The most frequent question I am asked is, “Which is the best book for me to buy to learn about trading?” or “Which book did you find most valuable when you first set out to learn how to trade?” Given that Christmas is an excellent time to read and learn, I’ll talk about the books of W.D. Gann, and the best way for one to work his or her way through them.
There are two points I want to make right at the start. There is no doubt that Gann’s best books were the later ones, How to Make Profits in Commodities, if you plan to trade futures, or 45 Years in Wall Street, if you are a stock trader. Now each book does contain a mixture of both stock and commodity trading but, as their names imply, they cover different areas of trading. Why do I rate them as being the best? Over the years, W.D. Gann, like most of us, learnt more, so the later books contain his later thoughts. He also became a better writer, or at least he learnt to express himself more clearly.
But if you want to do the job properly, here are some suggestions for the novice trader. Start with Gann’s first two books Truth of the Stock Tape (first published in 1923) and Wall Street Stock Selector (first published in 1930), which are today published together under the one cover. By doing it this way, working your way through his books in the order that they were written, you will appreciate the growth of understanding that he experiences. It will be the same for you. You will then know the whole story. Quite naturally, in his later books, he did not repeat all of the lessons from his earlier editions. He took it for grated that you had learnt the earlier lessons entirely. You must remember that these books were written over a period of thirty years.
So my advice is to start with the Truth of the Stock Tape and follow this up with the New Stock Trend Detector published in 1936. When you understand the wisdom contained in these early editions, I suggest you then progress to How to Make Profits in Commodities, and then round your knowledge off with 45 Years in Wall Street.
Your next step, and this is only for those who have made a definite plan to become a self-supporting professional trader, is to consider purchasing either the W.D. Gann Commodity Course or the W.D. Gann Stock Course. Neither is a light read, but the truths contained in these courses have stood the test of time in the markets for over sixty years. Studying these courses is a long-term project usually associated with attending a Trading Congress/Incubator. Getting involved to this degree should always be your decision and taken in your own time.
Of course Gann is not the sole repository of market wisdom. There have been many good books written by various writers over the years. We only stock the ones that are still in print and have been beneficial to my trading career. Here are some of the books that fit that category.
The Investors Quotient was a major factor in my coming to grips with the emotional hurdles I experienced, and continue to experience in trading. This book should give you the where-with-all to draw up, what I would call an “emotions” pressure chart. You can create your own psychological trading plan. This will prevent you from being sucked into the vortex or black hole of consensus that builds as a trend emerges. When a market is approaching a major top, every fibre of your body will be urging you to get in there and buy. At the major top or bottom the public is always wrong and being aware of this phenomenon will give you the insight and courage to profit from the mistakes of others. The Investors Quotient is a must for those who lack the discipline to follow a well written trading plan. Isn’t that all of us? Jake Burnstein often draws on the experiences of Jesse Livermore in the Reminiscences of a Stock Operator. If, by the way, you have not read Reminiscences of a Stock Operator, do yourself a favour and buy a copy for Christmas. It is the best book ever written about gifted, geared up, top traders. Though it is written in another day and another place it proves that emotions remain the same. And it is emotions, not facts, that give us our booms and busts. Trust me, it’s a great read.
The Futures Game, Who Wins, Who Loses & Why? Another of my old favourites which for many years has been out of print, has now been republished in a softcover edition. This book was originally published in 1969 under the title The Commodity Futures Trading Guide, an apt title if ever there was one. This classic, covers a broad spectrum of the market. The chapters on Risk/Reward and Money Management are worth, many times over what you pay for the book. It’s a must read!
If you want to add Mark Douglas’s, The Disciplined Trader, to your list you will have the start of a well-balanced library. The Disciplined Trader is a nineties approach to the basics of trading psychology laid out originally in The Investors Quotient. It is a softer approach to the same problems that we face, not just in trading but in life in general. I hope this lot has got you thinking. When you think of the books that are rejected by publishers every day you realise that any book is the best thoughts of our best thinkers. They are a condensation of the wisdom they have acquired in a lifetime and we can buy that for less than $100.00! Sounds like a bargain to me! It is so little to risk compared to the possible reward that I would classify it as a great trade. You are risking a little to gain a lot.