Most investment books & DVDs are educational: they teach you how the market works, other people’s failure and success stories, and technique & strategy lessons to increase your odds of success. Investment books & DVDs are most useful when you create your own personal study course and learn investing the way you can understand. A well chosen reading list saves you the trouble of spending money on educational courses, seminars, and coaches. But how do you know what investment books & DVDs to choose? We’ve broken down the books & DVDs category into: Techniques & Strategy Lessons, Stories, Reference Material. And remember, use our Difficulty Skill ratings and Review scores to help put together your reading list.
Techniques and strategies are about fundamental, technical, psychological, options, etc and provide material for planning, implementing and analyzing your specific trading strategies. Stories applies to a more broad spectrum of books from “Freakonomics” to the autobiography of CNBC Mad Money’s Jim Cramer. They also encompasses stories, historical accounts, and even certain self-help type material such as Van Tharp’s “Trade Your Way to Financial Freedom.” The final category, Reference Materials, are mostly textbooks or textbook-like reference material such as “Security Analysis” by Benjamin Graham. Just remember, in order to find what you are looking for you need to know what you are looking at. Educational material in books & DVDs are a great start to help you.
Here are the basic areas to compare when searching for Investment Books and DVDs.
- Experience. Most books and DVDs are classified according to the difficulty skill level of the author had in mind. Beginner traders could start with stories and beginner/intermediate techniques & strategy books, but reference books might be a little more difficult without some tutelage or guidance. Know that most reference books are a conglomerate of theory, application and strategies condensed into one textbook. It’s usually heavy on equations and light on explanations. If you aren’t great with the numbers, be sure to work your way up with some more dedicated technique and application books in our techniques and strategy section first.
- Trading Style. Imagine a trader who wants to understand more about short-term, options trading. What book would he use? He’d probably look to our techniques and strategy section to find a book about options applications, and then research the best short-term strategies. But how would you know that these are the best styles to fit your trading style? Well, sadly, the truth is it takes experience to know what works for you and what doesn't. As you improve and grow, your preferences will also change. But remember that the books can provide you with tools, but only in combining this with practice on papertrading platforms, mentoring help and/or reading example blogs can you become a successful trader. Your style is defined by how you want to approach trading the market. Books and DVDs provide you with knowledge and it is up to you to try it on to see if it fits you.
- Risk Appetite. We won’t lie...you won’t be able to settle your risk aversion by reading a book. Whether the bullets are fake (paper trading) or real (account trading), when you see that market moving, everything you learned goes out the window, and instinct takes over. So be sure to understand that reading a book is only the first step: learning. After, you still need experience and to practice your techniques. Then, with enough practice your experience will become instinct.
- Asset Class. Many books & DVDs that span all of the asset classes, but the material that’s difficult to use are the ones that cover multiple topics or none at all. Self-help books are harder to categorize but they are generally helpful for trading demeanor (such as psychological, technological, or lessons learned). Self-help books are more useful for intermediate levels after you’ve had success and failures. That’s usually when you’ll know what problems you have that needs improving. Make sure whatever book or DVD you use, you understand the assumptions and parameters that build a given principle or strategy. It will help you understand the application side of the theory.
Techniques & Strategies
- Type: Strategy Books, How To Tutorials, Techniques Specific to Asset Class
- Pros: Educational, Great “guide books”, Great to Learn about techniques and strategies for trading
- Cons: Theoretical and not practical, Strategies can be ineffective, examples are “old news”
- Summary: Techniques and strategy books are incredibly useful tools for improving your education, but have their setbacks in usually outdated examples and usually not being as effective as stated (since everyone has access to that book)
- Type: Self-Help, Biography, Factual Stories
- Pros: Inspiring, Good high-level tips, Entertaining
- Cons: It’s only “advice” not education, Difficult to translate principles into your unique situation
- Summary: Stories are useful for creating inspiration and entertainment in all of us, seeing professionals and experts who’ve gone through the same struggles as we are. It’s also a great “did you know” type of book. However, don’t use these types of books to replace actual educational material with specific lessons designed to help achieve your goals
- Type: Encyclopedia-type, Textbooks, Reference Material (definitions, acronyms, etc)
- Pros: Complete Abridgment from A-Z, Extremely Mathematical & Quantitative, Great for Theory & Underlying assumptions and principles and/or quick lookups
- Cons: Usually lacks examples and sufficient explanation, not useful for application
- Summary: Increase your theoretical knowledge of investing, derive a new technique or freshen up on that forgotten principle.