Trading Psychology: 5 of the Best Books

Trading Psychology

A key part of any trader’s edge is their mental ability to control their emotions and actions when trading. They say trading is 80% psychological mastery and 20% skill. The following 5 books will help you on your way to mastering your emotions in the market.

Trading in the Zone – Mark Douglas

Widely regarded as the go-to book for learning about learning the psychological demands of trading, Mark Douglas’ book ‘Trading in the Zone‘ takes the reader on a journey of reprogramming their current bad habits in the markets. 

If you’re at that stage of your trading where you’re still too impulsive and end up ruining perfectly good trades, or at the other end of the spectrum, letting your bad trades run then this book will help you on the path to eliminating these key errors.

Mark Douglas provides examples of how and why the mind works the way it does when encountering such psychological challenges that the markets can provide. The book is simple to read and understanding is gained through Mark’s excellent use of stories and allegories which likens the experiences of the market to real world experiences that we can all relate to.

If you’re looking to improve your understanding of how you react in the markets so that you can adapt and minimise the errors then this book is for you.

Trading in the Zone - Mark Douglas
Trading in the Zone - Mark Douglas

The Disciplined Trader: Developing Winning Attitudes – Mark Douglas

A different spin on ‘Trading in the Zone’, ‘The Disciplined Trader’ focuses on how to keep your cool, cut out the emotion and regaining the psychological composure that is the key trait of any consistently profitable trader.

With many of our habits of ill-discipline in the markets being formed by beliefs that are learned to function effectively in society this book explains why the profitable trader needs to learn how to become systematic in all aspects of their trading.

The book will show you how to understand your emotions in the markets and how you can create a mental structure to protect against the shortcomings.

The Disciplined Trader - Mark Douglas, Book Cover
The Disciplined Trader - Mark Douglas

The Chimp Paradox – The Mind Management Programme to Help You Achieve Success, Confidence and Happiness – Prof. Steve Peters

Master the voice of the chimp inside your head, which often causes you to make highly irrational decisions with this ‘The Chimp Paradox‘ by renowned psychology professor, Steve Peters.

Whilst this isn’t a trading book, much of the information contained in it is perfectly applicable to the everyday life of a trader. This is one of the most interesting books I’ve read on psychology and will help you learn just how gaining introspection of your life outside of trading impacts your life in the markets.

Steve Peter’s has helped all manner of Sports Professionals and played a key part in Britain’s success at recent Olympics. It’s a fascinating book about mastering the voice inside your head and one that comes highly recommended.

The Chimp Paradox – The Mind Management Programme to Help You Achieve Success, Confidence and Happiness – Prof. Steve Peters, Book Cover
The Chimp Paradox – The Mind Management Programme to Help You Achieve Success, Confidence and Happiness – Prof. Steve Peters

Thinking, Fast and Slow – Daniel Kahneman

Again, not a book specifically on trading, but one that will give you a deep understanding of how and why the mind works so often on an irrational basis.

One of the first questions novice traders ask any professional is “what trading books do you recommend?”. No surprise then that this very question was asked when I was on Peter Webb’s Masterclass course (you can read my review of that course, here). To my surprise, Peter didn’t mention either of Mark Douglas’ books above but instead recommended Thinking, Fast and Slow by Daniel Kahneman.

Admittedly, it is a long read and filled with high-level information so it’s one to take your time with. Give a chapter a read and then let it sink in over a few days and see where your cognitive biases are misleading you, and then go back to the book.

Alternatively, if you wish to gain an insight into whether the book is worth is worth a purchase (it is) then watch the Horizon documentary ‘How You Really Make Decisions’ with the author, Daniel Kahneman, on YouTube.

Thinking, Fast and Slow – Daniel Kahneman, Book Cover
Thinking, Fast and Slow – Daniel Kahneman

Zen and the Art of Poker: Timeless Secrets to Transform Your Game

Much of the psychology tactics used by the world’s most successful Poker players intertwine with those used by the most successful traders. A short read, ‘Zen and the Art of Poker‘ explains why those who keep their cool and play the long game are the winners in the end.

I loved this book and had to buy it after reading the preview. Almost every poker reference in it could be switched for a trading one and it’ll help you visualise your trading in terms of sitting at a Poker table, trying to keep your cool and coming on out on top of your competitors at the end of the game.

You’ll be able to fly through it in a few days and be able to take numerous lessons from it into mastering your sports trading.

Thanks to Caan Berry for suggesting this one!

Zen and the Art of Poker- Timeless Secrets to Transform Your Game – Larry W. Phillips, Book Cover
Zen and the Art of Poker- Timeless Secrets to Transform Your Game – Larry W. Phillips

If I could recommend only one book I’d say you should go with Trading in the Zone by Mark Douglas. But I’d definitely recommend at least watching the Horizon documentary ‘How You Really Make Decisions’ as it gives a fascinating insight into how the brain works.

If you’ve read any of the above books then comment below with your thoughts of how it helped your trading.

Betfair Trading Software

Betfair Trading Software

Matched Bettor of 3+ years. Loves helping others find their path to what they really want to do in life. Started my Sports and Cryptocurrency Trading journey in June 2016. Bitcoiner.

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