The Best Trading Psychology Books I’ve Ever Read

There are thousands of fantastic books out there on trading.

They’ll teach you everything you need to know from technical analysis to fundamental analysis, from profitable trading strategies to macroeconomic theory, covering all the topics under the great hot sun.

I covered a list of my favorite general trading books in a different article.

But one of the most valuable and important topics you can learn from this wealth of trading literature is advice on how to cultivate good trading psychology habits to maximize your chances for success.

The problem? There are dozens of reputable trading books covering the subject of Trading Psychology, and many of them are quite expensive – so which ones do you read first?

Well, I’ve got you covered.

Over the past 4+ years I’ve read every great trading psychology book I could get my hands on, and in this list I’ll break down the books that had the most significant and lasting positive effects on my trading habits and mentality.

And as of currently writing this, in the middle of the COVID-19 Corona Virus pandemic – some of these books are on sale for as low as half-price! This is an awesome opportunity to add to your trading library and read some new books while we’re all stuck indoors.

So without further ado, it’s my pleasure to present you with the 10 best trading psychology books I’ve ever read.

#1 – Trading In The Zone

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The first book on this list may be an obvious one as it’s possibly the most popular trading psychology book in the world – but it’s popular for a reason.

Mark Douglas was one of the first trading psychology scholars in the trading industry. He was one of the first traders to recognize the profoundly important role good psychology habits had in determining a trader’s success.

Mark’s interest in trading began in the late 1970s while he was an executive at a commercial insurance firm. One fateful day, he decided to commit to his passion of mastering the financial markets and left his safe and cosy six-figure income career to become a broker for Merrill Lynch at the Chicago Board of Trade.

After completing his studies and becoming a licensed broker he spent several years in that role. And during that time he discovered that most brokers he worked with had no clue what the market was going to do next. But they were all good at convincing their clients to put on trades.

This perplexed his curiosity in what really moved the markets and influenced trader’s decisions, and so as he began trading his own account, he also began keeping a detailed daily journal of his thoughts and actions for every trade he took.

This exercise led to the inspiration for his first book – another book on this list – The Disciplined Trader. That book explored the good and bad mental habits he noticed in his journal. He wanted to thoroughly understand what he was thinking before, during and after every trade so that he could determine what patterns were leading to his success (or self-sabotage).

The book Trading In The Zone was his second book on the subject of trading psychology, written after many years spent analyzing his own thoughts and emotions and those of other successful (and unsuccessful) traders he subsequently went on to coach after the success of his first book.

It’s one of the first books I read on the subject of trading psychology, and it opened my eyes to the “secret” behind trading success. It’s not enough to just have a method that works. You also need to have the right attitude towards yourself and towards the markets in order to succeed.

Trading In The Zone will lay out the basic framework and foundation for developing powerful mental habits and attitudes towards your trading in order to set you up for the optimal environment for attaining success.

It will teach you how to overcome your fear of uncertainty, and how to hone your intuition and emotional responses in order to become not just a profitable trader – but a great trader.

#2 – Market Mind Games

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Market Mind Games: A Radical Psychology of Investing, Trading and Risk is one of the best scientific books ever written on trading psychology.

Mark Douglas’ Trading In The Zone is a book based on his personal observations on trading, and it’s extremely valuable and helpful to the aspiring trader and serves as a great introduction to the basic concepts behind good trading psychology.

But Market Mind Games written by the famous Denise Shull takes his fledgling research to a whole new level.

Layering personal observations from Denise Shull’s experience as a trading coach on top of scientific research and literature from biological, physiological and psychological academia, Market Mind Games goes deep inside the science behind trading psychology and what drives human emotion and thought processes when faced with uncertainty and high-pressure situations.

Humans are not good at dealing with probabilities. Unlike computers, we are bad at assessing outcomes of situations where there are many unknowns and a high pressure to be correct.

In fact, humans are “worse than random” when it comes to our predictions in the face of financial market uncertainty – meaning that we literally get things so wrong, that for most people, randomly predicting an outcome without our cognitive interference would give a better result.

This book explores why that is – (spoiler alert: it’s emotional interference) – and how you can develop self-awareness and good mental habits in order to compensate for and circumvent this tendency for humans to make poor decisions in relation to predictions about the future (and our skewed perceptions of risk as a result).

In fact, the book will help you not just compensate for this cognitive limitation – but turn it into an asset.

Denise Shull is the real-life equivalent to Wendy Rhoades – the hedge fund psychiatrist portrayed by the actress Maggie Siff in the hit Wall Street TV show Billions. In fact, Denise is so alike Wendy that in 2019 she actually sued Showtime for “stealing” her character.

But great trading shows and movies belong on their own list, so I digress.

Denise Shull is a performance coach who uses neuroeconomics and modern psychoanalysis in her work with hedge funds and professional athletes to guide and mentor them in the quest of improving their game. In other words, she helps multi-millionaire traders and athletes make better decisions under pressure.

She focuses on the positive contribution of feelings and emotions in high-pressure situations – such as trading, where traders must put large amounts of capital at risk in a world of uncertainty on a regular basis.

After reading this book you will not just have a better understanding of how your mind and emotions function and influence your decisions, but you will be equipped with a number of tools to exploit your mind’s emotional responses in order to harness their intuitive power and become a better trader.

#3 – Trading Psychology 2.0

It was incredibly difficult to rank these books in any particular order because the authors here are all masters of their craft.

But no matter what order they’re in, I couldn’t possibly leave this book off the list.

Trading Psychology 2.0: From Best Practices to Best Processes by the legendary Dr. Brett Steenbarger is a must-read for any aspiring trader who wants to have the best chance of success in this highly-competitive and highly-unforgiving industry.

Dr. Steenbarger is famous in the trading world. A performance coach of the best class, he currently works for SMB Capital – a famously successful proprietary trading firm on Wall Street run by Mike Bellafiore and Steve Spencer.

SMB Capital don’t mess around. And neither does Dr. Steenbarger. He takes his craft seriously, and he is as well-versed in the science of human psychology and performance-based disciplines as anyone else on this list.

Beyond his work at SMB and other highly successful trading firms, he also teaches as a Professor at the State University of New York with a particular emphasis on solution-focused “therapies for the mentally well”. So it’s safe to say that Brett knows a thing or two about his craft and is a verified authority on the subject in question.

The book Trading Psychology 2.0 presents a comprehensive guide to applying the science of psychology to the art of trading.

Contained in over 400 pages is the culmination of decades of research performed by Dr. Steenbarger. In them he offers critical advice and proven techniques to help traders better understand themselves and the markets, with practical solutions that can be implemented immediately.

The book doesn’t just contain monotonous theory – it contains actionable steps you can take right now to improve your trading results and attitude towards yourself and the markets.

After reading Trading Psychology 2.0, you will have a firm understanding of the research at the core of trading psychology. It will examine the ways in which psychology is applied in real-world trading. And as a result, you will gain the perspective and insight of veteran traders who apply these techniques daily.

Perhaps the longest book on this list, it is also one of the most valuable, containing a wealth of knowledge on the subject of good trading psychology.

I couldn’t recommend it more for anyone who is struggling with their trading or who simply wants to take their performance to the next level.

#4 – High Performance Trading

High Performance Trading: 35 Practical Strategies and Techniques to Enhance Your Trading Psychology and Performance is a book written by the highly reputable Steve Ward.

A performance coach with a reputation as respected as any of the others on this list, he has also worked with elite athletes and teams in over 30 sports including adventure, endurance and extreme sports.

Notice a recurring theme here? You might think that professional trading has a lot in common with professional athletics. And you’d be right.

Steve Ward leverages his experience with high-performing high-pressure athletes to help high-performing high-pressure traders get the most out of their talents.

Like Dr. Kiev, Dr. Steenbarger and Denise Shull, he works hands-on with traders and fund managers across the financial industry. He specializes in trading psychology, performance, neuroscience and physiology.

He works with elite traders on their risk psychology, their lifestyle and stress management, their decision-making in high-stakes situations and has a passion for mindfulness-based approaches such as meditation and increased self-awareness.

In his book High Performance Trading, he breaks down 35 unique strategies to approach your trading with in order to improve your performance across the board – from stress management to decision-making to confidence – all designed to not only increase your profits, but also your well-being.

It’s a fantastic book for anyone who wants to apply the theory they might learn in this book and other books into practical actionable steps that they can implement into their daily routines and habits.

#5 – New Trader, Rich Trader (1 & 2)

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How could I possibly write a list of the best trading psychology books of all time and forget to include the masterpiece work of Steve Burns?

This is a bit cheeky, but I had to slip two books into this section. The reason is that the second book is fantastic, but it only makes sense if you read the first.

I feel this is justified however, because both books basically tell two sides of the same story. The first book covers Steve’s fictionalized experiences as a beginner trader, and the second book revisits his life after attaining “trader enlightenment” and becoming a conistently profitable trader.

I’ll focus on the first book in this write-up because all stories have to begin somewhere.

First of all, Steve Burns has been investing and trading in the stock market successfully for over 20 years. He’s authored 6 books with the help of his wife Holly (and surely plans to write more), and he ranks near the top 500 of all reviewers on Amazon – meaning that he’s read a lot of trading books himself. And I mean a lot.

So it’s fair to say that he’s an authority not just on trading, but on trading literature too.

The reason why I put this book on a list of trading psychology books even though it’s technically a fictionalized memoir and not really intended to be considered an academic study of trading psychology in the same vein as some of the other books I’ve mentioned, it still manages to serve the same purpose of educating the reader on good trading psychology.

Nothing compares to experience. Even if you read all of the books on this list cover-to-cover, there’s still going to be the very real and very challenging hurdle of implementing all of this information successfully into your own trading process and lifestyle.

Steve Burns represents an ordinary every-day trader just like you who managed to do just that. And so his experiences as told in New Trader, Rich Trader offer valuable insight into the process of growing into a profitable trader.

I’ve read a lot of Steve’s work and I’ve come to thoroughly enjoy his views and his writing over the years – but you have to start somewhere, and if you’ve never read any of his content before – I suggest starting here.

New Trader, Rich Trader will accompany you on your own journey as a developing trader and you will relate to almost everything the character “New Trader” experiences in the book.

After reading this book not only will you have a better understanding of what it takes to be a successful trader, but you won’t feel alone in the challenging journey of attaining that success.

It’s a comforting tale as much as it is encouraging and enlightening. Its message is clear: “if I can do this, you can do this too”. All that’s required is an understanding of what’s necessary – and the sincere commitment to doing it.

#6 – Trading To Win

Trading To Win: The Psychology of Mastering the Markets is another great book written by a scholar of mental science.

The author, the late great Dr. Ari Kiev, was a highly-experienced psychiatrist whose work ranged from the study of nontraditional psychiatry practices to helping athletes and Wall Street traders achieve peak performance.

Unfortunately he passed away in 2009 at the age of 75, but fortunately he left behind a plethora of great work and contributions to the field of trading psychology so that we modern traders can stand on his shoulders and become true masters of our craft.

Early in his career Dr. Kiev specialized in suicide prevention and mental health. His curiosity about how other cultures handled mental health issues led to his study of nontraditional practitioners in Africa, Asia and the Soviet Union.

His work in the 1970s focused on helping patients become self-reliant, more assertive, and better able to cope with distress and obstacles in life. Dr. Kiev also happened to play basketball while he studied at Harvard and became interested in the psychological drivers of athletes.

He realized that athletes faced many of the same psychological barriers of self-doubt and uncertainty as his medical patients, which led to him developing techniques athletes could use to manage stress and improve their performance under pressure – much like some of the work Denise Shull and Steve Ward do today.

He helped coach Olympic teams in basketball, bobsled and other disciplines to achieve peak performance. (Feel the rhythm! Feel the rhyme! Get on up, it’s bobsled time! Cool Runnings!)

This work caught the attention of Steven Cohen – the manager of world-famous and profoundly successful hedge fund group SAC Capital.

Steven recognized the similarities between Olympic-level athletic performance and Wall Street top-dog trading performance, and convinced Dr. Kiev to join his organization as a performance coach and trading psychologist.

During his time at SAC Capital, Dr. Kiev studied elite trader’s behavior patterns and subconscious fears and helped them gain insight into their tendencies towards denial and rationalization that could sabotage their trading and investment goals.

This led to a huge body of written work by Ari, spanning more than 20 books in total – including several best-sellers such as this book.

Trading to Win compliments the other books on this list extremely well. Encouraging, enlightening, motivating and practical all at once – it will serve your trading career well to read this book.

#7 – The Disciplined Trader

The Disciplined Trader: Developing Winning Attitudes is the first trading book written by Mark Douglas. I’ve already introduced Mark Douglas, so I don’t need to go into detail about his background.

This book compliments Trading In The Zone exceptionally as a guide to understanding the psychology of self-discipline and the personal transformation required by your average social and school-indoctrinated person in order to become a successful trader.

Published in 1990, it was one of the first books to buck the trend of focusing on methodology – and focused instead on the role that healthy psychology plays in a trader’s success. After all, you can have the best methods in the world, but if you have poor trading psychology, you’ll find some way to screw it up.

It’s as interesting to read as it is educational, which is rare in trading books. Most trading books are either interesting but not very helpful, or they’re extremely helpful but dry and not very entertaining.

Mark Douglas was a talented writer who, like many of the other authors on this list of distilled greatness, had a gift for achieving both education while keeping his prose interesting and fresh.

The book speaks to you in a conversational tone, rather than an academic tone. It’s written as if Mark is talking directly to you, not to an audience.

If you’re struggling with any part of your trading then it’s very likely that reading this book will trigger several light-bulb moments and epiphanies about yourself and why you struggle with whatever you struggle with.

Like Trading In The Zone, my copy of The Disciplined Trader is covered in highlighter marks. It’s just full of gems of wisdom, and I flick through it from time to time and read the sentences I’ve highlighted for encouragement and motivation during tough times and bad drawdowns.

It almost has a spiritual undertone, and I have no doubt that Mark was a spiritually enlightened man who understood the profundity of human experience better than most. He was certainly a man with ideas far ahead of his time. The book actually touches on a few rather esoteric subjects such as dissecting what is experience itself.

But it’s done in a grounded way that is intuitive to understand, and contains ideas and tactics that are practical to implement in your own life. It has definitely earned its place on this list.

#8 – The Daily Trading Coach

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The Daily Trading Coach: 101 Lessons For Becoming Your Own Trading Psychologist is another masterpiece by Dr. Brett Steenbarger.

I’ve already introduced Dr. Steenbarger’s impressive backstory and credentials regarding his other book Trading Psychology 2.0, so if you skipped through this list and you’re not sure who he is – go and read that, because this book compliments Trading Psychology 2.0 in the most practical manner possible.

The Daily Trading Coach contains literally 101 lessons on coaching yourself to become a better trader.

It’s written in such a way that allows you to use the book to coach yourself on systematically improving your trading the same way that you might if you had a personal performance coach.

Each lesson follows the same general format: identifying an everyday challenge that traders typically face, an approach to meeting that challenge, and a specific suggestion for implementing that approach.

It’s the ultimate trader’s self-help book. It contains a detailed recipe for success, and no matter what it is you’re struggling with in your trading, I can guarantee that there’s a chapter in this book that will help you to address it in a practical and actionable manner.

This book sits in my office library for reference whenever I’m confronted with a problem in my own trading. It’s the equivalent of a biblical instruction manual for all serious traders who lack access to their own personal mentor or performance coach.

I’ve heard several reputable trading coaches refer to this book themselves, such as Akil Stokes who is an extremely experienced forex educator from Tier One Trading.

It’s a real gem, and if you’re having trouble with overcoming a particular challenge in your trading performance, then I highly recommend picking up a copy of this treasure trove of practical trading wisdom.

#9 – Market Wizards

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This one might seem strange to see on this list for anyone who has heard of it. But it’s here for a good reason.

Jack D. Schwager is a famous trading author who has written several of the universally-recognized best books in the trading industry – including the glorious masterpiece Market Wizards: Interviews With Top Traders.

Jack was himself a trader before he became an acclaimed author. He began his journey as a celebrity writer with Market Wizards – a thick tome of market wisdom containing dozens of interviews with not just successful traders, but the most successful traders of their generation.

It’s not intended to be a trading psychology book, but rather a book exploring the world of elite trading and what the various millionaire and billionaire trading legends do differently to the average trader.

Well, as you’ll discover if you read the book – it turns out that good trading psychology plays a pivotal role in their massive success.

The reason this book is on the list is because there’s guaranteed to be something contained within its many pages which all traders can relate to.

Covering market wizards from forex to stocks to commodities to options, ranging from independent traders to Wall Street traders and hedge fund managers of all ages and backgrounds, it really is perhaps the most comprehensive trading book on the planet.

As fascinating as it is enlightening, Market Wizards is a book that every serious trader needs in their library. It’s the first book that I give to friends or family who ask me about trading, and the first book I recommend to new traders who ask where to start.

There are countless nuggets of wisdom littered throughout the book in all shapes and sizes, and it gives you a fantastic insight into the many different styles of trading that exist as vehicles for generating profit.

The key takeaway from reading this book is that there are thousands of ways to make money in the markets – the secret to success is finding out which way works for you.

#10 – Atomic Habits

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The final book on this list, authored by famous blogger-turned-novelist James Clear, is the only one which was not written by a trader or specifically for the trading industry.

Atomic Habits: Tiny Changes, Remarkable Results – An Easy & Proven Way to Build Good Habits & Break Bad Ones is a bestseller for a reason.

James is an amalgamate of ancient and collective wisdom. He distills the very best ideas and practical methods of improving our lives into clean, simple and concise writings.

His writing focuses on topics such as how to start (and stick to) good habits, how to make better decisions and avoid bad ones, how to think strategically and accomplish more in less time, how to shape your environment to optimize the odds of success, and how to achieve big results without overwhelming yourself.

In his own words: “I consider it my job to find the best ideas and explain them in a way that is actionable and easy-to-understand.”

And he achieves just that in his brilliant work Atomic Habits.

By applying a manageable and Kaizen approach to habit building, this book explores the optimal methods for building good habits, sticking to them, and eliminating bad ones.

As traders there’s a misnomer out there that we require strong willpower and self-discipline. The truth is, there’s no such thing as self-discipline. What we might call self-discipline is in reality just a cultivation of good habits.

Someone who has good self-discipline doesn’t force themselves to do the right thing. Having to force yourself to do the right thing just means that you’re still in the process of developing the right habits.

Once your routine of doing the right thing (or simply not doing the wrong thing) becomes a natural habit, it appears to the outsider that you’ve developed self-discipline.

The professional athlete doesn’t need to force themselves to train or eat the right foods or go to bed at the right time. They don’t think about it that way. Instead, they develop routines and habits that result in them doing the right things to maintain success.

It’s exactly the same for trading. A “disciplined” trader doesn’t have to constantly remind themselves to keep their position sizing appropriate or honor their stop loss or stick to their trading plan rules – they do these things because they’ve become habits.

To the outsider who is still struggling to develop these habits, it may appear that a successful trader has great self-discipline and restraint in their actions. But to a truly successful and seasoned trader, it’s rarely a question of restraint or willpower.

They are “trading in the zone” so to speak – and these behaviors come to them naturally, because they never even thought about ignoring their stop loss or risking too much of their account or breaking their trading rules.

It was never even an option that they considered in the first place, because they were just following their time-tested routine which they’ve built up over thousands of consistent trading decisions. They never had to exercise any self-discipline, because they had good trading habits.

Well, if you’re struggling with developing self-discipline in your trading, then that means that you’re employing bad habits or haven’t cultivated enough good habits yet.

This book will help you to do that, and that’s why it’s proudly displayed on this list.

#11 – Bonus

As some traders mentioned in the comments below – Van K. Tharp is also a phenomenal trading psychology coach and has written some great books on this subject.

The only reason I haven’t included him on this list is because I haven’t finished reading his books yet, and I had to pick 10 from the ones I’m familiar with – but from what I’ve read so far, he definitely deserves a mention!

So if you can’t get enough of the other 10 books on this list, make sure to check out his work, too.

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