Top 15 best forex books that you should read
It is a well-established fact that many traders in forex end up losing money. If you think about the reasons why, it is partly because wannabe traders tend to focus on getting right into trading without giving time to learn the basics.
Over a period of time this obviously becomes disastrous as you end up losing all the money that you invested. In this article, we take a look at the top 15 best forex books about trading that you should read.
They have stood the test of time and gives a basic and a gradual approach to understanding how the currency or the forex markets work. Reading these books before you start trading can give you insights into the concepts and prepares you as a better trader compared to many.
We list the best15 books in forex in the order from the very basics to the more technical and also touch upon concepts such as risk management and trading psychology.
#1. How global currencies work
The book, How global currencies work, is a hardcover edition authored by three economists, Barry Eichengreen, Arnaud Mehl and Livia Chitu.
This is the perfect book for beginners who want to start with forex trading. Traditionally, the wide held notion in the markets has been that the global economic system supports the currencies of the world’s leading economies.
This is because of various factors such as political stability, trade and finance. In this book, the economists give a reassessment of the history of global currencies and also gives a refresher on the theories behind these principles.
Published in 2017, the book takes into account the current economic conditions in the markets and therefore provides a holistic view on how the currencies work. As a trader, it is essential that you understand the basic concepts of how currencies work before you start trading in the markets.
The authors, who are noted economists demonstrate how the use of technology and the changing dynamics of international trade continue to reshape the landscape where international currencies operate.
One interest take is that the book establishes evidence of how multiple global reserve currencies managed to co-exist to a certain point. This falls rather against the widely held view that the U.S. dollar is the only world’s global reserve currency.
The book covers all aspects including how currencies worked in the past, how they work today and also gives a forward looking view of how the international monetary system will change. It also addresses the challenges in its forward view.
#2. Currency trading for dummies
The book series, For Dummies might often be brushed aside for taking a rather simplistic view of things. However, in order to truly understand something simple works best. In this aspect, the book, Currency trading for dummies is no exception.
Any expert at some point started out as a dummy. Therefore, Currency trading for dummies is a must read book. It gives you the ins and outs of forex trading from a layman’s perspective. If you are nervous about all the technical jargon that is used, this book outlines everything in plain English.
The book is probably the next step in advancing yourself as a trader. It outlines how the foreign exchange markets works and explains things from a trading perspective. In a way, this book will help establish the basic foundations before you start trading.
You also get to understand how the markets work and the big players in the currency markets. It helps to prepare you about the potential downfalls, the risks and the pros of trading the currency markets, also known as the spot retail forex market.
The book is authored by Kathleen Brooks who is a research director at Forex.com and Brian Dolan who has over two decades of experience in the currency markets.
#3. A beginners guide to day trading online
This hard cover edition has been ranked as the national best seller when it comes to finance and trading. The second edition of the book was published in 2007 and gives readers an outline introduction to how trading works.
It is an entirely different ball game about knowing how the markets work and knowing how to capitalize on it. In this aspect, the book, A beginners guide to day trading online will prepare you for what is to come.
Day trading can be quite a challenge and the book aims to prepare you for what is to come. It gets a bit technical, but that is required for traders. The book introduces you to some of the commonly used concepts such as bid and ask, spread, liquidity and leverage.
By the end of reading this book, the reader would be familiar with the technical jargon that is often used not just in the forex markets but also other markets such as stocks and commodity futures.
With almost all the trading done online, traders can find it to be quite a struggle especially when they are completely new to day trading. The book does not specifically focus on the forex markets but gives a broader view of what to expect and what day trading is all about.
As a forex trader, this book is recommended if you want to understand how day trading works. Think of this as the natural progression after you have managed to understand how the forex markets work.
#4. Technical analysis of the financial markets
The book, Technical analysis of the financial markets, authored by John J. Murphy is one of the best all time sellers when it comes to trading. The book doesn’t specifically focus on the forex markets, but it explains the concepts that are common to trading the financial markets in general.
It is a big read, but the book explains the concepts of technical analysis in layman’s terms. Reading this book alone will save you tons of time in the future as it practically looks at just about everything in technical analysis.
The book is often considered the bible on technical analysis of the financial markets, as it is aptly named. From understanding how chart patterns work to Elliott wave trading concepts and more, this is a book that is a must read if you want to have strong foundations about how the markets work and how technical analysis is used in trading.
In some professional courses, this is one of the books that is a must read. There are lots of chart examples. While some might it a bit expensive, the price is nothing compared to the tons of information that it holds.
One of the best parts of owning this book is that you can always refer back to it at any point. In fact most of the articles on technical indicators and analysis that you read today can trace its roots back to this book.
#5. Japanese candlestick charting techniques
Whether you are trading forex, or stocks or futures, chances are that you cannot escape the Japanese candlestick charts. This is a chart type that shows what is happening to the price of the security. It is one of the most widely used charts in today’s trading.
However, Candlestick charts are relatively new to the Western world. It was imported from Japan by Steve Nison. In Japan, traders have been using candlestick charts since the 1930’s when the first rice commodity exchange was founded.
Understanding how candlestick charts work and knowing the meaning behind the candlesticks will make it a lot more easier for you to proceed further as a trader. Many forex traders make the mistake of simply diving into a technical trading strategy without understanding what the markets are doing.
Do not make that mistake. The book, Japanese candlestick charting techniques is the go-to bible to understand the Japanese candlestick charts. The book also introduces you to other commonly used but less conventional chart types that will surprise you.
The book gives out lots of examples and explains in detail the meaning behind every individual candlestick chart that is formed. You might be surprised to know that there are only a limited number of candlestick patterns that any security can form.
You do not have to learn all these patterns by heart but focusing on the few most important patterns can be very beneficial for you as a trader in the long run.
#6. The new trading for a living
Alexander Elder is a widely known author and a trader in the commodities and forex markets. He has designed various technical indicators that are widely used in the trading community today.
The book, The new trading for a living is an updated version which has already garnered a lot of appreciation and kudos. The book gives you a firm grasp about the essential trading rules and skills required to trade for a living.
Many traders secretly or openly dream about trading for a living. The aim to achieve financial independence and to generate consistent income through their trading has always caught the imagination of traders across the world.
The book gives a practical approach on how to trade for a living. It is not a magic recipe that will tell you the exact steps to trade for a living. On the contrary, the book prepares you about the things that you should know if you want to trade in the long term and want to achieve consistent profits in the markets.
The book gets a bit technical towards the end as it also comprises of various exercises that you can use to test your knowledge about the forex markets. It is a very valuable book if you want to enhance your education as a trader and are serious about making a living by trading forex.
#7. Forex trading – The basics explained in simple terms
This 2015 edition hits the nail on the coffin. Forex trading – The basics explained in simple terms takes you right where the action takes place. It can be a bit technical especially with the use of various technical indicators and what not.
Still, this is a must read book as it introduces you to some trading platforms that you are most likely to use as a day trader in the forex markets. The book gives answers to questions that you will quite often come across as a forex trader.
It also gives an introduction to how to trade using the trading platforms and the various concepts about contract sizes of lots. It also introduces the reader to the importance of maintaining a trading journal and the various types of orders and risk management as well.
The book authored by Jim Brown is a full time forex trader and has published many different books as well. You will come across some more of his books in the later parts of this article as we gradually progress into the more complex details of forex trading.
Jim also publishes various videos on Youtube and is relatively well known in the forex trading community.
#8. The encyclopedia of technical market indicators
So far, some of the books outlined earlier talked about technical analysis and technical indicators. You might be wondering what this is all about.
Technical indicators form a crucial part when it comes to trading. Most of the day traders use various indicators in the forex markets (including other markets) to help with entering and exiting a trade. The technical indicators also help traders to manage risk.
As such, it is important to understand what these technical indicators are and what they mean and most importantly how they are plotted on the chart.
The book, The encyclopedia of technical market indicators is a one stop book for most of the widely used technical indicators in the markets. It provides an alphabetical and up to the date listing of the technical indicators that are widely used by day traders in the markets today.
You can think of this book as an extension to the previous book as it goes in-depth into explaining how the indicators work and the mathematics behind the calculations. You will also learn how the various indicators are used to express different aspects of the markets.
While traders today continue to search for the perfect trading indicator or a trading system, this is an ever-green book that explains how the most widely used indicators work. This is a must read book as it helps to establish the foundations for you to build your own technical trading system.
#9. Currency trading and inter market analysis
Did you know that there are some strong correlations between the different types of the market? For example, if you are trading currencies, it doesn’t isolate you. A major event in the stock market can have its effects felt in the currency markets and vice-versa.
Many traders in forex tend to ignore this fact and they look at the currency trading as an isolated market within the financial markets. This is not true. The markets are very inter-related.
The book, Currency trading and inter market analysis gives the reader the basic concepts on how the markets are related to each other. It tells you how the effect in one market can be felt in the other.
The book, which is authored by Ashraf Laidi, is available as a Kindle edition or a hardcover. It opens your eyes to a new world of trading. By the end of this book, you would start thinking about how to use the information from market and apply it to the other.
Laidi is a well known figure in the forex markets and is known for his analysis that uses intermarket relationships. This gives traders a more confident approach to the markets. Trading is not about just blindly buying and selling, but understanding what the markets are telling you and implementing this information in your trading.
#10. Trading in the zone
Trading in the zone is a book that is widely cited by traders. In fact it one of the highly recommended books when it comes to forex trading. The book touches upon the concepts of how psychology plays a big role in determining yourself as a trader.
It is human nature to be averse to losses. Thus, when you are trading currencies, losses are a part and parcel of trading. Some traders react negatively when they lose. On the same hand, other traders get too greedy or over-confident when they win.
Trading in the zone is a must read book to understand the concepts of emotion in forex trading. It is written by Mark Douglas, a well respected author.
#11. The black book of forex trading
This is a book that is true to its name. It is a black book of forex trading and encompasses the critical lose ends when it comes to trading. It answers questions about how to build a trading strategy to risk management and psychology.
In short, this is a book that combines all the information that you gained so far into a strategy that you can start to build for yourself. There are actionable ideas in this book which could be a good starting point for you as a trader. The Kindle edition of this book is actually available free of cost, which is an added bonus.
#12. Currency Forecasting: A Guide to Fundamental and Technical Models of Exchange Rate Determination
As a trader, what you are essentially doing is basically forecasting what the currency is going to do. This is a book shows you how you can combine the two major fields of forecasting, which is fundamental and technical analysis.
Many traders in forex often end up focusing on just the technical aspect of trading. The fundamentals play a major role in trading too. It is the reason why prices move the way they do.
You would be doing yourself a huge favor by reading this book as it caters to some of the important concepts in trading that is often overlooked by traders in their early trading days.
#13. MT4 High probability forex trading method
Another book by Jim Brown which focuses on forex trading on a specific trading platform called the MT4. The MT4 is one of the most widely used free trading and charting platform. If you are trading forex, chances are that you will be very likely trading with an MT4 trading platform.
This book introduces you to some concepts of trading strategies that you could begin to apply. The strategies will not make you rich but is mostly aimed towards giving you the much needed practice of how to apply a technical trading strategy.
The book is available as a paperback or as a kindle edition. Even if you end up not using the MT4 trading platform, this book makes for a good read about how you can trade the forex markets using the technical indicators.
#14. Market Wizards, updated
The book Market Wizards is basically a collection of interviews with different traders. Authored and compiled by Jack D. Schwager, this book has stood the test of time. The latest edition is the 2012 edition.
It has been updated frequently and therefore gives a more up to date view of the markets. You might wonder what information you could get by reading interviews with traders. The fact is that this is a good collection of trading nuggets that traders who were interviewed reveal.
You will get a basic first seat view of the difficulties and the ups and down of trading, right from the horse’s mouth.
#15. The disciplined trader
The disciplined trader is yet another book authored by Mark Douglas. This book, as the author’s name should ring a bell focuses on the trading psychology. This is also a must have book besides the previous one mentioned.
The book answers some of the most commonly asked questions about why regular traders are unable to be successful in their trading. It mostly boils down to trading psychology and the mind.
Psychology plays an important role in the markets and can define you as a successful or a losing trader. It is worth every penny to read this book as it introduces you to the concepts of being a disciplined trader.
Table of Contents
- Top 15 best forex books that you should read
- 1. How global currencies work
- 2. Currency trading for dummies
- 3. A beginners guide to day trading online
- 4. Technical analysis of the financial markets
- 5. Japanese candlestick charting techniques
- 6. The new trading for a living
- 7. Forex trading – The basics explained in simple terms
- 8. The encyclopedia of technical market indicators
- 9. Currency trading and inter market analysis
- 10. Trading in the zone
- 11. The black book of forex trading
- 12. Currency Forecasting: A Guide to Fundamental and Technical Models of Exchange Rate Determination
- 13. MT4 High probability forex trading method
- 14. Market Wizards, updated
- 15. The disciplined trader