Top-5 best trading psychology books

Unfortunately, a competent strategy on its own is not sufficient to make a profit in any sphere. Success is also related to psychology and self-discipline: an ambitious trader should know his strengths and weaknesses and monitor their balance. Along with the active development of modern technologies, all spheres of human life are gradually moving into an online format, with over 90% of trading transactions being made via the Internet. We’ve compiled a rating of the five best books on the trading psychology for you, so that you can trade in peace right from home!

The Disciplined Trader, Mark Douglas

The author of this book can safely be called a pioneer of trading psychology, or one of its official founders. This work’s most beneficial feature is, well, its content. It’s brimming with useful tips on the development of thinking, which is the foundation of everything, including trading. Mark Douglas openly talks about the importance of healthy emotional habits for success. In the end, it doesn’t matter how good your strategy is if you can’t control your greed or fear. We recommend this book to all beginners in the field, because Douglas is a brilliant coach and a talented storyteller, who’ll shed light on complex trading terms and details in an understandable way.

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The Psychology of Finance, Lars Tvede

All modern traders are attempting to define and establish a system for predicting stock market behavior. For this purpose, new and new approaches are constantly being formed. Some experts try to apply methods that analyze price behavior, while others combine all possible ideas for greater efficiency. Meanwhile, when a market participant is choosing a method that would allow them to predict prices with a high probability, they are bound with their own preconceptions and the influence of the emotional mood of the market majority on asset price. This book examines the impact of this factor on price fluctuations on the stock market. 

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Mean Markets and Lizard Brains, Terry Burnham

This book is a must-read for those who want to look at the stock market from a different angle. The secret to success, of course, lies in taking clear and thoughtful steps. At first, it’s important not to stumble so as not to lose money, so the author reveals in detail what to rely on in the process of buying stocks, real estate, currency or gold. The book will give you the opportunity to get answers to all the financial questions, as well as to put the author’s advice into practice. His recommendations have already been tested by time, so even inexperienced market investors can use them – with caution, as any other recommendations.

Terry Burnham is an economics professor and a specialist with extensive experience, who understands issues related to the financial world. He’s been extensively studying the influence of the biological component in a person on his behavior and life in modern society.

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The Daily Trading Coach, Brett N. Steenbarger

All successful people are their own consultants. Brett Steenbarger has identified 10 basic lessons that can become anyone’s guide to the big world of trading psychology. If you like to learn independently, this book will perfectly complement your library. It has everything about self-education and skill development: it’s motivating, easy to read and offers unique content. Since Steenbarger combines a wealth of trading experience with psychology, his guide will help the reader cope with the typical problems faced by most beginners. For a person who is enthusiastically studying the art of trading, this is a good way to get the needed inside knowledge at a reasonable price.

Fear, Greed, Panic: The Psychology of the Stock Market, David G. Cohen

For a complete understanding of any field (business, investment, etc.), you need to understand the psychology how it operates in the first place (in simple words, to find out what causes certain processes and how they generally work). The same approach should be applied in trading: according to the author, in order to have a comprehensive vision of the market mechanism and at the same time get the most out of working in financial markets, first of all, it’s necessary to delve into the topic head-on.

David Cohen encourages his readers to look at the psychology of this sphere and try to understand the huge number of factors that most analysts either completely ignore, or only mention in passing without a detailed study. The main of these factors are fear, greed, the need to feel protected, information overload, external pressure, fear of mathematics, excessive optimism, denial of the presence of cumulative factors, confusion in determining a specific goals, competitiveness, and incorrect perception of technological changes. In the book, you can get acquainted with tests that will allow traders to determine the level of their financial abilities and skills. Just remember that you can learn how to manage trading and make it a source of good income only by fully immersing yourself in it and studying every part of it, however small.

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