15 Best Forex Books | LiteFinance

2024.11.08 2024.11.08
15 Best Forex Trading Books for Beginners and Advanced Traders

Oleg Tkachenkohttps://www.litefinance.org/blog/authors/oleg-tkachenko/

Forex trading books are an alternative to private blogs, theoretical papers, forums, and separate articles. Books consistently and deeply reveal the essence of trading, and expert authors share their experiences. Moreover, books allow you to revisit and review the material at your own pace at any time.

This article provides a brief overview of the most popular and best books on Forex trading. As professionals and educators, the authors have helped hundreds of novice traders build their careers. Each author has a unique writing style, highlights, and original ideas.

Key Takeaways

Best Forex Books for Beginners

This section introduces you to the best trading books for beginners that will help you learn about the following basics:

• Forex trading principles, CFD markets, price formation, and factors affecting quotes.

• Fundamental and technical analysis and price forecasting tools.

• Trading strategies and systems and their main elements.

• Risk management in CFD trading and risk minimization and optimization. Avoiding the risk of losing money is described in almost every book.

   

Every author has a unique perspective on these issues and presents their trading approach in a distinctive manner. Therefore, every book for novice traders is useful and engaging. Even experienced traders can discover something new for themselves.

Currency Trading for Dummies by Paul Mladjenovic, Brian Dolan, and Kathleen Brooks

TutorialCurrency Trading for Dummies is a basic guide for beginner traders (referred to as “dummies”) who are newly introduced to the world of Forex and are eager to expand their knowledge. Authors Paul Mladjenovic, Brian Dolan, and Kathleen Brooks explain complex trading concepts using plain language and clear examples illustrating practical strategies. The book can help traders who know little or nothing about Forex.

Main theses:

• Forex is available to everyone. Previously, financial markets were limited to financial institutions. However, with the development of Internet trading, the market has become available to individual traders. Everyone can give it a try now.

• Risk management in the CFD markets is paramount. Any transactions involve high risk. Without planning and a risk management system, there is no point in even starting trading. The book emphasizes the importance of risk management and protective orders to minimize potential losses.

• The key to making money in Forex trading is not just the strategy itself, but the skill of a trader. This book examines different strategies, fundamental analysis, and the psychological aspects of Forex trading. However, your success in making money with these strategies depends solely on you.

   

The book is perfect for people who are unsure if they want to pursue trading as a full-time occupation but are interested in learning about Forex without delving into complex details. This book, written in simple language with a touch of humor, is more aimed at broadening general knowledge.

Forex Trading: The Basics Explained in Simple Terms by Jim Brown

This is another book for beginners, which covers the basic aspects of Forex trading, such as money management, the rules of opening and closing trades, and trading psychology. The book focuses on creating a trading plan. Brown is an experienced trader who shares his own trading concept with his readers.

Main theses:

• A trading system is the key to success. The author describes the main elements of a trading system and its basic ideas. The book provides guidance on creating a trading plan and devising a strategy tailored to the specific needs of a trader.

• Understanding the market driving forces determines your strategy. The author introduces the core concepts of fundamental analysis and explains how to systematize information using technical analysis.

• Risk management is all about protecting your capital. The book explains various risk management tools and how to minimize the risk of losing money without sacrificing initial investment.

This book is suitable for novice traders who are looking for unique ideas for their trading systems.

Forex for Ambitious Beginners by Jelle Peters

The book Forex for Ambitious Beginners describes how the Forex market operates and which factors affect the quotes. It also covers standard, non-standard, and advanced indicators and how to integrate them into a trading system. Additionally, the book includes tests at the end to help readers retain their knowledge.

• The book emphasizes that there is no single ideal trading method that would suit everyone without exception. Success in trading requires time, hands-on experience, and knowledge.

• Understanding the nature of trading hinges on asking the right questions.

• Minimizing risks, maximizing potential, and finding the optimal operating strategy is essential.

The book is suitable for traders who already know about Forex theory and want to develop their trading style and philosophy.

Forex For Beginners by Anna Coulling

This book offers a unique perspective on trading philosophy. It is often believed that women are less inclined to take high risks and tend to be more detail-oriented and practical. Whether this is true, you will find out after reading the book. The overall narrative is similar to many books for beginner traders, covering the basics of Forex, technical and fundamental analysis, and types of trading strategies.

Main theses:

• Risk comes in many forms. The author categorizes risks into three groups, explaining in detail the concept of each type and its potential for opportunity. The book emphasizes risks the most.

• You can make money in any market if you understand the principles of price formation.

The book resembles a professional trader’s blog. Therefore, it is suitable for anyone who is ready to work and make a profit.

Trading in the Zone by Mark Douglas

The book focuses entirely on the psychological aspects of trading, delving into the mental and emotional challenges that traders face. Rather than discussing trading tools or systems, the author aims to guide readers on developing the right mindset to achieve success as a trader.

Main theses:

• Сonsider the probabilities. The author states that successful CFD trading relies on understanding probabilities and probabilistic thinking. He suggests that each trend should be viewed as a separate event with an unpredictable result.

• Keep your focus on the decision-making process and the execution of the trading plan instead of being fixated on the outcome of each trade. This approach emphasizes the importance of the process over the final result, as Mark Douglas advocates.

• Developing the right habits is crucial. The book stresses the significance of cultivating behaviors and habits that contribute to future success.

The book is suitable for everyone because understanding the basics of trading psychology and managing your emotions is crucial for achieving positive results. Even if you are not planning to pursue professional trading, the book helps you understand yourself, fostering optimism and confidence in your abilities.

Best Forex Books for Advanced Traders

This section offers a selection of books for those who are already familiar with the basic trading theory and have experience managing trades, at least on a demo account. The books contain algorithms for identifying and confirming signals using different tools, author’s trading strategies, and much more. The authors also share their professional experience.

Day Trading and Swing Trading the Currency Market by Kathy Lien

Kathy Lien is an experienced trader who serves as the chief foreign exchange strategist at Forex Capital Markets LLC. She is also an analyst and has authored numerous financial articles. In her book, she generously shares her expertise, covering both simple and complex trading strategies.

Main theses:

• Technical analysis is the foundation of day trading. Kathy Lien provides a detailed overview of various technical analysis methods, including the use of charts, indicators, and oscillators. Special attention is given to analyzing price patterns and trend movements.

• The ability to adapt and generate new ideas grants you a competitive edge. The book provides an in-depth analysis of the significant developments in the currency market over recent decades. Primarily, it delves into the realm of trading automation.

The book is aimed at experienced traders who have the expertise to utilize various strategies on different time frames and are now seeking a deeper understanding of trading.

The New Market Wizards by Jack Schwager

Jack Schwager’s book The New Market Wizards is a compilation of interviews with more than 20 successful traders in the United States. The author delves into their investment philosophies, popular trading strategies, and approaches to risk management.

Schwager does not just share the success stories of these traders, he tries to understand their mindsets and the reasons behind their decisions. He asks incisive questions, encouraging his interviewees to share their deepest trading secrets. The book immerses readers in the world of professional trading, revealing that behind the seemingly unpredictable market fluctuations are distinct methodologies and a profound comprehension of the market.

Main theses:

• Individual approach. Every trader and investor is unique, so there is no one-size-fits-all strategy. It is important to find a niche and trading style that corresponds to your personal qualities and preferences.

• Discipline and risk management. Every trader, no matter how skilled, can make mistakes. However, their capacity to manage losses and control emotions enables them to sustain their trading activities in the long run.

• Trading and investing is not only an art but also a science. It is important to develop a trading philosophy, to improve constantly, and not to be afraid of experiments.

This book is perfect for those looking to learn about various trading algorithms used by professional traders. It covers Forex trading without charts, based on fundamental analysis, arbitrage, futures, and options strategies. You will find a diverse range of experiences collected here, including the author’s unique trading insights.

 How to Make a Living Trading Foreign Exchange by Courtney Smith

The book’s author, Courtney Smith, focuses on the specifics of each market, ranging from currency markets to complex derivatives markets. Considering each market’s peculiarities, the author offers strategy options and lists the main ways of generating a stable income.

Main theses:

• Technical analysis is the basis of any strategy. The book explores the use of trends, support, and resistance levels, as well as indicators, to find the key confirming signals. It also examines the algorithms and techniques for trading price channel breakouts.

• Risk management is the second key component of success. A stable trading system is achieved through a combination of trade insurance methods and technical analysis.

The book is intended for professional traders who want to discover new structured markets.

The Black Book of Forex Trading by Paul Langer

Paul Langer is a professional trader who has dedicated most of his life to studying complex technical tools that incorporate elements of mathematical and statistical analysis of financial markets. In this book, he shares his trading experience with readers.

Main theses:

• The importance of psychological resilience. Langer emphasizes the importance of controlling emotions and discipline in trading.

• Risk management strategies. The author shares methods for minimizing losses and preserving capital. The book also deals with typical trader’s mistakes and how to avoid them.

• Technical analysis. The book provides a detailed review of key indicators and technical analysis methods used to predict price movements.

This book is for everyone. It provides an alternative perspective on trading decisions, analysis approaches, methods of money and risk management, and emotional control.

The Alchemy of Finance by George Soros

The billionaire, known for his unconventional approach to economic theory, has made a name for himself as the author of numerous financial papers. He famously “broke” the Bank of England, showcasing his alternative views on market structure. His perspective suggests that markets not only influence traders but are also influenced by them.

Main theses:

• Soros criticizes traditional economic theories and argues that they do not consider the importance of reflexivity and the behavior of market participants. He offers an alternative approach to understanding financial markets.

• Soros introduces the concept of reflexivity, which explains how market participants not only respond to market conditions but also have the power to influence them. This interaction creates cycles that can lead to irrational behavior and market bubbles.

• The author analyzes historical events and market crises to prove his theory and demonstrate the effectiveness of his methods in real-world scenarios. He examines his investments during various periods, including Black Monday in 1987 and other challenging times.

The philosophy of one of the greatest financiers of recent decades will be useful to anyone interested in the world economy and its history.

5 Best Technical Analysis Books

This section is entirely dedicated to technical analysis. After reading the suggested books, you will learn about technical analysis tools, their functions, and how to combine them effectively. Furthermore, you will be introduced to global market interconnections and the concept of black swan events.

Japanese Candlesticks Charting Techniques by Steve Nison

The author explains how the shape of a single candlestick, its formation time, and its combination with neighboring candlesticks or patterns can be used to predict further market movements with a high degree of accuracy, determine pivot points, and confirm other indicators’ signals. The first part of the book on Forex explores 50 popular trading patterns, while the second part delves into their combinations with other instruments.

Main theses:

• Candlestick patterns and their interpretation. The book contains detailed descriptions of candlestick patterns that help predict price movements. Nison examines single candlestick patterns such as “Doji” and “Hammer,” as well as complex patterns such as “Bullish engulfing,” “Bearish engulfing,” “Morning star,” and “Evening star.”

• Nison includes many real-life examples and cases illustrating the application of candlestick charts in different market conditions. The author analyzes historical charts and shows how various candlestick patterns can help predict future price movements.

• Nison pays special attention to the psychology of market participants and how candlestick patterns reflect traders’ sentiments and expectations. He explains how to analyze market performance and recognize buy or sell signals depending on the general psychological mood.

The book is perfect for traders who wish to understand specific technical tools, such as candlestick patterns, and utilize them effectively in their trading systems.

Technical Analysis of the Financial Markets by John J Murphy

The book Technical Analysis of the Financial Markets by John Murphy is one of the most famous manuals on technical analysis. It details the methods and tools used in forecasting future prices by analyzing the history of quotes, including the impact of trading volumes on price movements. 

Main theses:

• Introduction to technical analysis. The book explains the basic concepts and principles underlying technical analysis, outlining how it works and its role in the general market research framework.

• The basis of technical analysis. The book considers different types of trends, their formation, and methods of their evaluation, and describes price patterns and examples of their use. Besides, it considers the influence of time cycles on market movements.

• Trading strategies and risk management. The author advises on developing and applying trading strategies based on technical analysis, considering different approaches to risk optimization.

The book will come in handy for anyone who wants to become a professional trader. It was written in 1998, confirming that the systematic approach to technical analysis remains relevant even when the long-term model of market development changes.

Intermarket Analysis by John Murphy

John Murphy’s book Intermarket Analysis contains an in-depth study of the interactions between different financial markets. The work begins with an overview of the global intermarket changes of the 1980s that led to the start of the largest equity bull market in history. The book also examines post-1998 developments and emphasizes how intermarket interactions can be useful in asset allocation and economic forecasting.

Main theses:

• Markets interconnectedness. Financial markets, including stocks, bonds, foreign currencies, and commodities, are interconnected. Changes in one market can impact others, so understanding these interrelationships is crucial for predicting price movements and making informed trading decisions that consider intermarket correlation, taking into account intermarket correlation.

• The role of interest rates. Interest rates have a significant impact on all financial markets, including bonds, currency pairs, and, eventually, equities and commodities.

• Commodities as an indicator of inflation. Commodities such as oil and gold can indicate future inflationary trends.

The book is suitable for traders interested in global markets and price trends on long-term time frames.

The Black Swan by Nassim Nicholas Taleb

This book is one of the best resources for understanding trading. Despite its unconventional approach, it remains widely popular. Taleb coined the term “black swan” to describe unexpected global events that have a significant impact on the world and branch economies, such as the Great Depression, the advent of the Internet, or pandemics. The book explores the causes of black swans, their consequences, and how investors can consider their probability in long-term investing.

Main theses:

• Illusion of understanding. People believe they have a better grasp and control of the world around them than they actually do. This false perception leads to an unwarranted sense of security and confidence in their knowledge and predictions, causing them to overestimate their capabilities and strengths.

• The importance of chance and probability. Taleb emphasizes the crucial role of chance and probability in our lives. He argues that success or failure is often shaped by random factors, not solely by personal effort and ability.

• Inevitability. We cannot predict or avoid black swans. However, we can develop adaptive behaviors to live in a changed environment.

Everyone will benefit from this book. You should definitely read it even if you are not a trader. The language and manner of the author’s narration resemble the style of science fiction writers. However, logic based on facts proves that this is our reality, and the possibility of a force majeure cannot be ignored.

Trend Following by Michael Covel

The book is a practical guide to trend following strategy that can be applied in the stock market and on Forex. The author shares knowledge on how to identify trends and exit trades in time to obtain maximum profit with minimal risks. After the 2008 financial crisis, the book was updated to include the experiences of successful traders like John Paulson and Carl Icahn, who managed to identify trends even after the economic crisis. 

Main theses:

• Trends are paramount. There are clear trends in the Forex markets, and identifying them is essential for successful trading.

• Perfect is the enemy of good. The more you complicate a trend strategy, the higher the risk of getting confused and making mistakes. Simplicity and discipline are the guarantee of success.

This book is perfect for both gambler traders and long-term investors.

Conclusion

Books offer a unique insight into the world of millionaire traders who share not only their successful transactions but also their mistakes. These traders did not become professionals overnight. They started as beginners and have come a long way from being stock speculators to becoming authors of the most popular books.

There is something in books that you will not find by reading blogs, forums, or watching webinars. The books of famous traders allow beginners to get answers to the following burning questions:

• Is it wise to take on high risk without full knowledge? When did professionals begin initiating their first trades?

• How to develop your own trading strategy, and is it possible to start trading with minimal risk right away?

• How to succeed among traders who already have some experience?

Trading will teach you to think. You will learn to plan your time and life, consider multiple potential scenarios, develop the foresight to assess risks, and adopt a more rational and sensible approach to various aspects of life.

Not all the best books for Forex trading are listed here. However, starting with these books alone will be enough to adjust your trading approach and motivate yourself for a positive result. Save this top list of Forex trading books and try to read at least one book every 1–2 months.