I’ve always read multiple books at the same time to prevent mental stagnation. Recently I have been reading two market related ones, The Intelligent Investor by Benjamin Graham and The New Market Wizards by Jack D. Schwagner. Both are great books and sheds light on different aspects of the market, the former is about how to intelligent allocate your capital for long term investing, and the latter is a summary of interviews with some of the top performing traders at the time of publishing (1992).
The biggest thing that both books agree on (with regards to how much I’ve read so far) seem to be that:
1) No one can consistently predict the stock market, and
2) Humans are ill-suited to handle themselves in the stock market
It’s important to note that The Intelligent Investor is a book that could benefit both investors/traders, and appeals to a large range of market participants. The Market Wizards series is great but it feels like Schwagner picked a biased subset of the trading world, or according to Nassim Taleb (author of the popular book The Black Swan), they were lucky. Alternatively, it could just mean that most people are too emotional to trade. This is an interesting phenomenon that has spawned countless behavioural finance courses and psychology studies.
I’ve been trading the stock market for fun since early 2013 with a small amount of capital (for me at that time), and during my short stint with the stock market I’ve always questioned whether it is better to invest for the long run or rack up a series of winning trades using leverage and options over a much shorter period of time. As a consequence my strategies were inconsistent and I wasn’t able to produce consistent wins. Due to the recent oil crisis my commodity related options were crushed and brought me to a point where I need to re-evaluate my goals or face eventual annihilation of my trading net worth. Luckily these options only consist of 20% of my high risk capital so much of my trading portfolio is still intact.
I’m currently educating myself on trading indicators so I could make more accurate directional assessments, with the eventual goal of building a probability based trading system with buy/sell signals. This process has been an interesting one, as much of the indicators use a combination of mathematics that feels quite artificial and closer to a computer programming experience than statistics or abstract mathematics. I will update any research efforts as they become available.