I am often asked what trading books I would recommend. The following list of books are ones that I have read and found to be worthwhile. As there are no perfect trading “methods” or infallible traders, none of these books are the holy grail of trading. However, each one offers valuable insights, analysis and trading ideas. This list is in no way exhaustive, but they represent the go-to guides that I consult fairly regularly. If there are other books that you would recommend, please send me a message by clicking here.
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How I Learned to Trade Like Tom Sosnoff and Tony Battista, Vol. 1 & 2 – Tony Rihan
TastyTrade viewers will recognize the author as “Tony from Mexico”. In the first volume, Tony covers the fundamental trade mechanics and rules of high probability options trading based on the concepts taught on the Tastytrade network. Volume 2 digs deeper into concepts such as trade adjustments, probabilities, portfolio management. These books provide a great foundation for the options trader and present the material in a very easy to understand format.
How to Price and Trade Options – Al Sherbin
Options expert, Al Sherbin, details his probability-based trading strategy in this textbook. He presents the pricing models (such as Black-Scholes) in a non-mathematical manner with a practical way to apply the knowledge. The most valuable portion of this book is the chapter on exiting trades. He spends considerable time demonstrating how to use the Kelly Criterion formula (which is typically used by traders to determine trade sizing) to calculate the optimal price at which to exit a losing trade so as to provide the trader with an “edge.” This concept is a game changer for me. This text does assume a moderate understanding of options and option strategies.
Profiting with Iron Condor Options – Michael Hanania Benklifa
This is the authoritative guide on selling iron condors. Michael Benklifa scrutinizes every aspect of trading iron condors and lays out a very specific trading plan that can be easily implemented. Although the text is specific to iron condor trading, there are many takeaways that can be applied to selling credit spreads.
Mastering the Trade, 2nd Edition – John F. Carter
This is an all-inclusive book on trading. It does not focus specifically on options trading, however that does not diminish the value of the contents. John Carter devotes considerable amounts of the book to the psychology and business of trading, an often dismissed but crucial component of trading. The author is first and foremost a short-term or swing trader and details all of his daily trade setups and methods of analysis. This volume is not for the faint of heart, but John’s humorous anecdotes and analogies help propel the reader through some very complex material.
Trading Option Greeks, 2nd Edition – Dan Passarelli
This text is an in-depth look at how time (theta), volatility (vega) and the other greeks impact options pricing and trade profitability. The author covers all of the various types of option strategies and explains how the greeks individually and collectively factor into each strategy and how to leverage that into a more profitable trading plan. This book is written with the intermediate to advanced option trader in mind.
Options as a Strategic Investment – Lawrence G. McMillan
This is the original option trader’s bible and it is a hefty read at over 1,000 pages. A word of warning – this book is entirely theoretical in nature and does not use any real world examples. McMillan spends a lot of time on the complex mathematics of options trading, including options pricing models and volatility calculations. This text should be part of every serious option trader’s library, but it is not for the faint-of-heart.
Market Wizards: Interviews With Top Traders – Jack D. Schwager
This is right at the top of the list of my all-time favorite trading books. The author interviews a different top professional trader in each chapter uncovering how they got started in trading, how they became a successful in their domain and most importantly, what failures did they incur on the way to success. No two traders or trading styles are alike and that is clearly evidenced in this best-selling book.
The Stock Twits Edge: 40 Actionable Trade Set-Ups from Real Market Pros
This book is the retail trader’s version of Market Wizards. Subject areas include trend following, value investing, swing & day trading, options, forex, and trading pyschology. Every chapter is written by a trader that currently has an active presence on social media. Each trader presents a favorite trade setup in detail as well as risk management techniques. This book is a wealth of knowledge covering many different trading vehicles and perspectives.
Panic, Prosperity, and Progress – Timothy Knight
This is not a book on trading per se. It is, however, a very engaging history of the markets over the past five centuries. The author demonstrates how history does, in fact, repeat itself and greed is not something unique to the modern generation. I found the book fascinating and had a hard time putting it down after I started to read it. If you have the slightest interest in how the markets as we know them today evolved, you will find this book intriguing.