Discover the top 10 trading psychology books that every trader should read. Enhance your mental game and improve decision-making with these essential reads.
Andrew Azis and Mike Baehr have written this well-researched book.
Main Ideas of “Mastering Trading Psychology”
- Trading is not just about numbers and charts. How you think and feel is really important too.
- Learning from mistakes is important. Don’t get upset when you lose money; try to understand why it happened.
- Being patient is a big part of trading. Good opportunities don’t come all the time.
- Taking care of yourself is crucial. This means getting enough sleep, eating well, and managing stress.
- Keeping a trading journal can help you see patterns in your trading and improve over time.
- Setting realistic goals is important. Don’t expect to get rich quickly.
- Understanding your own strengths and weaknesses can make you a better trader.
In this book, Steenbarger focuses on how our thoughts and feelings can affect our trading success.
Main Ideas of Trading Psychology 2.0
- Understanding Yourself: The book teaches traders to observe their own thoughts and emotions. By doing this, they can learn to control their feelings and make better decisions when trading.
- Four Key Processes: Adapting: Being flexible and adjusting to changes in the market.
Building Strengths: Recognizing and using personal strengths to improve trading.
Cultivating Creativity: Thinking of new ideas and strategies to trade effectively.
Developing Best Practices: Creating good habits and routines that lead to successful trading. - Self-Coaching: Traders should learn to guide themselves and improve their skills through practice and reflection.
- Practical Tips: The book provides many practical tips that traders can use right away to improve their trading mindset and performance.
Dr. Brett Steenbarger turns into a true psychotherapist for traders in this book. He made this book FREE for everyone, you can access here.
Main Ideas of “Radical Renewal”
- Connecting to something bigger than ourselves, like nature or spiritual beliefs, can give us new perspectives.
- To really change, we need to think and act in new ways, not just try harder at old habits.
- Finding roles and activities that use our strengths can lead to big life changes.
- Taking care of our body through exercise, good sleep, and healthy eating gives us more energy for positive change.
- For traders, loving the process of understanding markets is more important than just focusing on making money.
- We grow the most when we push ourselves out of our comfort zones but in ways that match our interests and talents.
- By making small positive changes in different areas of our lives, we can create big overall improvements over time.
Morgan explains that being good with money isn’t just about math or knowing facts. It’s more about how we behave and make decisions.
Main Ideas of “The Psychology of Money”
- Luck and risk matter: Sometimes good or bad things happen with money that we can’t control. It’s not always just about how smart or hardworking we are.
- Always wanting more can lead to bad decisions. Know when you have enough.
- It’s not about how much you earn, but how much you save that matters most.
- The longer you can keep your money invested, the more it can grow.
- Borrowing money can be dangerous if not used wisely.
- Always keep some extra money saved for emergencies.
- As you grow older, your goals and what you want might change. Be ready to adjust your money plans.
- Use money to give yourself more choices in life, not just to buy things.
Yvan talks about how to be a good trader by focusing on one main skill: being mindful
Main Ideas of “The Essence of Trading Psychology”
- Mindfulness is paying attention to what’s happening right now without judging it. It’s about being aware of your thoughts and feelings without getting caught up in them.
- By practicing mindfulness, traders can learn to watch their thoughts and feelings without reacting to them. This helps them make better choices when trading.
- The book teaches different ways to practice mindfulness, like meditation and breathing exercises. These can help traders stay calm and focused.
- Being mindful helps traders accept that they can’t control the market.
- They learn to focus on what they can control – their own actions and reactions.
- Yvan Byeajee shares his own experiences and struggles as a trader, showing how mindfulness helped him become more successful.
Denise Shull says that feelings are not bad for trading. Instead, they can help us make better decisions if we understand them.
Main Ideas of “Market Mind Games”
- Mindfulness can help us make better trading choices.
- The market is like a game, think in terms of probabilities.
- Being tired or stressed can make us trade poorly, so it’s important to take care of ourselves.
- Instead of getting upset about losses, we should try to understand why they happened and learn from them.
- Having the right amount of confidence (not too much or too little) can help us trade better.
- What works for one trader might not work for another, so it’s important to understand ourselves.
In this book, Brett Steenbarger gives 101 short lessons.
Main Ideas of “The Daily Trading Coach”
- Understand yourself – know your own thoughts and feelings.
- Create good habits, better routines.
- Practical ways to control your emotions
- Make clear trading goals and work towards them.
- Stay focused and concentrate better when trading.
- Be flexible to different market conditions.
- Take care of yourself by eating well, exercising, and getting enough sleep.
- Keep a good attitude even when things are tough.
Ori Brafman and Rom Brafman explores why people often make decisions that don’t make sense.
Main Ideas of “Sway: The Irresistible Pull of Irrational Behaviour”
- People make irrational decisions due to psychological forces that influence our thinking.
- It explains cognitive biases like loss aversion, commitment bias, social influence, chameleon effect etc.
- The authors share interesting stories and studies to show how these ideas work in real life.
- The book offers solution. By being aware of our feelings and thinking critically, we can make better choices.
- Understanding ourselves is crucial to to break free from irrational thinking.
This book by Mark Douglas, published in 2001, is considered as a classic.
Main Ideas of “Trading in the Zone”
- How you think about trading is just as important as knowing about the markets.
- You need to learn to control these emotions.
- Accept that you can’t control the market
- Instead of trying to predict exactly what will happen, think about what’s most likely to happen based on patterns you see.
- Believe in yourself and your ability to succeed as a trader.
- Have a clear plan for your trades and stick to it, even when it’s hard.
- Don’t blame others for your losses. Learn from your mistakes and keep improving.
- Doing the same good habits over and over is key to success in trading.
- Don’t let distractions or emotions pull you away from your trading plan.
- The market is always changing, so good traders never stop learning and improving their skills.
Jared Tendler focuses on the basics of fear, greed, confidence and discipline in this book.
Main Ideas of “The Mental Game of Trading”
- Having the right amount of confidence (not too much or too little) can help you trade better.
- Following your trading plan and rules, even when it’s hard, is crucial for success.
- The book gives you a step-by-step way to find out what’s causing your trading problems and how to fix them.
- Your physical and mental health can affect your trading, so it’s important to take care of yourself.
- The author shares stories from real traders who have used his methods to get better at trading.
- Becoming a good trader takes time. The book encourages you to stick with it and keep working on your mental game.
Bonus: Summary of Atomic Habits
The book Atomic Habits has changed the lives of innumerable people worldwide. It’s not specifically for trading, but very powerful book for cultivating success mindset.
Main Ideas of “Atomic Habits”
- Instead of just setting big goals, it’s better to create a system of good habits that will help you reach those goals.If you can get just 1% better every day, those small improvements will add up to something really great over time.
- Four Laws for setting good habits: Make it Obvious: Make the cues for your good habits clear and easy to see.
Make it Attractive: Find ways to make your habits more appealing.
Make it Easy: Start with small actions that are easy to do.
Make it Satisfying: Reward yourself when you complete a habit to encourage you to keep going. - Identity Change: Example – instead of saying, “I want to run a marathon,” think, “I am a runner.” This way, your habits become part of who you are.
- Your surroundings can influence your habits. Eg. if you want to eat healthier, keep healthy food where you can see it and make junk food less accessible.
- Keeping track of your habits can help you see how far you’ve come and motivate you to keep going.
- Changes take time, and the results may not be visible right away. Stick with your habits, and you will see progress over time.