My Day Trading READING LIST - These are the BEST books I've read transcript

in today's episode I'm going to share with you my reading list and we're going to do it chronologically beginning with the first books I ever read about trading when I started my journey to become a day trader to the books I've read most recently now these books I'm going to share with you today this this selection these are some of the books that had the most Monumental effect on my career and in my own trading in fact I wouldn't be here if it weren't for some of the tidbits I picked up through these books I'm going to share some of those tidbits with you and I'm also going to encourage you to read some of these books on your own time becoming a successful Trader requires equal parts skill strategy and discipline now for me I hit rock bottom early on in my trading days because I didn't have discipline I struggled with emotion I struggled with self-control I would have these days where I would suffer a big loss and then rather than just walk away which is what my rules told me to do I would double down I would take a second trade a third trade a fourth trade next you know I'm spiraling out of control and in one day I could give back weeks or even months of progress and it was so emotionally challenging I I was I just felt like I was at my Wit's End and some of these books helped me deal with understanding what was happening to me in those moments and how to self-correct all right so let's begin with the first book that I bought when I decided I want to become a Trader the Candlestick course by Steve niss is the first book that I bought this this book was written in the early 2000s and the reason I bought this book was because at the time I recognized the importance of understanding how to read Candlestick charts but I really didn't know where to pick up that information now today you could pick up a lot of that information right here on YouTube and in episodes that I've uploaded and shared with you but it's always nice to have a physical guide to go with that and so in this book there's the introduction to Candlestick analysis really talking about the basics of how to use candlesticks the history of candlesticks where they came from you do have quizzes so it'll quiz you on your on the knowledge that you're learning and I think for any beginner Trader this is a mustre if you don't understand how to read Candlestick charts you're going to be left in the dust because the fact is as you well know candlesticks are a universal language of the financial markets so this book is probably popular not just with traders of stocks or specifically small cap stocks the area of the market that I focus but even with traders who trade indices who trade Futures who trade uh possibly Forex cryptocurrency because you can use Candlestick charts on any of those financial instruments the way I've always thought about Candlestick charts is that they are giving buy and sell signals but most people don't see them they're there but you don't see them because you haven't learned the the the symbolic language of what these individual candlesticks mean now one challenge that I had with this book in particular was that although it's certainly helpful and interesting I did feel at a certain point um there's a limit to how much you can learn in this format because this is always showing you what's what's already happened ultimately the best Traders are going to be able to see just this much of a pack p and predict what's going to happen next because we don't have the full pattern completely unfolded when we're first looking at a chart right when we're first looking at chart we have this and now we have to make a prediction you know based on just seeing this of is this stock going to continue higher or is it going to reverse so when I see something like this small spinning top dogee of course then the next candle making a new low that's indicating reversal we get a fairly big pullback and then down here we get another dogee that's an indicator that we might get a move back up and of course we do so this is helpful in terms of laying a solid foundation in understanding individual candlesticks and how these individual candlesticks come together to form multi Candlestick patterns so unfortunately the biggest downside of this book is that it's not super cheap um on the back let's see if it has a price this is actually kind of crazy it retails for $75 $75 um us it it's um well these prices are a little outdated they have some conversions to different um currencies but this is this to be honest it is not a $75 book in value to me this book uh I don't know what I paid for it I may have even paid that I don't really know for sure but this is you know if we're just going to be honest this is not a $75 textbook um it is presented in textbook form but it's only about aund and it's like 200 Page book so it it's if you can find a used copy and you probably can on Amazon I would pick one up um it's not in color but this is one that for me was helpful in laying my Foundation of just understanding how to read Candlestick charts and again in for me in my experience when I was learning how to trade uh there weren't YouTube videos that talked about this type of stuff that's why I created my YouTube channel in 2013 uh because I was like well I'm going to start putting some stuff out there on YouTube that I think people are looking for okay so that was the first book that I read the second book right here trade mindfully by Gary Dayton this is a book that I found incredibly helpful early in my career now this book was written in again in the 2000s uh maybe it it's 2011 or something like that 2012 um I'm not sure the exact date uh but in any case this book talks about the struggle that I went through I mean this is like for those of you that struggle with emotion in your trading this is a book you have to read now you could get it on audiobook you don't have to read the actual book it's it'd be fine to use the audiobook but the fact is this is a book that really is going to help you better understand why you're falling victim to this cycle of emotional impulse control it talks about a Trader's mental blind spots which we all have it's it's talking in this example about someone trading S&P um e mini Futures and so it is a book that would be relatable really to any type of um Trader again Forex crypto currency Futures it doesn't matter but uh I really think that for those of you that struggle with self-control this is something that you're going to want to read now I'll tell you that just reading this book will not make you a master of self-control becoming a master of self-control requires a very high level of self-awareness um an ability to discipline yourself and an ability to know in the moment very objectively is this a market I should continue to trade in or should I walk away now for me my instinct after I have a loss my gut instinct is try to make back that loss as quickly as I can so if I was up 6,000 and I lose two grand and I'm up only 4,000 I don't feel good I feel like I've lost something I have a sense of loss to alleviate the discomfort that comes with losing something what do we do we try to make it back doesn't matter if you lose your wallet if you lose anything you need to find it you feel a sense of discomfort and that discomfort is going to drive you to an action the action is an attempt to no longer be in a state of discomfort and to be feeling good again so once you find your wallet you feel good again once you recover that $2,000 that you lost you feel good again so the problem there is that sometimes the right decision is that I need to walk away because the market is not in this moment suitable for my strategy the market is too choppy we're not seeing good resolution and that requires an ability to look at the market not based on where you sit in your own p&l on the day but based really on how is the market performing are stocks going up are stocks dropping a and to have that honest reflection and the the problem is that in the moments of Maximum emotion the part of our brain that is doing that thought process is not the most uh Advanced or intellectual part of our brain that emotional response is coming from a very reptilian part of our our brain and when that part is in control we call it emotional hijack now there's some books I um will share with you that I read a little bit later in my career that helped me um better understand this phenomenon and U find better ways to deal with it but but the fact is uh this was a really important book for me early in my career and it got me started on um this mission to become a more mindful Trader to be more Zen in my trading to be able to be a real master of discipline and I try to lead by example with that uh every day while I'm trading of course at Warrior trading okay so um so first book was uh Candlestick course by Steve niss second book was trade mindfully third book how did this get here this is a this is an original this is an original proof of my book how did day trade the plain truth well that's funny I I know how this got there we'll put this aside it's a great book by the way okay so we have the intelligent investor at a certain point in my career uh when I was struggling with sort of impulse control uh and I was struggling as a day trader I started to think maybe I'm making this too complicated you know well look at these big investors the Warren buffets and you know all these all these people who have been so successful they were not day trading right they're they're investing and they're making you know billions of dollars so I thought all right maybe I should get a better handle on at least understanding um how how they trade and Warren Buffett said this is by far the best book on investing ever written by written by Benjamin Graham so this book was written um for what it's worth um quite a long time ago um the preface um is written by Warren Buffett and let's see this was written and originally let's see um well Benjamin Graham lived from 1894 to 1976 It Was Written in 1973 so this really is an old a very old book um but it is a good read I would say that one of the things that I always encourage when I'm teaching my classes and when I'm talking to people who are aspiring Traders is to learn as much as you can about the market at Large even if learning about how Warren Buffett is investing isn't going to necessarily translate to making more money tomorrow as a day trader it's part of having a good holistic understanding of how the market works and I think ultimately and I actually saw an article recently um that talked about how courses on financial literacy directly result in people making more money over the course of their career because they make better fin financial decisions and that's why schools and colleges are trying to make it a requirement to have financial literacy as part of the education now that wasn't the case when I was going to school and it may not still be the case for many of you today and it seems like a crime that people could graduate from high school or college without understanding the financial systems that they could certainly benefit from it seems the people that understand the financial systems the best are the people who are in a very elite group and that's unfair so I I read the intelligent investor in the hopes of maybe becoming better at picking stocks for long-term investing this was also during a period when I was actively trading stocks like apple you know every single day and then over the course of a year I would have lost money but I'd look at Apple and I'd be like well geez this stock actually went up like you know 10% this year I would have done better if I just bought it held it and walked away instead I over traded and I lost money and that made me feel kind of stupid however I will say for those of you having the same thought process that if you start with a very small account like 1,000 bucks or 2500 yes you could put the whole thing in apple and if Apple goes up 10% in one year you're up 200 250 bucks on a $2,500 account it's not meaningful in fact last year I probably beat most hedge funds in terms of performance but I did that because I started with a relatively small account and I made as much money as I did in a small account so I probably made 50% % maybe 100% on a small account most hedge funds won't do that in fact um Warren Buffett recently said the days of Burkshire Hathaway having big percentage returns are over because once you get to a certain amount of money you cannot move in and out of a stock that's going to go up 50% in one day with a billion dollars you can't it's not possible these are companies that are valued at only maybe 15 20 million so you could you couldn't put a billion dollars you'd be buying the whole company plus like you know 20 others just like it there's just a limit to scalability so I think for most day Traders what I said as my goal is with a relatively small account to grow it as quickly as I can and then all the excess profits once so my bucket for day trading generally has been I'll keep like $100,000 in my account maybe as low as 30 or 40,000 and of course I've done small account challenges where I've had less but usually once I get over 100,000 I'll take that profit out and I'll then put it into you know a birkshire haway type of stock where I can buy and hold and just let it work but I can't do that with $110,000 or $5,000 because the returns aren't enough for it to be a full-time job for me so I have to actively trade with a small account and then the excess profit I roll over to lower risk buckets of investment like large caps or enes and things like that okay so second book um or third book was the intelligent investor and then uh Peter Lynch he was the manager of the mellin fund at Fidelity incredibly um skilled investor very well known um but specifically in the 90s uh and early 2000s so this is a book that was written uh again this was written a while ago this this talks about um his investing in the 80s and 90s let's see the date of this book was copyright 1989 so you know again um this is a book on investing and I found this to be really interesting for me and helping me better understand uh the mechanics of the market what big investors would be attracted to what they'd be looking for and although maybe you'd think that doesn't translate to making more money tomorrow it's Again part of that better understanding of the market in general however after reading those two books I couldn't help but feel a little bit depressed because I thought well I I don't have the money to invest like these guys I don't think I'll have the money to do that for a long time their strategy doesn't really work for a small Trader and so I read read this book The Happiness Advantage to help get myself back into a good mood this was written by um Shan acor and he's a very interesting fellow who's written a number of books but the happiness in Advantage how a how a positive brain fuels success in work in life and it's not just that you know kind of Hocus Pocus you know think happy and you'll make money it's really talking about the the the the reality that if you look at thing that you can choose to look at things through the cup half full or the cup half empty and there are so so many people out there that have uh incredibly fortunate lives and are very very gifted but are constantly looking at the cup half half empty and I struggled with that myself uh in my early years when I hit rock bottom and then even as I started turn the corner just dealing that frustration that I needed to do more and what I was doing wasn't enough and just feeling really frustrated with my performance that I wasn't doing as well as I wanted to now Sean um grew up in Texas and um got accepted into Harvard for his uh for his undergraduate and so made this huge move from Texas to Harvard and he said when he was studying at Harvard you know something like 85 90% of the students there are miserable they're dealing with panic attacks anxiety depression they're just like so maxed out because they're in this you know they're they're in this environment where there's a tremendous amount of pressure on each individual to perform it's incredibly competitive uh and and the market the stock market is is not necessarily different from that the stock market is very very competitive and the stock market is a place where it's not about you know success among the group it's a very individualistic um type of career you succeed on your own merits so this is a book that helped me with getting into a better head space and this is also something that I think about in trading you know I know not every day is going to be a record-breaking Green Day in fact uh only one day ever you know in my career at this point has been a record-breaking Green Day and only one day has been a record-breaking red day and everything else is just in between and sometimes when I have a day where I give back 30% off the top or I give back half of my profit I was up 10,000 I lose half of it in one train I'm up only 5 grand it's easy to look at the glass is half empty I feel frustrated I feel disappointed I feel angry with myself and there is a tendency in that moment to go back to some of those old habits of jumping in anything that's moving to try to desperately recoup that loss and the better I've gotten at being able to say you know what I gave back a little bit today but you know what I'm I'm green on the day I'm green on the week I'm green on the month big picture life is good or big picture I'm read right now but I'm I'm building my knowledge I'm gaining experience and this is part of the process that has helped me keep my emotions lower so when I'm faced with these moments of frustration those emotions don't get as big okay so um so happy disadvantage so we'll put these um aside over here for now um now this is a book that is kind of interesting thinking fast and slow I on the one hand like it it's a New York Times bestseller uh on the other hand he's very critical of the stock market and Traders in general uh uh almost to the point of just saying day Traders um and the illusion of stock picking that Traders are just um complete degenerate gamblers uh which I didn't really appreciate so I was able to set aside his clear bias against active trading and and take value out of the book which is again this is a book about thinking this is a book about the way we look at the world the way we look at challenges in our life the way we make decisions and something with trading that I think is very interesting is the fact that we are thinking fast and slow at the same time some of my trades are they're almost impulsive and that's I say impulsive and I mean it in this sense intuitive they're in it's intuition and when you're in a moment of intuition you're not thinking imagine someone who's on a surfboard surfing they're not thinking in their conscious mind I need to shift my weight um just you know 7 mm to the left to maintain my balance balance becomes intuitive it becomes you know part of this like parasympathetic kind of just it's it's like it's happening you don't have to tell yourself to breathe you're just breathing right and trading for me is like that I've gotten to a point in my trading where when I see something I'm pressing the buy button like it's muscle memory it's just happening and I'm kind of on autopilot however there are moments where I need to take the controls away from autopilot because autopilot can in the right C in the right conditions send me into these snowball modes uh and so I need to be able to know when I have to intervene to take myself off autopilot and when I have to sort of slow down and ask myself all right right now are these good trades to be making something that a lot of Traders struggle with is is quantifying trades being good or bad based on just the outcome but what you learn over a long period of trading is that in fact you can take terrible trades and make money and you can make great trades and lose money because the market will give you inconsistent feedback now long term over the big big big picture if you have a strategy that is proven like mine is that you've got a solid track record behind then as long as you're following the rules of the strategy you'll come out ahead but in short periods of time you can have a series of of four or five losses in a row and you're still following all the rules of your strategy or you could start breaking all your rules and you could start making money and this is what some Traders will do and they'll jump from strategy to strategy to strategy giving up as soon as one strategy starts producing losses and they abandon it and then they switch to something else so that's obviously to be discouraged what's important is to be able to understand this is a strategy them following but in these moments I have to be able to make that objective analysis of is this a market that I should be leaning into and being aggressive or easing off the throttle and slowing down okay so um so this was a great book then um a couple years ago I listened to this book on um audio tape when I was on a um saleboat off the coast of New England and I I listened to the whole book while I was sailing it was just it was just me and and the ocean and and this book and I found this to be fascinating this open um sort of a world that I I really didn't fully understand uh it it talks about uh the rise of machine Traders and the rigging of the US Stock Market this is something that began um really with the Advent of electronic trading in the late 80s and early 90s where Traders um well both Traders and exchanges were sort of fighting with one another and everyone's trying to make money and cut in front of the other Trader and this still happens uh in a very real way today it can make you a little cynical um and it can make you realize that as a little guy but this helped me kind of better understand about staying in my lane and trading what I know and uh leaving the areas uh to the big guys that are that I'll never have an edge in you know I'll I'll never be one of the reasons I feel like I'll never be a uh one of these big investors is because they're so well connected you know the Jim Kramers who know all the CEOs I mean they have an advantage that I'll never have right it's just impossible for me to have that Advantage so um anyways I think this is a great book to read and then this book gave a recommendation for uh this book right here secrets of the se's bandits so this is a book that's I'm pretty sure it's out of print it's hard to find but these two books um can go hand in hand and the original electronic Trader Reveals His battle tested trading techniques this is not going to be a book that is necessarily going to give you strategy that you can uh apply to today's market it's more of it's historical but it is very interesting and uh worth a read so these two books um I found very interesting and then this was a book that um many people had recommended over the years it's called the little book of Market Wizards lessons from the greatest Traders again um these this sort of take some Liberty with um with who would be considered a Trader um you know it's talking about people who run these quantitative analysis uh trading firms who who make incredible amounts of money um John blender a brilliant options Trader who managed money for George Soros sorry Soros um Quantum fund so you know in any case it's a it's a very light read it's a very short book it's a book that you could bring on an airplane no big deal um and uh this also is quoting the book reminisces um reminiscences of a stock operator uh which is a book that's um also a good read I could have added that to the list but I didn't so you know I I think that this is something that um many of you would probably find some value in uh it's it's not been as meaningful a book to me as most of the others it may be one of the lowest on the list uh but but still interesting nonetheless okay now we're going to get into a book that um I found incredibly helpful this is a book that I read about a year and a half ago it's called quit by Annie Duke you've probably heard me talk about it in um different episodes Recaps um and things like that got some water spilled on it but um I listened to it on audiobook and then I bought the the the physical book to have a copy of it so let's see this book was written in 2022 so it's a relatively new book and I just found this to be fascinating so Annie Duke is a a professional poker player and she writes the book about the power of knowing when to walk away and I thought what could there be a better book for an active day trader to read Knowing When to Walk Away I mean this is like knowing when to walk away is huge she tells an interesting story about taxi drivers in New York City and a study that was done of them and uh taxi drivers in New York City a lot of taxi drivers are renting their taxi for a 12-hour shift from a company that owns a bunch of these taxis and so they're paying their rent for each day that they're you know they're pay for the 12-h hour shift now she said that the tendency is that as soon as they hit their goal of how much they want to make that day enough to cover the rent that they have to pay for the car Plus Fuel and then a profit for themselves they walk away and so for some drivers they'll walk away after uh a couple hours of of good fairs and they'll leave the the remaining eight or nine hours on the clock they'll just put the car back they're done but on a cold day when you know there's not as many fairs they'll grind out that full 12 hours until they've paid the rent of the vehicle and then they've made a little bit of their profit or or maybe they don't quite get there and she they did an analysis where they said I don't remember what the percentage was but they would make was like 15 or 18% more money if on the days it was hot they kept picking up fairs and on the days it was cold they walked away early even if they didn't hit their profit Target now I think the thing that's unfortunate is that a lot of the people that are in the situation of driving these taxi cabs don't have a lot of money so the reason they work until they hit the rent on a slow day is because they don't have the money to pay the rent for the car for that 12 hour shift if they don't make it on that day so they have to keep pushing and then why they don't work harder on a day when it's really hot is a bit of a mystery to me I I don't know if that's um a risk analysis of like well you know whenever you're driving you have the risk of having an accident so why even take the risk of you know having something bad happen I'll just take my profit and walk away I don't know if there's some uh additional fee you pay for mileage or something like that but in any case um when it comes to trading the way I tied this back was that there are days where I could trade from the second I sit down for 12 hours and I won't get much for it and then there's other days where I'm going to hit my daily goal in in the first 30 minutes should I walk away after I hit that daily goal that's a tough call to me the answer is no because on a day where I hit my daily goal in 30 minutes who knows what could happen if I trade for four five six hours that could be a really big green day and those are the days where I have to dig in I have to lean in I have to dig deep and push as hard as I can and try to capitalize as much as I can on this small window of opportunity in fact I would wager that about 80% of my profits come from about 20% of my trading days each year so if it's one of those days where the market is hot I got to dig deep and if it's cold then that's a day where if I start running in a resistance I start giving back profit maybe it's time just to step back as a Trader it is so hard to walk away when you're in the red you never want to walk away in the red you always want to walk away in the green but one of the things that I've come to kind of understand is that sometimes I have to think of myself as weathering the storm seeking shelter you know like there's a big storm going on right now and it's about survival we're no longer talking about like how much money can I make it's survive survive to you thrive live to trade another day and so if I manage to only get beaten up a little bit I'm grateful for that if I only lose a little bit on a cold day hey that's great no reason to push it just survive and come back and and then push again when it's hot now it's easier to do that when you did push during the last hot cycle because you'll have um you know some reserves built up from when it was hot and then you feel like you're really going to do well this is that kind of Great Depression mentality of like you know putting a little away for a rainy day and so anyways I'm a big advocate of um quit by Annie Duke so definitely recommend reading that one what in the world this crazy this was my reading list twice how to day tray the plain Truth by Ross Cameron this is a bestseller on Amazon if you guys haven't checked it out I encourage you to do it I took um I began my career as a Trader this was me in middle school so probably like 13 years old 14 years old um and that was when I started my career so I I wrote this book really to be um what I thought would be a great introduction to trading this is not meant to be a textbook it's not trying to teach you everything there is to know about trading um but it's to introduce you and to get you started if you want to keep reading then you should okay so now this is uh actually Annie Duke's first book thinking in bets but I read it second I read the this was written in 2018 um I read quit first because this just resonated with me more and anyways thinking in bets I read second but I did find it to be really interesting so thinking in bets talks about the challenge that she faced as a poker player of making decisions when you don't have all the information right you don't know what cards are going to come next when when trading you don't know what's going to happen next you can have a hunt you can have a theory and it can be very much based on educated intuition but you don't know so you have to make some presumptions with what you do know so you take everything you know all the knowledge you have about statistics and the strategies that work and the time of the day it is and the price of stock you're looking at and everything else and you take all of that and then you create your you make your decision so thinking in terms of bets um it it it's it it helps you realize that in a way every decision you make is a bit of a an educated guess a gamble if you want to call it a gamble um a bet and and that's certainly true obviously when you're literally gambling or when you're trading the markets and you're taking these you know these trades it's very obvious there but when you think on in a on a bigger scale about how many other decisions in life are are similar it for me helped me better understand the decision-making process I make when I'm trading and she talks a lot about resulting which is the process of um basically being very critical of your decision based purely on the outcome so you know you had you took a trade you took a really big loss and then beating yourself up because you lost and it's like that's the hindsight being 2020 you can always be critical of things in hindsight oh I could have would have should have but it doesn't really do us any good and that starts to actually get into a loop of emotional thinking it's not very high level of intelligence to just constantly be critiquing what you could done differently could have would have should have there's only so much value in that so the question is in the moment that you made the decision was it a solid decision regardless of the outcome let's just look at the decision to take that trade based on what you had for information in that moment was it a good decision and if the answer is yes then the outcome is what it is now if part of that is no well the decision was good but I took 10,000 shares I only should have taken 3,000 then there's an opportunity to take a lesson from that loss and that's very valuable and and it's equally valuable on on a winning trade you could have a winning trade and you could say oh that was a great trade but but was it really did you take way too much risk was it borderline a gamble you know was it really a good trade just because it's a winner doesn't make it a good trade so this helped me think more critically about my trades and by thinking more critically about your trades you get more focused on what really were my good trades that I need to focus on taking more of and what were some of my bad trades that are showing me things in my trading that I need to stop doing because ultimately if you can lean in and double down on the things that are working you will make more money if you can drop and cut entirely the stocks that are contributing to some of your biggest losses you will lose less which means you're making more so for some Traders the difference between success and failure can be a very fine line just simply cutting out one of the strategies that's costing you some of the biggest losses and leaning in on one of the ones that's giving you bigger winners that can be the difference between success and failure so I hope you guys enjoyed um going through my recommended reading list I do hope you check out a copy of my book head a day trade the plain truth and as always if you enjoyed this episode make sure you hit that thumbs up and you subscribe the channel and I'll see you for the next one real soon and hey you YouTube thinks because you watch this whole episode that you might really enjoy this one that I'm going to post right here so check out this episode next