Book Recommendations

Over the years I’ve read quite a few books about trading, finance and making money. Quite a few of these have been rather ordinary, some have been well worth it, see below for some of the more useful ones:

Must Reads

1. Inside the House of Money - I consider this is a must read, have read it several times.
2. When Genius Failed: The Rise and Fall of Long-Term Capital Management - No matter how smart you think you are, you will never be as smart as these guys.
3. An Arbitrage Guide to Financial Markets - It’s a bit slow going though worth it to learn how all the markets interoperate. The arbitrage is big banking focussed though still very informative.
4. The Economist - This is one that the first book highlighted to me… reading the economist is very good for looking at where the different bits of the world are going.

Highly Recommended

1. Pairs Trading: Quantitative Methods and Analysis - Great explanation of pairs trading, goes into a fair amount of details which can be a little heavy going if you pay a lot of attention to the quantitative bits, though honestly you don’t need to, just try to grasp the concepts. Also covers risk arbitrage which might be useful for those that dabble in equities as well.
2. The Misbehavior of Financial Markets - A very interesting book by Mandelbrot, shows the flaws in conventional financial theory and goes part of the way towards fixing them. I picked up the UK version while I was there and spent a lot of time reading it while on holidays there.

I found these useful

1. Way of the turtle - I haven’t actually purchased this book, instead I’ve read it in my local Borders It’s great from a trading psychology and discipline perspective. The author took the same strategy as many other people took, he followed it exactly and did very well, the others stopped believing, or didn’t execute on every signal and didn’t do anywhere near as well.
2. Professional Stock Trading: System Design and Automation - It’s useful to see some real life trading systems, I wouldn’t recommend them as to use (the author got into some trouble with his hedge fund), though it’s interesting to see how others have gone about designing and building an automated system.

Very interesting though somewhat unrelated

A couple of books which I think are excellent and would recommend reading to anyone interested in how the world works or making money.

1. Freakonomics - It’s a must read, though has very little applicability to FOREX trading, hence I’ve put it here.
2. Blue Ocean Strategy - This is more of a business book, a great one.

Hopefully some of these books should help you gaining a better understanding of the world of finance and making money. You may notice a complete lack of books about FOREX. There is a reason for this, I haven’t found any that I think are worth the money.

A final word of warning, stay away from any books that will make you instantly rich.