Top 10 Books On Forex Trading Psychology
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Forex trading psychology is a big topic. It covers a wide variety of topics related to our personality.
If we don’t get our trading psychology right, it can be harmful and negatively affect how we trade.
While the technical side of trading is complex, it can be learnt and rarely changes. Arguably, it is even harder to know ourselves.
Trading psychology, however, is not the only thing you should focus on. You also need to understand how to use both fundamental and technical analysis.
You should also be careful when reading forex trading books on psychology.
Don’t get swept away by how they motivate you to be more positive, you should look for lessons that you can implement in your trading plan.
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Top 10 books on forex trading psychology
Here’s our list. Make sure you get them all and start learning!
1. High Performance Trading: 35 Practical Strategies and Techniques to Enhance Your Trading Psychology and Performance
High Performance Trading is written by Steve Ward who also has other books on motivation which are highly useful for forex traders who want to boost their confidence.
It is also great for stopping people from making mistakes, which is arguably more important than making money.
The book is well-written and easy to read, the perfect start to diving into forex trading psychology.
It is a great place to start when setting out to understand trading psychology.
This book is by trader Yvan Byeajee and is perfect for outlining many of the pitfalls traders fall into related to trading psychology.
One of the key things Byeajee advises is meditation, which is also advised by several other writers on this list.
He says it helps him get his head into the right place and supposedly does so before starting to trade.
The book is also a quick read and is light on fluff or any information the reader will not need.
Byeajee went from being a losing trader to a successful one by actively charting how he trades and it is something he talks about in his book.
Market Mind Games is written by Denise Shull and is written as fiction, an interesting way to explore trading psychology that is rarely done.
The key lesson to take away from this forex trading book is that you need to watch your emotions at all times.
While it is useful to know about how to react in difficult situations, identifying them too late is not effective enough. You need to be active in spotting them.
Being constantly aware of your emotions is one of the hardest things any trader can do, and in some senses is the first step to conquering their mentality.
Shull also teaches us that our trading practices and private lives are linked. What happens to us at home will affect how we trade and vice versa.
That’s why it is important to observe them at all times.
4. Trade Mindfully: Achieve Your Optimum Trading Performance with Mindfulness and Cutting-Edge Psychology
Written by Dr Gary Dayton, this forex trading book is a great combination of different previous works by other traders and authors on trading psychology.
He is also a psychologist and has been trading since 1999 - that’s 20 years of experience - and also teaches traders important techniques.
Trade Mindfully is perfect for a solid overview of different ideas, helping to put them together in a logical way.
One of the primary things the book teaches is that you should accept your emotions, not battle against them or allow yourself to be trapped by them.
The book is full of useful tips and exercises to help you stay in control and work on your ‘mindfulness’.
Some of the most useful things the book teaches is how to meditate and how it can be useful to traders, and how to get out of a trading slump.
5. How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
Trained as a chemical engineer and worked as a research scientist. After losing his job, he decided to take up trading.
In the overview of the book, he talks about how when he first started trading he got lucky and made $6,000 on one of his first trades.
He then proceeded to lose it all on a series of bad trades with the money he made.
Aziz preaches the importance of having a good morning routine before the market opens, saying waking up 15 minutes before and slapping water on your face is not enough.
For Aziz, he must wake up early, go for a run, have a shower and eat breakfast all before the market opens or he will not feel mentally prepared.
You can also follow Aziz on Bear Bull Traders on YouTube.
The Psychology Of Trading is written by Brett N. Steenbarger PhD an Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, New York.
He specialises in brief psychology and explains practical concepts for trading, combining both worlds effectively.
This forex trading book isn’t just about trading psychology, it also integrates a lot of real psychological practices, not just techniques to help you trade better.
Steenbarger, like Aziz, also advises exercise in the mornings to get you mentally prepared to trade.
He also explains that we are not just one personality, we are actually made up of a combination of personalities and we need to become an ‘observer’ and identify what personality is in control.
Traders should also check out his other forex trading books, which include:
Steenbarger also has a blog called TraderFeed, a great place to pick up trading tips.
7. The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management
The New Trading for a Living was written by Alexander Elder, another trader with experience as a psychologist and is the updated version of the older book.
Elder originally trained as a psychologist before learning how to trade, which makes him more reliable to listen to than most other traders who write on the topic.
He teaches a calm, disciplined approach to trading, to move traders way from making irrational and unplanned decisions.
The book has an excellent section on risk management, one of the most important things traders need to get right when they start out
Trading for a Living is also best suited for swing traders, though there are some key techniques day traders can take from the book as well.
It also offers many practical tips and is for traders who want to set realistic goals.
Reminisces of A Stock Operator is supposedly based on the life of famous trader Jesse Livermore, and was written by Edwin Lefèvre.
Lefèvre was at one point a stockbroker and financial writer and led an exciting life under numerous roles. At one point he was the ambassador to Spain and Italy for Panama.
Livermore was one of the most successful and unsuccessful traders that ever lived, amassing a fortune before losing it all and then regaining it several times.
The book was written originally as a series of 12 articles in The Saturday Evening Post and is great for understanding crowd psychology and market timing, something Livermore mastered.
There are many lessons to learn about how the market works.
Livermore was one of the first people to realise that there is nothing new in the market, everything that has happened will happen again.
The market works in cycles and repeats itself. There is nothing new in trading.
Written by Jack Schwager, Market Wizards is by far one of the most well-known books on trading ever written.
Throughout the book, Schwager interviews different traders on their strategies and it is perhaps the best book to get an insight into how some of the most famous traders think.
He also wrote many other books interviewing traders in different specialties, including:
One thing that Schwager has noted before is that some technical traders dislike fundamental trading, and vice versa.
They don’t believe in the other type of trading. However, both are successful, highlighting the fact that traders need to find what works for them.
Another vital thing Schwager points out is that it is more important not to lose money than to make money.
Trading in the Zone is written by Mark Douglas, and many traders refer to it as the trading psychology bible.
Mark Douglas was an experienced trader and brought to the table a number of things traders need to consider about their mentality when trading.
One of the most significant being how as a child, the way in which we cope with loss and failure affects how traders deal with it as they get older.
Further to that, it can teach traders useful skills to overcome these issues and make better trades.
Douglas also wrote many other books on trading psychology. Here are some others you can look into:
While most of his books cover trading mentality, Trading in the Zone is perhaps Douglas’s best work. It won him numerous awards, including the Bull/Bear award in 2006, 2008, 2011, 2015 and 2017.
If you want to learn more about Mark Douglas and Trading In The Zone, you can read this article here where we covered the topic extensively.
If you remember anything from this article make it these key points.
- Forex trading psychology is vital to get right to trade effectively. Not having the right mentality can lead you to make poor trading decisions.
- Fundamental and technical analysis are also important. Traders shouldn’t overlook understanding them, they should work alongside trading psychology.
- Forex trading psychology is also important for your regular life. They are connected and affect one another.
- Forex trading books are a great place to start, but experience is also important. At some point, you have to put the books down and start trading.
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