The published list
Asked about favorite trading books, Kullamägi's FAQ calls all of the following must-reads:
- Reminiscences of a Stock Operator by Edwin Lefèvre
- How to Make Money in Stocks: A Winning System in Good Times and Bad by William O'Neil
- The Market Wizards books by Jack Schwager
- How I Made $2,000,000 in the Stock Market by Nicolas Darvas
- Trade Like a Stock Market Wizard and Trade Like a Champion by Mark Minervini
Several of them are also on this site's reading shelf.
Why read them in order
The list mixes very different kinds of book: a narrative about a speculator's career, rule-based growth-stock methods, and interviews with many traders. Reading them in a deliberate order lets each one add a layer, instead of five competing systems arriving at once. The order below is this site's suggestion, not one given in the FAQ.
A reading plan (ours)
Lefèvre
Read for the way markets and speculators behave. Note every idea about trends, patience and cutting losses.
Darvas
Read for one person building a method from charts and mistakes. Note how the rules changed over time.
O'Neil
Read for a systematic description of how past big winners looked before their moves. Note the measurable criteria.
Minervini
Read for setups, risk and sell rules in modern markets. Note anything stated as a number.
Schwager
Read last, for the range of ways different traders found an edge. Note what they had in common.
Turning notes into tests
The FAQ's other advice is to study the charts of past movers and build a chart database. Books are most useful when they feed that work. For every idea you note, write it as something a chart can confirm or reject: a measurable condition, a time frame and an outcome. Then look for it in your database, including the failures. The database is covered in build a chart database, and the traps of looking only at winners in survivorship and hindsight bias.
What books cannot do
- They describe other markets and other decades; conditions differ.
- Authors choose their best examples; their failures are rarely shown in full.
- A rule that worked for one trader's size, temperament and time frame may not fit yours.
The reading routine
- Read one book at a time.
- Keep notes as testable statements.
- Check each statement on charts, winners and failures.
- Keep what holds up; drop what does not.
- Revisit the list after a year of chart study.