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TOP 5 Must-read Books on Psychology of Trading

Profiting on Olymp Trade or another online trading platform is not only about finding the right strategy. It has much to do with psychology and self-discipline. An ambitious trader should be aware of his or her strong and weak points and keep them in balance. For this article, we have hand-picked 5 books that should help a budding online trader develop important traits and correct dangerous bugs. These books will be useful regardless of your strategy, risk tolerance, and goals.

Ok, let’s dive in.

#1 The Disciplined Trader by Mark Douglas

This book is by far our favorite. By the way, its full title is The Disciplined Trader: Developing Winning Attitudes, and we can say the contents meet the stated goal. The book’s author, Marc Douglas, was one of the field pioneers in trading psychology. The Disciplined Trader has become a best-seller and an industry classic. The book comes with a lot of extremely useful tips on how to develop a mindset that will let you make consistent profits.

Mark Douglas focuses on the importance of healthy emotional habits for a trader’s success. After all, it doesn’t matter how good your strategy is if you cannot control your greed or fear. The Disciplined Trader is really easy and exciting to read, unlike a typical educational book on trading that is often mind-numbing. Douglas is a brilliant coach and a talented storyteller.

We recommend starting with this book if something feels wrong, but you cannot figure it out. The Disciplined Trader might shed some light on what causes the friction and how to eliminate it.

#2 The Hour Between Dog and Wolf by John Coates

Again, the full title, The Hour Between Dog and Wolf: How Risk-Taking Transforms Us, Body, and Mind, is much longer. By “the hour between dog and wolf,” the author means a trader’s psychological transformation under positive or negative stress. John Coates explores the situations when a person suddenly becomes overconfident and takes too much risk because a winning streak has begun. On the contrary, a difficult period makes him or her timid, indecisive, and risk-averse.

Coates helps readers understand the deep connection between success in trading and the way our bodies and minds feel and behave. These feelings, in turn, are able to cloud inexperienced traders’ judgment and lead to wrong decisions that trigger losses.

Luckily, some scientific tricks Coates shares may help toughen your mind and body against the stress that goes hand in hand with active trading.

#3 Trading in the Zone by Mark Douglas

Another best-seller by Mark Douglas, the author of The Disciplined Trader. Trading in the Zone, but released 10 years later. It is a must-read if you seek to discover and change harmful mindsets standing between you and consistent profitability. This book is your chance to overcome the mental and emotional habits that cost you money.

Douglas wrote Trading in the Zone after several years spent analyzing thoughts, emotions, and behaviors of both his own and those of good and bad traders. A popular trading coach, Douglas had a lot of material for research.

Some traders argue that it would be enough to read only one of the books, but we do recommend both. Trading in the Zone may repeat some of the points of The Disciplined Trader, but it greatly expands them. We are 100% sure that these two works combined can significantly improve the way you trade.

#4 Mean Markets and Lizard Brains by Terry Burnham

Does our Lizard Brain that ensures biological survival be trusted when it comes to trading decisions? It’s hard to say. In his eye-opening book, Terry Burnham explores what makes markets and individuals behave irrationally. Why do people buy some assets at absurdly high prices? What factors make markets go crazy for no good reason? What ancient instincts stand behind massive sell-offs, bubbles, panic, and euphoria?

Terry Burnham’s exciting investigation offers readers an insight into the psychology of humans and markets. You will know more about how and why your “animal ego” urges you to do strange things.

Sure, this book alone is unlikely to transform a reader into a 100% rational human being. Instead, it will make you aware of how our subconscious betrays us when it comes to money. This awareness will make you skeptical about your guts’ financial advice that often causes disastrous mistakes.

#5 The Daily Trading Coach by Brett N. Steenbarger

According to the subtitle, the book is ready to share 101 lessons for becoming your own trading psychologist which sounds helpful, and it is. If you are a fan of self-coaching, this book will be a great addition to your library. The Daily Trading Coach has everything you expect to find in a self-study tutorial. It’s motivational, easy-to-read, and offers unique content. Dr. Brett, as the readers of the author’s blog call him, has collected tons of cool tips and strategies, combining them with practical exercises and case studies.

As Steenbarger matches rich trading experience with psychological background, his guide will help you cope with typical stumbling blocks every beginner is facing. For a dedicated learner, it’s a good way to get some trading wisdom at a relatively low cost.

Bottom Line

Reading about trading psychology is an excellent way to spend a day. First, it keeps your brain fit. Second, it shows the cause and effect relationships between your actions, thoughts, beliefs, and profits. Lastly, it motivates you to get better at online trading.

In case you prefer other methods of learning, remember that Olymp Trade offers a great variety of educational opportunities and resources. Never stop learning!


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