Back in 2011, I pulled together a full run of Trading Rules & Aphorisms.

It turned out to be a worthwhile exercise, and so I began updating this semi annually. This is a list of my favorite traders, analysts, economists and investors views’ on what to do — and what not to do — when it comes to markets.

This is the latest updated version of my:

Trading & Investing Rules, Aphorisms & Books

Livermores Seven Trading Lessons

Bob Farrell’s 10 Rules for Investing

James Montier’s Seven Immutable Laws of Investing

Richard Rhodes’ 12 Trading Rules

John Murphy’s Ten Laws of Technical Trading

Six Rules of Michael Steinhardt

• David Merkel: The Eight Rules of My Investing

Art Huprich’s Market Truisms and Axioms

DENNIS GARTMAN’S NOT-SO-SIMPLE RULES OF TRADING

Lessons from Merrill Lynch

Louis Ehrenkrantz’ 7 Golden Rules for Investing

Rosie’s Rules to Remember

In Defense of the “Old Always” (Montier)

Lessons Learned from 37 Years of Futures Trading

Richard Russell’s The Power of Compounding

The golden rules of investing (India)

25 Common Sense Money Tips

 

If you have any suggestions for any good lists of rules I may have missed, please link to them in comments. If they are worthy, they will get added tot he list.

After this run, I plan on updating this list 2x per year . . .

 

My own trading rules and favorite Trading Books are after the jump

My (Ritholtz) own rules

10 Errors and Checklist for Investors

Lessons the Guys Who Wrote Dow 36,000 Should Have Learned

Rules for Shorting

15 Inviolable Rules for Dealing with Wall Street

10 Psychological, Valuation, Adapative Investing Rules

The Zen of Trading

 

Then go to these books — they cover trading and markets generally:

Jack D. Schwager: Stock Market Wizards : Interviews with America's Top Stock TradersStock Market Wizards : Interviews with America’s Top Stock Traders by Jack D. Schwager

Schwager interviewed market legends at the height of their success. What makes the book so worthwhile are the consistent themes that evolve from currency traders, mutual fund managers, commodities traders, hedge fund managers. Regardless of what is being traded, there are related motifs that run throughout.

What results is not a “How to trade” book; instead, it is a book about “How to think about trading.”

Charles D.  Ellis: The Investor's Anthology: Original Ideas from the Industry's Greatest MindsThe Investor’s Anthology: Original Ideas from the Industry’s Greatest Minds by Charles D. Ellis

Instead of interviewing famed investors, Ellis gathered their best writings into one collection. He ends up with a series of short chapters by luminaries of days gone by. There is something worthwhile on just about every page. This is another favorite worth rereading every few years.

Maggie Mahar: Bull: A History of the Boom and Bust, 1982-2004Bull: A History of the Boom and Bust, 1982-2004, What drove the Breakneck Market — and What Every Investor Needs to Know About Financial Cycles by Maggie Mahar

The best book about the 1982-2000 market, bar none. There are a surprising number of lessons buried in these pages that will reward the careful reader. I found it both fascinating and informative.

Richard D. Wyckoff: How I Trade and Invest in Stocks and Bonds (Contrary Opinion Library)

How I Trade and Invest in Stocks and Bonds by Richard Wycoff

Quite simply, this is one of my favorite books on the markets and investing. The fact that it is from 1923 is totally irrelevant.

Another good book is When to Sell by Justin Mamis. Published in 1970s, it is filled with good observations about developing a sell strategy.

If you want some book ideas for Technicals, have a go at these:

Technical Analysis of the Financial Markets by John J. Murphy.
Technical Analysis from A to Z by Steven B. Achelis;
Encyclopedia of Chart Patterns by Thomas N. Bulkowski;
Japanese Candlestick Charting Techniques by Steve Nison;

Don’t think you need a full reference library; any pair of these books should do.

Last, there are a full run of books here:

Reading Is Fundamental

More Reading Ideas

Category: Investing, Rules, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

24 Responses to “Investing & Trading Rules, Aphorisms & Books (Fall 2012)”

  1. AHodge says:

    I have a few
    including
    Never listen to anyone who has his ownTV show…

  2. Liquidity Trader says:

    Awesome

    Thanks for this, its a great idea to keep updating it!

  3. denim says:

    Isn’t shorting in the face of HFT and flash crashes is a bit like risking the whole wad for an adrenalin rush?
    How about a bear put spread instead?
    http://www.investopedia.com/terms/b/bearputspread.asp#axzz27fznupjR

  4. WallaWalla says:

    Barry,
    For those of us who are generally uneducated about trading and markets, would you recommend a particular introductory book? Many of these books seem to require, at the very least, a cursory knowledge of the field.

  5. WallaWalla:

    Towards what end?

    Meaning, a book for a person who wants to become a trader professionally? To help manage your own investments? Or simply for background info?

  6. What a wonderful post!!! Full of very pertitent insights

  7. ben22 says:

    thats a long list….very nice, can’t say I read them all, but this idea sort of piggybacks on a some of the trading rules from Richard Rhodes (was a great list imo) which is:

    - Adding to a position should never increase your risk in the trade
    and
    - Risk on a trade should always decrease over time

  8. denim says:

    You have a very impressive list.

    Some of my archives:

    “The Only Indicator You Need Is…
    Non-Farm Payroll data!”
    http://www.zacks.com/stock/news/80841/the-only-investment-indicator-you-need

    “My Ten Commandments of Short-Term Trading”
    By Jeffrey Brewer
    http://archive.aweber.com/markettoolbox/1QlgE/h/My_Ten_Commandments_of.htm

  9. Orange14 says:

    @WallaWalla – best general book is Benjamin Graham’s ‘The Intelligent Investor,’ with the updated commentary by Jason Zweig. You cannot go wrong here.

  10. denim says:

    Though not exactly a how to invest article, this one focuses on the shark tank that I put some of my meager money into.

    “Rational Fools vs Efficient Crooks: Efficient Markets Hypothesis”

    http://www.softpanorama.org/Skeptics/Financial_skeptic/Casino_capitalism/Pseudo_theories/Permanent_equilibrium_fallacy/Efficient_market_hypothesys/index.shtml

  11. Scotty J says:

    Barry,

    A good addition to you list would be Sir John Templeton’s 16 rules to investment success:

    https://www.franklintempleton.com/retail/pdf/home/splash_PUB/TL_R16_1207.pdf

  12. ToNYC says:

    Listen very closely to the traders who say nothing. The silence will allow you to hear what the winners aren’t saying. The point is that winning does not at all involve more clarity or better hearing, but doing something you feel in whatever size that doesn’t matter while enjoying the fast, early, often, and cheap Fails as you learn by doing anything.

  13. WallaWalla says:

    Hi Barry, sorry for the long response time. Managing my own investments is my first priority at the moment. Becoming a trader professionally may be something to look into in the future though.

    @Orange14
    I read Graham about a year and a half ago. It really sparked my interest in finance, investment, and trading.

  14. Take a look at the first Market Wizards book by Jack Schwager

  15. No link, but Buffett’s two rules might prove timely on the eve of the EMU’s implosion:
    1). Never lose money.
    2). Never forget rule #1.

  16. David Putty says:

    In addition to the books you mentioned on technical analysis I would also recommend

    Aronson:Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals – Gives a good look into the limitations of traditional T.A.

    Kaufman: New Trading Systems and Methods – Covers a wide range of technical trading systems.

  17. MarkTwain18 says:

    Hello there, Barry.
    Great blog. Love the eclectic, wide ranging nature of your links and thoughts.

    I have an idea for a book on investing that actually may be a different type of “rules of investing” book.
    It might fit the unconventional part of your persona. (That’s a compliment)
    If you have any interest at all in co-authoring something like this, give me a digital shout at my email address.

    Thanks,
    M.

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