I Read 67 Trading Books, and I Found This

I read 67 trading books, and I found this.

Now, in my earlier years of trading, I always wondered, and maybe you've wondered as well, what books will actually help you become profitable. Now, I used to assume it was all about reading the right book, the one classic that would unlock all the trading secrets to success.

But after reading 67 trading books, both around the best traders in the world and books on super niche topics, and also trading for the past 6 years, I've made some surprising discoveries, like how the most popular trading books are actually the worst for beginners, most of the time, and how the real insights come from books most traders have never actually heard of.

Now, I previously did a video, um, ranking all of my kind of top, I think it was like 30 books, give or take, into a tier list. But I also want to show what it is actually like to read 67 trading books. Now, 67, I'm pretty sure is the correct number, but it's been 6 years. There's been a lot of smaller books that I've read here and there, and there's also been some books that I've picked up and then continued, like a year later or something like that.

But here's part of my kind of physical collection in Dubai. So I got The Black Swan. I've got Advanced Futures Trading Strategies, which is a hefty book, but it's a great book. And I've also got a couple others on the bookshelf behind me there, and also in some cupboards. Unfortunately, I had to leave a lot of my books back in London, which is where I'm originally from. But I think some of these books are always worth re-buying just 'cause they're so good.

But over the years, I have read everything from Market Wizards to academic textbooks on quantitative finance and also on coding, from technical analysis to psychology books, from Jim Simons, and then to less known traders as well.

Now, over the years, I've distilled thousands of pages into lessons that have actually moved the needle in my own trading, whether that be via content like this, or just in my own trading itself, of lessons I've picked and used.

If you want to see a full reading list and kind of like a tier list as well, I'll leave the link in the description below, and I'll send it over to you via email. But enough of that, let me show you what I've discovered after reading 67 trading books and the main books I would recommend for every part of your trading journey.

Now, the first thing I think I do want to cover is the problem with popular trading books, or at least the classic ones everyone recommends, you know, to starting out traders. It's a bit of a controversial take, but in my opinion, books like Trading in the Zone by Mark Douglas, while they are good books, they're really terrible starting points. And there's a couple reasons why.

They focus normally on psychology, mindset, and discipline. And the truth is, you don't need psychology in the beginning of trading. You need an edge. All the discipline in the world won't save you if your trading strategy is a losing one.

Now, don't get me wrong, psychology definitely does matter, but only after you have a proven profitable edge. So, what should you obsess with as a beginner? Well, you want to obsess with finding an edge, testing that edge, so using backtesting, things like that, implementing that edge, whether that be manual execution or maybe algorithmic execution in the future, and then working on psychology because, of course, when you have live money at risk, you're going to feel particular emotions, and it's going to take time and techniques to kind of cope with that. But handling that first before you've even got a reason why you would make money in the markets makes no sense.

And that's also why I wanted to make this video because one of the kind of top comments from my previous video on the tier list was that people wanted a kind of structure of what's great beginner books, what's kind of intermediary books, and maybe more advanced books. So, I thought I'd split it up first by going over foundational books.

Now, these aren't all the books I would ever recommend, but these are definitely the top ones that I, you know, I'd want to recommend, uh, within like a time constraint. So, if you're starting out and want to become a systematic or algorithmic trader, these are your best starting points.

Book number one is Quantitative Trading by Ernest Chan. Now, I see some people give this book hate, and I think it's because it is really meant for complete beginners. So, if you really have no idea about quantitative trading in general, this is an awesome book for it. It gives you kind of definitions. It explains a lot of the beginner concepts, and it is designed for retail traders. Also, the author of the book, Ernest Chan, has a PhD and also has worked in funds. So, you know, he knows what he's talking about, right? This book will teach you all the basics you really need to know. Now, for some people, it will be too basic, but if you're just getting started, I definitely recommend this.

Now book number two is Systematic Trading by Robert Carver. Robert Carver has worked at one of the largest hedge funds in the world, and he also now runs his independent systematic/algorithmic trading portfolio. This book is the framework for all systematic trading across pretty much most assets. What you'll learn is how to create trading rules, position sizing, and also how to avoid common traps. I would say it's one step above, uh, the previous book by Ernest Chan, and I'd still recommend reading this book as well. I've personally, I've got a copy, and it's, it's great.

Now book number three is The Laws of Trading. This is the book that I would hand you that isn't necessarily as practical and tactical, but it will give you the decision-making framework that is so important in trading. The author is Augustine LeBron, which he was a professional prop trader in the options world, and he also did market. And this book teaches you how to think about trading decisions in real time. It gives you proper frameworks about how to think of risk versus reward, probability versus certainty, edge versus variance, and overall, it's a book I still reference quite a lot nowadays because it's a great book on all those sort of topics.

Now, the, the next book is Evidence-Based Technical Analysis by David Aronson, I believe. And I'll keep this one short because I already actually have a video on this whole book on my channel. It's primarily a central reading because it teaches you how to quantify technical analysis and build strategies around it. A big roadblocker for a lot of systematic traders that are getting into it, they don't really know how to quantify something because ultimately, as a systematic trader, you need everything in criteria that could also kind of be coded. And to do that, you need to do something called quantification, which means defining each one of those criterias as clearly as possible. And sometimes technical analysis can be a bit wishy-washy, right? People don't really know how to define it straight away. Nowadays, 'cause I've worked on hundreds of different strategies, I'm pretty good at it. But this was a great book at the beginning to kind of get you started.

Now, next is strategy books because I know everyone in the comments is going to be saying, "Well, I, I need actual strategies, right? Like, what am I supposed to trade?" So, once you understand the foundations, these are the sort of books I'd recommend that go over strategies.

Now, to give context, no book is going to give you a strategy that's going to make you an instant millionaire or instantly profitable. A lot of these books are teaching you the foundations. Now, some of these strategies will still be profitable and still actually will work depending on what markets you deploy them in. But a lot of trading has set you up with terrible expectations, expecting that one strategy is going to make you you 10 grand per month just guaranteed. It's not going to happen. But these books are some of the best books I've ever read around strategies in general.

So, the first one, and I, I've probably recommended this too much, but it's Advanced Futures Trading Strategies by Robert Culver. Some of these strategies I even use in my own portfolio in my futures trading or derivatives of them. Now, he goes over 30 fully tested strategies across multiple time frames and also styles. These are real strategies you can learn from and even implement today. Some of these strategies actually quite outperforming crypto markets because they're a bit more advanced versions of like trend following.

Six is Algorithmic Trading Winning Strategies and the Rationale by Ernest Chan. This is what I'd say is Ernest Chan's one of better books. I'd also say Machine Trading is another great book by him, and this is where he focuses on different strategy types like mean reversion and momentum. This book primarily teaches you the why behind strategies and not just the how, which is really important for optimization and also for understanding how a strategy should look in the back tests.

Now, book number seven, this is definitely a bit more advanced, but I really would recommend it. It's Expected Returns. This is a masterclass in understanding risk premium. Now, what is risk premium? It's primarily the return you earn for taking specific risks. Now, while a lot of traders don't like to admit it, most strategies nowadays are risk premium. Meaning, you are getting paid for taking on some extra type of risk, such as equity risk, value premium, momentum premium, all those sort of things. And this matters because almost every profitable strategy for the most part is harvesting some form of risk premium. And understanding which premium you're harvesting and also how that premium sort of works lets you build better strategies, diversify properly. And one thing I actually missed out here is it lets you back test a lot better. This book is a bit dense, but it is a great read. I would definitely recommend it.

Now, the last category is portfolio books. This is the endgame for systematic trading because systematic trading, you're trying to build a portfolio of diverse strategies, and that's how you take advantage of the holy grail.

Now, I actually have this video already on the channel explaining the holy grail. But primarily, what it means is the more diverse strategies you add, so the lower correlation or uncorrelated they are in a portfolio of strategies, the better risk-adjusted return you're going to get. And that's because the other strategies compensate for each other when they go into drawdown. You'll normally get, as I kind of mentioned, lower drawdowns, smoother equity curves, and higher risk-adjusted returns, which is what we all want, right?

So, the best books on these topics do get pretty dense and advanced, but these are the two I'd always recommend reading. Book number eight is Advanced Portfolio Management. I'm not going to butcher his name, I really apologize. He's also got a great Twitter as well. The key topics he goes over is portfolio construction, risk management at the portfolio level, combining multiple strategies as well. He also does talk about it a bit fundamentally, but, um, you can apply them in the same way, and then also rebalancing frameworks. This is institutional level portfolio management kind of made more accessible to retail traders. I will say for most retail traders, it maybe going to be a bit of a tough read, but this is why it's the last part of this kind of recommendations, right? This is the end goal you want to work towards.

And then a simpler version is Smart Portfolios by Robert Carver. This is definitely simpler. It's not as advanced, and it's not going to give you everything you'll need, but it's a really lot easier step-by-step process to build a multi-asset investment portfolio and also how to rebalance that portfolio efficiently. So, it's still a great book. And I would also say what I'd probably normally do is read this book first and then kind of go on to this book as well.

Now, there's a lot of books here that I haven't actually mentioned. Um, and I'm going to include them in a list that will be available to kind of download via the link in description. It will cover also a lot more different topics, uh, just 'cause I can't fit everything in this particular video.

And for whatever reason, if you want to skip reading all of these books like I have, uh, and you want to learn actually how to implement what these books teach, check out the backtesting boot camp I created. You'll get code templates for testing strategies and also for implementing them to be fully algorithmic. You'll get step-by-step frameworks for building systems and all my learnings, really, from these books.