When starting your forex trading journey (or any venture), it is imperative that you do thorough research before you even make your first real trade. Yes, there is something to be said for being too “book smart” and not having enough experience applying the theory that you have learned, but in our experience, if you are smart with what you learn and how you learn it, you can never be too prepared.
The list below comprises some of the best books for forex trading beginners wanting to do some research on forex markets. These books are in no particular order, so read the ones that pique your interest and the ones you think you can truly learn from. You do not need to have any experience whatsoever in forex trading, just a keen interest in the subject is sufficient. When you are reading the books we outline below, it is important to try and absorb as much of the information provided as possible. This can be ensured by taking comprehensive notes or testing yourself on the content you have learned. This may not be as interesting as simply reading the book, but it will be much more effective for your trading potential in the long run. If you do not take on board the information you are reading, you are wasting your time. Some of the books below are not specific to forex markets and instead focus on concepts that apply to all financial markets, it is still worth giving these a read, and you never know, you may want to start trading the stock market instead!
Technical Analysis of the Financial Markets by John J. Murphy
“Technical Analysis of the Financial Markets” by John J. Murphy is the first book on our list for a reason, providing a comprehensive overview of technical analysis. It covers a wide range of topics, including chart patterns, indicators, and trading strategies. Focussing on the visual analysis of market data, this book helps readers understand price trends, market psychology, and the interplay between supply and demand. This book is also excellent for serving both the absolute beginner and more intermediate traders, as it does move on to more advanced techniques later in the book. Written in 1998, it still serves as a valuable resource for traders and investors seeking to utilize technical analysis to make profitable decisions in financial markets.
Currency Trading for Dummies by Kathleen Brooks and Brian Dolan
The “… for Dummies” series has produced some gems throughout the years by getting insightful experts to write their books for them, and in forex trading, there is no exception. “Currency Trading for Dummies” is a book for beginners that simplifies the complexities of currency trading but can go into surprising depth when it needs to. Authored by Kathleen Brooks and Brian Dolan, the book introduces readers to the forex market, covering topics such as currency pairs, exchange rates, and factors influencing them. It explains technical and fundamental analysis tools, helping readers interpret charts and economic indicators. The book emphasizes the importance of developing a trading strategy, managing risks, and maintaining emotional control. It also provides insights into some more advanced trading strategies. This is a great book for complete beginners and will remain an excellent reference as you further develop your skills as a trader.
Market Wizards by Jack Schwager
“Market Wizards” by Jack D. Schwager, first published in 1989, is a classic book about financial markets. In this widely renowned book, Schwager conducts fascinating interviews with top traders from various financial markets, uncovering their unique strategies, perspectives, and approaches to trading. The book provides lessons on risk management, trading psychology, and the importance of discipline and adaptability. Through the captivating narratives of these market wizards, Schwager inspires readers to develop their own trading styles and learn from the experiences of those who have achieved remarkable success in the world of trading (a bit like you are doing now by reading this article!).
Japanese Candlestick Charting Techniques by Steve Nison
“Japanese Candlestick Charting Techniques” by Steve Nison sounds like a serious niche book about observing candles, but in reality is a definitive guide to understanding and applying the ancient Japanese art of candlestick charting in modern trading. Nison introduces readers to the rich history and practical applications of candlestick charts, which provide valuable insights into market trends, reversals, and price patterns. The book covers various candlestick patterns and their interpretations, enabling traders to identify potential entry and exit points with greater precision. Nison’s expertise and clear explanations make this book a useful resource for traders seeking to incorporate candlestick analysis into their technical analysis toolkit.
Day Trading and Swing Trading the Currency Market by Kathy Lien
“Day Trading and Swing Trading the Currency Market” by Kathy Lien is a comprehensive guide that focuses on the techniques and strategies specifically tailored for day trading and swing trading in the currency market. Lien provides readers with insights into the inner workings of the forex market, covering topics such as currency pairs, market participants, and key economic indicators. The book emphasizes the importance of technical analysis, offering practical guidance on chart patterns, indicators, and trading setups. Lien also delves into risk management, trade execution, and the psychological aspects of trading. With numerous real-life examples and case studies, Lien equips readers with an exceptional number of tools and depth of knowledge so that they can go on to make informed trading decisions.
Forex Trading: The Basics Explained in Simple Terms by Jim Brown
“Forex Trading: The Basics Explained in Simple Terms” by Jim Brown is a beginner-friendly book that breaks down the fundamental concepts of forex trading in an accessible manner. Brown provides readers with a clear understanding of the forex market, including how it operates, major currency pairs, and the factors that influence exchange rates. The book focuses on simplifying complex trading concepts, ensuring that readers grasp key topics such as leverage, pips, and risk management. Introducing a practical approach, Brown introduces readers to various trading strategies and techniques, emphasizing the importance of finding a trading style that aligns with individual preferences. The book also covers essential aspects such as chart analysis, indicators, and entry/exit points. Brown’s goal is to provide readers with a solid foundation in forex trading, empowering them to make informed decisions and navigate the market with confidence, and so is perfect for beginner traders.
Reminiscences of a Stock Operator by Edwin Lefèvre
Going back in time a bit, “Reminiscences of a Stock Operator” by Edwin Lefèvre, published in 1923, is a timeless classic that provides a detailed account of the life and experiences of a fictional trader named Jesse Livermore. Based on the real-life experiences of Jesse Livermore, the book offers insight into the world of speculation and trading. Lefèvre skilfully depicts Livermore’s journey, capturing his successes, failures, and the lessons he learned along the way. The book delves into the psychological aspects of trading, risk management, and the importance of adapting to market conditions. This book remains an invaluable resource for traders and investors, serving as a guide to the art of speculation and the challenges faced by those seeking success in financial markets, and continues to stand the test of time.
Buffett: The Making of an American Capitalist by Roger Lowenstein
“Buffett: The Making of an American Capitalist” by Roger Lowenstein provides an insightful and comprehensive look into the life and investment philosophy of Warren Buffett. He is (and you should probably know this even as a complete novice) one of the most successful investors of our time. Lowenstein explores Buffett’s early life, his evolution as an investor, and the key tenets that guided his remarkable success. The book delves into Buffett’s value investing approach, his focus on long-term investments, and his ability to identify undervalued companies. Lowenstein also examines Buffett’s unique management style, his emphasis on integrity and ethical practices, and his astute capital allocation decisions. Through detailed research and interviews, Lowenstein offers readers an engaging narrative that sheds light on Buffett’s investment strategies and the mindset that shaped his iconic career.
The Big Short: Inside the Doomsday Machine by Michael Lewis
“The Big Short: Inside the Doomsday Machine” by Michael Lewis provides an account of the events leading up to the 2008 financial crisis and the individuals who predicted and profited from the collapse of the housing market. Lewis offers an in-depth look into the world of subprime mortgage bonds, collateralized debt obligations (CDOs), and credit default swaps (CDS) that fuelled the crisis. Through vivid storytelling and interviews with key players, the book uncovers the complex web of greed, deception, and flawed financial practices that contributed to the disaster. Lewis highlights the few individuals who recognized the impending crisis and took advantage of the market’s vulnerability. “The Big Short” was adapted into a film starring Christian Bale and Brad Pitt, which is also worth a watch. Slightly different from the other books on our list in that you may not learn how to be a better forex trader from this book, but an in-depth knowledge of the 2008 financial crisis is essential for anyone going into the financial markets.
Irrational Exuberance by Robert Shiller
“Irrational Exuberance” by Robert Shiller examines the phenomenon of speculative asset bubbles in financial markets, with a particular focus on the stock market. Shiller explores the psychological and economic factors that contribute to irrational exuberance, where market participants become overly optimistic and drive prices beyond fundamental valuations. The book covers historical examples of speculative bubbles and their subsequent bursts, including the stock market crash of 1929 and the dot-com bubble of the late 1990s. Shiller also discusses the role of media, herd behaviour, and the influence of narratives in shaping market sentiment. By analysing the cyclical nature of market booms and busts, “Irrational Exuberance” provides a cautionary perspective on the dangers of unchecked optimism and therefore remains an insightful resource for forex traders, despite this book focusing primarily on the stock market.
Beginners Forex Trading Books Takeaways
In conclusion, this article highlights the importance of thorough research and learning for forex trading beginners. We emphasized the value of books as resources for acquiring knowledge and understanding the complexities of the forex market. The books we recommend cover a range of topics, including technical analysis, trading strategies, market psychology, and the experiences of successful traders. By exploring just a few of these books, you can gain a solid base of knowledge and develop the skills necessary for successful trading.