The Traders Journal

Pivotal Books in the 25-Year Trading Life of a Stock Market Investor

Images (2)I’ve always believed that an accurate way to take the measure of a person is to ascertain which books had the most significant influence on his or her life.  Most people will find it difficult to be 100% truthful.  I will endeavor to be truthful, but will adjust the question to share my “Books of Most Influence” list, pertaining specifically to my life as a stock market trader.  These are the books that have simply had the most profound and positive impact on my investing endeavors as I look back over the past 3 decades. 

Whether you are a novice or expert investor, whether you find your trading is resulting in your “check engine” light coming or simply you feel you are recently coming up a bit short of salsa on your trading taco, reading or rereading a pivotal book will have a rejuvenating and recharging effect.  At least that’s how it works for me. 

Some of these books I’ve read over six times.  I know that because each time through I use a different color highlighter pen.   One caveat here is that we can argue all day about best books or best sellers, but this is simply a list of memorable books in the life of Gatis Roze.

The other caveat is that I’ve divided up the list under the umbrella of my Tensile Trading System.  Therefore, they are organized into my 10 stages of investing.  I hope you find my books turn out to be as important to you as they were to me.

Stage #1:  Money Management
I have four recommendations here only because three are significant tools in helping me to help others in the investor education arena.  The 4th book – John Murphy’s tome which I memorized from front to back – was the basis for my successful completion of the Chartered Market Technician (CMT) certification.


 

  1. The Visual Investor: How to Spot Market Trends (2nd edition) by John J. Murphy
  2. Investing for Dummies by Eric Tyson
  3. The Investor’s Guide to Active Asset Allocation: Using Intermarket Technical Analysis and ETFs to Trade the Markets by Martin J. Pring
  4. Technical Analysis of the Futures Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy

Stage #2: The Business of Investing
Here I have three books to recommend.  I have reread the Reminiscences of a Stock Operator book about Jesse Livermore six times, and each time I always find new insights.  Don’t be put off by the fact that this book is over 80 years old.  This is also supported by the reality that if you read both of Dr. Alex Elder’s books, you’ll realize how much has stayed the same over the years.

  1. Reminiscences of a Stock Operator by Edwin LeFevre (also available now in a wonderful Annotated Edition by Jon Markman)
  2. Trading for a Living by Alexander Elder
  3. Come Into My Trading Room by Alexander Elder

Stage #3:  The Investor Self
As every expert or professional trader will tell you, this is the key to profitable investing.  Both of these books must be re-read.  I do so myself every couple of years.  Its’ the good stuff, as George Lane once told me.

  1. Trading in the Zone by Mark Douglas
  2. Market Wizards: Interviews with Top Traders by Jack Schwager

Stage #4:  Market Analysis
William O’Neil spoke to us when I was in business school and just as he was starting Investors Business Daily which was funded by his own trading profits.  In my opinion, he has done more to effectively educate multiple generations of successful investors than any one single individual in the world.  The book on the Wyckoff method had such a profound impact that for a number of years, I took Wyckoff classes at Golden Gate University in San Francisco.

  1. How to Make Money in Stocks: A Winning System in Good Times and Bad (4th Edition) by William J. O’Neil
  2. Charting the Stock Market:  The Wyckoff Method by Jack K. Hutson

Stage #5:  Routines
A successful life as a trader is made up of a series of successful days.  I have shared this easy-to-read book, written by multiple authors, with many students to help instill in them the importance of productive routines.  Along those same lines, the annual Stock Traders Almanac is a calendar, organizational handbook and statistical marvel that will increase the likelihood that you’ll make more profitable trades.

  1. Manage Your Day-to-Day: Build Your Routine, Find Your Focus, and Sharpen Your Creative Mind by Jocelyn K. Glei
  2. Stock Trader’s Almanac 2014 by Jeffrey A. Hirsch

Stage #6:  Stalking
Both of these two books will give you guidance as how best to approach the markets and will describe those key relationships that’ll help shift the probabilities your way.

  1. What Works on Wall Street(4th Edition) by James P. O’Shaughnessy
  2. Trading with Intermarket Analysis by John J. Murphy

Stage #7:  Buying
Ralph Vince is one of the great minds in the area of optimal bet size, asset allocation, money management and risk analysis.  Having said that, his four books come with two prerequisites.  First, you have to be well along the path as a seasoned investor before you tackle his material.  Secondly, you’ll need lots of strong coffee unless you’re an insomniac.  It’s heavy reading but with big payoffs.

  1. The Mathematics of Money Management: Risk Analysis Techniques for Traders by Ralph Vince
  2. The New Money Management:  A Framework for Asset Allocation by Ralph Vince
  3. The Handbook of Portfolio Mathematics: Formulas for Optimal Allocation & Leverage by Ralph Vince
  4. Portfolio Management Formulas: Mathematical Trading Methods for the Futures, Options and Stock Markets by Ralph Vince

Stage #8: Monitoring Positions
This reading is just as the name implies.  It’s a war out there, and my belief is that investors cannot lose their focus or relax once they’ve taken a position.  Gerald Loeb’s book has also stood up through the years and is worthy of your time.

  1. The Battle for Investment Survival by Gerald Loeb

Stage #9:  Selling
There is a good deal of garbage written about exit strategies, and I believe this is the most complex discipline for investors to grasp.  In my seminars, I offer up a number of selling methodologies because no one size fits all investors.  Having said that, I think Donald Cassidy’s two books present the essential building blocks for a customizable system that’s workable for most investors.

  1. It’s Not What Stocks You Buy, It’s When You Sell That Counts: Understanding and Overcoming Your Self-Imposed Barriers to Investment Success by Donald L. Cassidy
  2. It’s When You Sell That Counts by Donald L. Cassidy

Stage #10:  Review & Adjust
Tom Peters was a lecturer when I was in graduate school, and I found that his research on excellence challenged me on a personal level to be the very best I could be.  I know this sounds like a military ad, but it had an impact.  The other book is by Larry Williams who is an extraordinary and well-documented trader, author, lecturer, politician, and yes, winner of the World Trading Championships multiple times. But the reason I respect him so much is that he set out to teach his 20-something daughter to trade stocks, and she herself subsequently won the trading championship.  I am now endeavoring to tutor my own 20 year-old son in a similar fashion and emulate Larry, so I have a special soft spot in my heart for his many achievements.  And for what it’s worth, he’s also an exceptionally nice person as well!

  1. In Search of Excellence:  Lessons from America’s Best Run Companies by Thomas J. Peters and Robert H. Waterman, Jr.
  2. Long Term Secrets to Short-Term Trading by Larry Williams

May this somewhat novel blog produce many good results for you, just as these books have done for me.

Trade well; trade with discipline!
-- Gatis Roze

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Great list, Gatis, wouldn't argue with any, agree with many not appearing, too :) I would add though: second edition of John Carters' Mastering the Trade - very good walk through on rules based trading. Also another classic - Stan Weinstein's Secrets for Profiting in Bull and Bear Markets. Tx!
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