Trading psychology books must read for every trader

Trading Psychology Books- Must-read for every trader

Table of Contents

Do you wish to become a better trader? You simply must master trading psychology! Emotions are the biggest wreckers of trades out there. They cause absolute bedlam. You will find out soon as you are in the first month of your trading career. If you do have some years of trading experience, of course, you are aware of the ruckus emotions wreak on you. Small wonder that trading psychology books that are a must-read for every trader become a necessity you cannot do without. 

The trading psychology book fair 

Welcome to the trading psychology book fair! We will be discussing the most intriguing, stimulating content out there. We will also look at trading psychology per se through the eyes of an advocate of ‘mindfulness’, which will lead to a better appreciation of why a trader ought to care at all for the subject. The Books can better help you to understand trading indicators and to understand various trading strategies.

Trading psychology books: The Sppetiser 

Wishing you a great start ruminating on this topic. Bon appetit!

The Hour between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust

Authored by John Coates, the book destroys not a few of the fallacies we carry around about ourselves and our trading behavior. The author proposes the following corrections: 

  • Given that the body and brain are intricately interconnected, we ought to treat them as a unit; 
  • Neurochemistry and physiology changes with the winning and losing of trades; 
  • Decision making is not a wholly conscious process; 
  • Preattentive processing is far more impactful than conscious processing;   
  • Intuition is significant pattern recognition; 
  • Communal and interconnected biochemistry prepares us for boom and bust cycles. 

There’s ground for building muscles for the mind. There have been sufficient advances in biochemistry to warrant this observation. 

In the book, Coates describes the physiological changes that take place on winning and losing. The hormonal dance thus unleashed sets the tone and tenor for boom and bust cycles. We are obedient like humble servants to hormones. 

There are footnotes that bear out the above – scores of them. By themselves, they make for engrossing reading. 

The titular hour between dog and wolf is when we have been sufficiently stimulated to act. This transformation can be channelized. If you manage this well, you end up building wealth. Conversely, your trading career can truly ‘go to the dogs’. 

The takeaway

The above material has everyday, real-life applications. That’s how potent trading psychology books are! Educational resources galore at ABinvesting and InvestBy!

The lessons in Coates’ book are there for you to leverage. You can start an impactful process that combines real-time awareness of the state of your body, feelings, and thoughts. The well-known thesis behind ‘mindful awareness’ could also add further depth to this strategy. 

How do you master market psychology?

We now come to the groundbreaking book that has won raving reviews from peer scholars. In December 2014, Wiley came out with Dr. Gary Dayton’s “Trade Mindfully.” 

A snippet of accolades won by the book: 

  • Described as likely the most useful trading psychology book for the last two decades; 
  • A trailblazer combining Eastern philosophy with sports psychology; 
  • Significant cutting edge concepts lucidly presented; 
  • The book presents profit maximization through psychology; 
  • Easy to understand, accessible to all traders regardless of the level of experience; 
  • A blueprint for trading success; 
  • Recommendable for traders for holistic training. 

Best of all, there’s a raving review by a top-ranking author Brett Steenbarger. The latter is in every list of trending trading psychology books. He says that Dr. Dayton’s book is the best he has read, combining mindfulness with trading. Steenbarger goes on to say that Dr. Dayton explains the problems that generally plague traders, drawing upon thorough research to show how mindfulness and a process orientation can address these effectively.  

The best trading psychology book 

Our candidate for the best trading psychology book is, therefore Dr. Dayton’s “Trade Mindfully.” But, first, we will briefly look at what the book contains. 

Dr. Dayton’s trading psychology is concentrated on two types of important mental skills traders ought to have for arriving at their optimum performance.  

  • High-value mental skills; 
  • High-value trading actions. 

High-value mental skills 

Trading psychology: why traders ought to care for mindfulness 

Recent advances in psychology applicable to trading psychology reckon mindfulness to be a vital technique in helping traders make significant behavioral changes. Mindfulness is derived from Yogic and Buddhist traditions.

 Research has supported the application of mindfulness in a diversity of aims. Only a handful of these are :

  • Increasing concentration and focus.
  • Reducing stress.
  • Helping people overcome psychological challenges.
  • Performance enhancement in sports and trading. 

Three merits of mindfulness for developing your trading psychology

Improved concentration and focus

Similar to tennis players who frequently report ‘seeing the ball better’ when mindfully aware, the trader applying mindful awareness may start ‘seeing the market better’ beside the directional cues it offers. The practice of mindfulness is what in athletes’ jargon is called ‘being in the zone. ; 

Staying in the moment 

Traders are sometimes too preoccupied with preceding events or projecting their beliefs onto future events. Such preoccupation is a waste of energy. Mindfulness or mindful awareness training can help traders in the zone. Like athletes, they can notice changes the second they come in. 

Since there’s no other intrusive thought blocking their trading mind at that moment, observing market cues takes place with the trader relatively stress-free. With Dr. Dayton’s book, you can literally be ‘on the ball’, rather than plumbing the depths of the Pacific ; 

Decoupling from emotions and thoughts

With ‘defusion,’ you can step outside your emotions and see the trade objectively. This will give superior practical results since you are not struggling with doubts and anxieties whilst trading. 

High-value trading actions 

High-Value Actions for traders are actions that : 

  • Are under the control of the trader; 
  • Relate to the trading process; 
  • Help widen the trader’s ability to read the market; 
  • Increase the possibility of the trader concluding successful trades; 
  • More positive emotion and trading confidence. 

Results of implemented High-Value Actions for traders

  • High-quality preparation; 
  • Effective trade execution; 
  • Precise trade assessment;
  •  Near fault-free trading actions. 

Small wonder that we have to adjudge Dr. Dayton’s “Trade Mindfully” as the most valuable trading psychology book for us all out there!

Trading psychology giants: Steenbarger and Douglas

We will be looking at the most popular work respectively of Brett Steenbarger (whose acquaintance we made above) and Mark Douglas (whose book ‘Trading in the Zone’ resonates with what Dr. Dayton has told us).  

Why does Wiley have access to all the greats?!

In 2015 Wiley came out with Steenbarger’s “Trading Psychology 2.0: From Best Practices top Best Processes”. The SUNY academician has authored several highly praised trading psychology books, all available from Wiley. He is also an avid blogger, and therefore easily accessible. 

Steenbarger’s latest book is a thorough guide to the application of psychology to the art of trading. The veteran trading psychologist provides crucial advice and proven techniques to help interested traders make sense of the market better. There’s a plethora of takeaways that can be implemented at the shortest notice. 

The book is touted as a ‘coach n print’! Salient features are 

  1. The book targets understanding research at the core of trading psychology; 
  2. Examines the manner in which psychology is applied in practical trading; 
  3. Aims to give tips that can be used with immediacy for quick results; 
  4. Backs up its theses with references to the work of veteran traders. 

Mark Douglas’s “Trading in the Zone”: Is trading in the zone a good book? 

You will have a large number of readers who opine that Mark Douglas’s “Trading in the Zone” is the best trading psychology book out there. 

Contradictions, conflicts, and paradoxes in the thought process can be disastrous for even well-grounded, shrewd traders. Mark Douglas, himself a trader, personal trading coach, and industry consultant these past three decades, addresses five particular issues, proffering traders insight that will make them consistent winners. 

The book offers the following:  

  • The specific solution to the people factor of price movements; 
  • How lack of focus and trading confidence Marrs stock picking; 
  • The probabilistic mindset. 

Douglas’s aim has been to help you gain an edge on the market. It is possible to combine a knowledge of the real you and the real Wall Street to obtain trading consistency. The power of the trader’s psyche receives attention. Leveraging new knowledge of the same, you are led on to unprecedented profitability. 

The best of the rest: Trading psychology books 

Bidding adieu to Dayton, Steenbarger, and Douglas (for now), we turn our attention to the best of the rest. Although there’s an avalanche of trading psychology books published every now and then, there are a select few that promise to linger long after they are put down. 

Edwin Lefevre’s “Reminiscences of a Stock Operator”

Lefevre’s book is a constant in the frivolous book marketplace. Published a few years after the Great War, the book undertakes to describe the life and work of the legendary trader, Jesse Livermore. Bringing together rich storytelling with a trader’s acumen, the book tells a compelling tale that makes for compulsive reading. Every time you go thru it, you encounter new finds. 

The book has proven to be a pleaser of all classes of traders. Even beginners can take away a lot from the tale. Biographies have always been favored. For us traders, it is only fitting that we learn about past greatness. Above all else, we will learn never to repeat mistakes. 

Denise Shull’s Market Mind Games: What is the best trading book to read?

Denise Shull’s experience as a trading coach is combined with diverse references to the literature of fields like Biology, Physiology, and Psychology. The book plunges deep into the science behind trading psychology. Denise Shull has probed the reasons driving human emotion and thought processes when faced with high pressure and uncertainty.

People, in general, lose their bearings when faced with probabilities. We are very poor at evaluating outcomes where there are many unknowns, and high pressure to be right. 

Truth to tell, people are worse than random when it comes to forecasting. More often than not, we cannot predict the market properly without letting emotional interference get the better of us. 

Further confounding the confusion, this leads to our perceptions of risk being skewed as well. 

Denise Shull helps you turn your emotive liabilities into assets. Her book will help you rein in the breakaway demons of negative emotions. You will then be able to use emotions constructively and positively. 


Trading psychology is a vital offshoot of Psychology. We are indeed fortunate that scholars have taken the initiative in making the murkiness of the trading mind decipherable. This has had a great impact on education and training. 

Future generations of traders will be indebted to such popularisers of trading psychology. Just like online brokers like ABinvesting and Investby,  have democratized trading, so too brilliant academicians have brought home to us the whole scientific truth. 

Neither life nor trading can be wedded to prejudices. Clarity of mind requires good instruction – which trading psychology books are always willing to provide!

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