As you know, trading is quite a controversial activity, as many successful speculators constantly argue with each other on many issues, and one such example is the attitude towards literature. Based on our own experience, we can note that the best books on Forex disclose the psychological aspects of trading rather than specific methods of analysis.
If you do not take this into account and hope to see only the breakeven trading method in the public literature, there is a high chance to get into that same group of ideological critics of classics and books. Besides, methods of technical analysis set out in the 20th century are still working, if you take into account the fact that they were developed before the advent of the electronic form of trading, because it is no secret that computers and then online trading increased both the volumes of transactions and volatility of the instruments.
Best books on Forex revealing the psychology of trading
As you know, the currency market triggers exactly the same range of emotions as all the other markets - greed, fear, unconditional trust to the opinion of others and to the broker, so any similar literature will be good to explore common mistakes – for example, about the stock market, but Edwin Lefevre’s work “Reminiscences Of A Stock Operator” should be recognized as the most informative book.
Despite the fact that the author has never been a trader, but rather a talented journalist and a writer, the story of the protagonist recounts the biography of Jesse Livermore, a famous trader who started trading at 15, and during his career he earned and lost huge amounts, i.e. had a sufficient experience to talk sensibly about the nature of the market.
Most of the book is devoted to the behavior and interaction of traders and brokers. When an experienced person reads this material after they have started to consistently earn, the first thought that comes to their mind is “Why didn’t I know about this book when I just started?”
The matter is that it described the typical provocations and market insiders in detail, when the weak and driven speculators, who do not know the information in full, listen to "recommendations" of the strong players who are directly interested in attracting an increasing number of outsiders to the side opposite to the future movement.
In the stock market, a similar role is played by the stock issuer or a large fund, in Forex market such party is the largest banks, which don’t niggle and even launch false information in the media, and dealing centers, which don’t place positions to the market and offer customers deliberately losing trades.
Best books on Forex should pay attention on this type of situation, and the more will be described, the better. The book by Alexander Elder “How to Speculate on the Stock Exchange and Win” can be a good example. As you know, Elder has education and experience of working as a psychiatrist, so he managed to present the material about emotional and behavioral mistakes of the trader in his book very well and in plain language.
Best books on Forex for practical work
It was noted above that most of the classic books are still relevant today, but computers and high-frequency trading have made some adjustments. Firstly, there are more false intraday bursts – in other words, the hunt for stops of the weak speculators; secondly, the media have become an integral part of the market over the last century, so the market became more nervous and volatile.
In connection with this, if you take the system from any book and adjust it, taking into account today's realities, it will, in theory, work no worse than half a century ago. But this is a too complex topic that requires a separate detailed study. Instead, we recommend paying attention to the books containing systems that have always worked, work now and will work without adjustments.
First of all, Joe DiNapoli’s work “Trading with DiNapoli Levels” comes to mind. The matter is that this trend strategy is based on Fibonacci ratios, which makes it extremely accurate. Joe himself, unlike most of his fellows-theorists, also is a respected and influential trader with 40 years of experience – he began teaching after years of active trading, including intraday.
One thing is worth noting – along with the professional development of the author, an analysis using software tools has also been developing, and data transfer speed has been rapidly increased, i.e. the market was close to today’s realities – this is part of the reason why the DiNapoli theory was regarded as one of the best books on Forex. And Fibo levels work perfectly on any financial markets.
In addition, the author's material also tells about sufficiently effective indicator systems on the stochastic oscillator, moving averages, MACD, RSI, and CCI. Many publications and sellers of training courses today borrow recommendations of DiNapoli, so it’s easier just to read the original.
The supporters of candlestick analysis, who categorically reject mathematical approach, can also discover interesting moments in the “Direction indicators” chapter, which tells about a few reliable candlestick patterns, including about the famous “rails”.
Any novice should know “Street Smarts” by Linda Raschke
Many beginners try to study the market not from the beginning, but from the complex models, including Elliot's wave theory. In fact, it is the most controversial in its analysis segment, so if you have a desire to try your hand at something more complex than the indicators, it is recommended to immediately reject this venture and start learning Wolfe waves, construction of which is described in detail in Linda Raschke’s book “Street Smarts”. In total, Linda fit the description of the waves on only 7 pages of ordinary type, including graphic examples, and that was more than enough. The material appeared to be very precise, without the unnecessary details and author’s own add-ons.
However, this book is distinguished not only by the waves. Just like Edwin Lefevre, Linda and her co-author Larry Connors put emphasis on economic news – namely, she tried to answer why the price often goes against expectations and actual data. Given how many strategies are sold today for trading on the news, and how many mistakes are made by the beginners as a result of stereotyped thinking, Linda’s findings can be regarded as the best books on Forex, as they allow to avoid collapse in the early trading.Social button for Joomla