The more you immerse yourself into trading, the more you’ll discover that the biggest road blocks you’ll encounter have their origins in human behaviour. Trading psychology, emotions, personal development and discipline, to name a few. And while there are plenty of great books on trading psychology, I often enjoy taking a broader view and seeing what I can learn from non-trading books.
The more that you read, the more things you will know. The more that you learn, the more places you’ll go.
– Dr. Seuss
To give you an example: while trading, I found it really helpful to be aware of cognitive biases related to losing (e.g. prospect theory and loss aversion), which is described extensively in Daniel Kahneman’s masterpiece; Thinking, Fast and Slow. To approach a certain trading issue from an outside perspective like this can be tremendously helpful.
That’s why I decided to share a list of non-trading books with you. At first sight, these books have nothing to do with trading. However, every single one has improved my trading in ways that are more subtle and sometimes deeper than initially thought.
These books not only changed my trading, but have changed myself, in becoming a more aware, focussed, driven and positive person. I absolutely believe that by reading some of these books, you can experience similar personal growth.
The best non trading books for traders
1. The Power of Habit – Charles Duhigg
Step by step changing your habits can have a massive impact on your life in the long term. Changing your trading habits could have a similar effect on your trading.
This book uses research to explain how habits are formed and changed. Habits are formed using a loop of cue, routine and reward. To change a habit, one needs to keep the cue and reward, but change the routine.
Employing the strategies from this book has allowed me to get up earlier, have a morning trading routine that prepares me for the upcoming trading day and much more. If you feel like you’d like to change some habits, this book is for you. Read more.
2. Thinking, Fast and Slow – Daniel Kahneman
This fascinating book has probably been one of the biggest aids in understanding trading emotion, psychology and biases. Daniel Kahneman takes us on a tour of how we think, describing our thinking as divided in 2 systems, a fast and a slow thinking system.
This book is sublime in explaining human behaviour and cognitive processes and biases, and in that way is very useful to keep in mind with relation to trading emotions and behaviour. It describes why we do what we do, why we make emotional decisions that might not always be in our best interest and what we can do to make better choices. This is a book that not only will improve your trading, but will be useful in daily life as well. A highly fascinating read! Read more.
3. Grit: The Power of Passion and Perseverance – Angela Duckworth
One of the most common reasons why people fail in achieving their goals is not because they lack talent, but because they’re not persevering in their road to achieving that goal. They lack passionate perseverance. In other words, grit.
This is especially visible in trading, where research indicated that 80% of all day traders quit within the first two years. Angela’s research-backed book describes who typically succeeds in life and why. She then offers a Grit Formula to help anyone to become more gritty, focusing on six key factors: hope, effort, precision, passion, ritual and prioritisation. This book is a must read for any trader looking for sustained success. Read more.
4. The 4-Hour Work Week – Timothy Ferriss
This is a classic and most people will have at least heard about it. Still, I think it’s a good book to include as it sparked a change in mindset about what you should get out of life and how to achieve it. There’s no need to wait until you’re old to start enjoying life.
Timothy describes ways to achieve a different lifestyle and take the bull by the horns. Not all of his advice would always be easy to implement or even relevant, but that’s beside the point.
It gets you thinking of what can be done if you put your mind to it. This is something many traders will probably recognise. This book is an easy and entertaining read and is highly recommended. Read more.
5. The Marshmallow Test: Understanding Self-Control And How To Master It – Walter Mischel
I have written about the marshmallow test before (in my article on exit strategies), but back then I didn’t know there was a book about it. When I found out, I absolutely had to read it.
Self-control is one of the hardest things to master when trading. I am confident in saying that not having enough self-control is the main reason why most traders fail. Not having the self-control to wait until you enter a trade, not having the self-control to let trades play out or not having the self-control to actually follow your trading plan.
This book explores the nature of willpower, identifying the cognitive skills and mental mechanisms that enable it and showing how these can be applied to challenges in everyday life. Every trader should have read this. Read more.
Which non trading books have made a big impact on your life as a trader? Let us know in the comments!
