. It also offers free delivery if you meet certain requirements. If you prefer Traders Library, most of these books can be purchased there as well.
Book Summaries Jack D. Schwager, Market WizardsBook Summary: First published in 1989, Jack Schwager interviews seventeen professional traders and gets their thoughts on the ups and downs of trading stocks and futures. They discuss traits of a good trader, common mistakes made by beginner traders,
money management,
discipline and good trades gone bad. Disliked: I like visual works and this book is devoid of any stock charts even though it is filled with ideas from technical traders. I would have liked at least one trade outlined on a chart for each interview. Words to profit from: “Win or lose, everybody gets what they want out of the market.” Ed Seykota Stan Weinstein, Secrets for Profiting in Bull and Bear Markets Book Summary: First published in 1988 Stan Weinstein Liked: After I read “Secrets for Profiting in Bull and Bear Markets” the first time I felt like I understood the market so much better than before and was ready to make some real money. In this book Stan brakes down the steps of when to buy high probability stocks at the right moment. He identifies how to find the stocks that are likely to outperform the market. He covers long as well as short trading and also has ideas for traders and investors. Disliked: The area of money management, which is key to trading, is glossed over in this book. Words to profit from: No matter how good my system is, you will not win 100% of the time. That’s a promise. How you deal with this fact of life will go a long way toward determining how big a winner you become. Dr. Alexander Elder, Come Into My Trading Room Book Summary: “Come Into My Trading Room” has great information on the whole trading business. First written in 2002, Come Into My Trading Room” is a sequel to the well respected “Trading for a Living”. Included in this book is information on system development, indicators, what to trade, discipline, how to trade and money management.Liked: Alexander Elder trades for a living and throughout this book gives his ideas on what it takes to make money trading stocks. This book spends a lot of time on the differences between beginner and professional traders. Professionals use good money management, remain calm and plan their trades. In regards to discipline, keeping track of your trades is an area Elder believes strongly in. At the end of the book six actual trades are discussed in detail. Disliked: Sharing winning trades was a great way to end the book but I would have liked to have seen at least one trade that ended in a loss. Words to profit from: “The secret to trading is that there is no secret.” Jesse Livermore, How to Trade in Stocks Book Summary: Originally written in 1940, by legendary trader Jesse Livermore this version has added material by Richard Smitten and was published in 2001. The writing style of this book is similar to Edwin Lefevre’s “Reminiscences of a Stock Operator”. This version contains updated material and stock charts of current stocks used to support the original written material.Liked: This book gives great insight into how to trade. It has a lot of interesting ideas and thoughts in regards to behavior of stocks, people and discipline. The system applied involves checking the major averages to ensure they are going the way you are trading, identifying the strongest sectors and buying the strongest stocks. Livermore discusses the pivot point of a stock and how to time your buying. A great deal of time is spent on the emotional aspects of trading which may not be a surprise for someone who made and lost fortunes a number of times. Disliked: “How to Trade in Stocks” presents Livermore’s original “market key” which is a table of stock prices which he used to assist in his trading. As noted by Richard Smitten, this section is at times difficult to follow. It would have been useful if a stock chart had been inserted with the appropriate text to more clearly illustrate Livermore’s thoughts. Perhaps because Livermore did not like charts this was not done. Words to profit from: “The leading stock groups of one major market move most likely would “NOT” be the leading groups of the next major market.” Edwin Lefevre, Reminiscences of a Stock Operator Book Summary: First published in 1923, “Reminiscences of a Stock Operator” is still one of the most recommended books on trading. An all time classic. “Reminiscences of a Stock Operator” was the most recommended by all of the traders interviewed by Jack Schwager author of Market Wizards. The basic system used in this book is buy strength and sell weakness.Liked: As this book was originally written over 80 years ago, I find the statements regarding peoples emotions and behavior are so obvious that the market will continue to do what it does no mater what technology does. This is simply because people make up the market and the basics of human emotions do not change. The book describes how stocks are distributed to the unknowing on the way down and that a stock should only be bought if it is behaving like it should. Many of the one-liners you see today, such as “It never was my thinking that made the big money for me. It always was my sitting” were first published here. Disliked: The English in this book is a little hard to grasp in a few spots but that is likely due to the fact that it was written over 80 years ago. A few graphical interpretations of the systems used would have been useful. Words to profit from: “Stocks are never too high to buy or too low to sell.” Van K. Tharp, Trade your Way to Financial Freedom Book Summary: Van K. Tharp is a psychologist who coaches traders but does not trade himself. This book written in 1999 discusses human biases, how to build trading systems, getting out of trades and position sizing.Liked: “Trade your Way to Financial Freedom” is clearly written with lots of examples of how to design your trading system. Van Tharp does not spend too much time on identifying entry points, as he shows a random entry system can make money, but on managing the trade. Very little time is spent on entering trades because Van Tharp believes this is the least important part of the trading system. He believes that there are thousands of winning trading ideas and that provided you have shown that your idea is profitable you are destined to win big. The trick is to cut your losses quickly, deal with the risk of the trade and apply proper position sizing. Van Tharp defines position sizing as how much stock you should buy. This is quite an important area that few concern themselves with but which can have a great influence on your trading profits. Disliked: This is a strong book but the one area where a bit more information would have been provided would be on the usefulness of indicators in system development. Words to profit from: “One of the secrets to successful trading is finding a trading system that fits you.”
Steven B. Achelis , Technical Analysis from A to Z Book Summary: In this two part book Steven Achelis, first gives beginners the basics of technical analysis and then provides a reference source for a number of today’s top indicators.Liked: The first part of this 317 page book consists of 47 pages and introduces the topic of technical analysis. Topics covered are support and resistance, trendlines, moving averages, stock charts, trends and psychology. After this introduction, Steven provides a guide to indicators which covers most of the major indicators used today. As an example, for the MACD indicator, there is an overview of the indicator, an interpretation of the indicator, how to use the indicator and a stock chart illustrating the indicator. For most indicators there are 2 to 3 pages of information. Disliked: For some of the indicators discussed in “Technical Analysis from A to Z” a secondary reference would be a good addition. Words to profit from: “As we all know firsthand, humans are not easily quantifiable nor predictable. This fact alone will keep any mechanical trading system from working consistently.”
William J. O’Neil, The Successful Investor Book Summary: This book is a quick read with a lot of stock charts and commentary to help you learn how to trade using the CAN SLIMTM system.Liked: William O’Neil, is the founder and chairman of Investor’s Business Daily and the author of “How to Make Money in Stocks”. In “The Successful Investor” O’Neil details how to use the CAN SLIM approach to investing. O’Neil concentrates his buying on strong stocks in strong sectors. There are a lot of stock charts presented and discussed which show both winning and loosing trades. He talks about how to buy long and sell short as well as many myths about trading. The system as presented is quite easy to follow as are the money management techniques discussed. Disliked: The one area that this book falls short in is in investor psychology and discipline. Considering many systems break down in this area some attention should have been paid to this area. Words to profit from: “And in the stock market, personal opinions aren’t worth diddly-squat. The only opinion you need to heed is that of the market itself.”
Also discussed in this website are a few
book summaries
on fundamental analysis. You can also find book summaries in the magazine Technical Analysis of Stocks and Commodities. Finally, if you are looking for book reviews which detail other ways to generate a second income other than trading, try our
alternate ideas section.
Happy reading
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