Creating trading success also has to come from many angles. When I am asked about what option trading books to read, it's complicated. With that in mind, here is my list of recommended trading books. Option Volatility and Pricing - Natenberg This is my "go-to" book for new option traders. Natenberg does a good job explaining option trading through the lens of volatility, which is a perspective many don't think about when they start to trade options. This also has the full listing of basic option strategies and management techniques associated with them.
Anything by Jeff Augen is worth a read. This particular text goes a bit more into the nasty bits of options trading-- namely defining volatility and managing trades. This goes a bit more into the quantitative side, which can be fun if you know your way around excel or R. Volatility Trading - Sinclair Are you ready to go way down the rabbit hole?
Sinclair has a ton of heavy math, along with real-world examples. This book brings insight into how hedge funds and derivatives desks actually play the options market. There's a good chapter on how to properly plan your trades, and a surprising amount of insight into trading psychology.
It's tough to get through and sometimes sections won't apply to your trading style, but it's great to have on hand as a reference, especially if you have a longer term timeframe in mind.
Options, Futures, and Other Derivatives - Hull I didn't really want to put this one on the list because I don't think it serves traders very well. But since it's a required text for many college classes, it's good to know about it-- you will gain the perspective of all the MBAs you'll be trading against.
It goes beyond the pattern and explains the underlying supply and demand dynamics. This book is in its 8th edition, which shows you the staying power of the content. This book will teach you how to properly get an edge in the market.
To be honest, I was really uncomfortable reading this book as I do incorporate TA into my trading-- if anything I now have a respect for when patterns fail. Trading and Exchanges - Harris The amount of caffeine I needed to read this book could kill a small village in Bhutan. But this one you have to read if you are to understand how exchanges operate.
If you trade at all in a shorter term timeframe this will give you insight not found in any other book about how the market operates. One Good Trade - Bella If you want to learn about the markets from the perspective of a prop firm, Bella will give you what you want. There is a ton of wisdom on these pages, and plenty of narratives to make this an easy read. There's very little information out there on the art of tape reading, and OGT will give you a rundown of how it works. Mind Over Markets - Dalton I believe one of the most underutilized forms of analysis is market profile.
It's a dark art, and there isn't much literature on it. But this book is a must read. It's a struggle to read at times but I often review chapters every so often to understand the short term market. Markets in Profile - Dalton This is the second book you must read on Market Profile, and it's a little more up to date compared to MoM. There's a little more integration with newer behavioral finance stuff and neuroeconomics.
Seriously, you must understand auction market theory if you want to learn to trade. Mastering the Trade - Carter The setups are a bit outdated, but this holds a special place with me as it first introduced me to derivatives trading. Brett If you haven't read anything by Dr. Brett you are doing yourself a disservice. I love this book because the author comes from a background of Clinical Psychology focusing on high-performing individuals.
The anecdotes easily crossover into the trading realm, and you can gain plenty of insights about yourself and your trader profile. The Daily Trading Coach - Dr.
Brett Treat this book like a daily devotional. Brett smartly broke up the book into lessons. Read one lesson per day and see how you could implement it in your trading.
Continual, incremental self-improvement will do wonders for your performance. Trade Your Way to Financial Freedom - Tharp If you ever wanted the best way to track your performance, you will learn it here.
The book discusses the concept of "R-multiples," which I believe is critical for traders and investors to understand. Tharp focuses not on the individual setups but how to approach them from a risk-oriented approach. Trading in the Zone - Douglas This one seems to always show up on lists. It's a great weekend read that can get you motivated to take on the market again, and how to get into the proper trading state. This book will tell you a ton of things that you already know but you need to hear anyways.
If you have trouble defining and accepting risk, this book is for you. Letters from a Stoic - Seneca A nervous, fatalistic, pessimistic personality is not the right kind of profile you want to have as a trader. These letters from Seneca taught me how to accept randomness, embrace risk, and focus on the things that are important in my life.
The Talent Code - Coyle A great way to get better at the markets is to see how others become great in other fields. There are a ton of parallels, and this book gives you the steps necessary to become great in a trade. In-depth practice, self-corrective mistakes, and proper coaching are the true keys to talent. Flow - Csikszentmihalyi Have you ever felt joy while trading?
You were fully immersed in the market and in a state called "Flow. Being in "Flow" during trading significantly increases your performance.
It's a quick read and it goes over how to properly get into the mental state to develop as a trader. As the title says, trading can be a very creative endeavor and this book will show you how.
I'm a card carrying member of the Cult of Tim Ferriss, and I don't mind saying it. What's good about this book is that it focuses on elimination. Books on Performance The Talent Code - Coyle A great way to get better at the markets is to see how others become great in other fields.More...