Trading is about mastering three different areas:
- A trading system with an edge.
- Using the right position sizing and risk management parameters for the system.
- Having the right discipline and mindset to execute a trading system consistently over the long term.
Developing the right trading psychology is about how you think about trading execution and results.
The profitable trader is patient with entries and exits waiting on their signals. They are focused on what works and not personal opinions or predictions. A trader with the right mindset doesn’t worry about missed trades or boast while winning and doesn’t become depressed while losing. They are never too proud to admit when they are wrong and exit their trade.
The winning trader doesn’t give unsolicited advice to other traders because they know everyone trades their own system and their own plan. They are not angered by the market action with losses because they take full responsibility for all their trades. They keep a detailed record of all their trades to learn from winners and losers. They love trading and never stop learning and getting better. The profitable trader always protects their capital through risk management, always trusts in their methods, always has faith in themselves and method, and always perseveres.
Profitable traders greatest edge in in their psychology.
Here are ten of the best trading psychology books to help you on your path to developing the mindset of a profitable trader.
Trading in the Zone: This is widely considered the best book every written on the subject of trading psychology.
The New Trading for a Living: This book lays the foundation for understanding the importance of combining mind, method, and money management to become a profitable trader.
Trading Psychology 2.0: One of the best books on a full overview of the elements of trading psychology.
Mindset Secrets of Winning: This book by stock market wizard Mark Minervini explains the step by step process for creating the right mindset for success in all areas of life.
The Behavioral Investor: While this book focuses on investor psychology the principles also apply to traders.
Calm Trader: I wrote this book as a quick overview of all the principles I learned in the stock market over 25 years and reading over 400 trading and investing books.
The Ultimate Trading Psychology Guide: In this book you can read about the first hand mental and emotional experience of a trader putting real money at risk.
The Essence of Trading Psychology: This is a great trading book that walks readers through developing mindfulness and self awareness in their trading.
Overcoming 7 Deadly Sins of Trading: This book explains the negative mental behaviors a trader needs to avoid to be a profitable trader.
12 Habitudes of Highly Successful Traders: This book explains the positive mental attributes needed to be a profitable trader.
These may be the only ten trading books on psychology you will ever need to read.