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
• Louis Ehrenkrantz’ 7 Golden Rules for Investing
• 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)
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
• 15 Inviolable Rules for Dealing with Wall Street
Then go to these books — they cover trading and markets generally:
• Stock 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.”
• The 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.
• Bull: 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.
• 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:
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.
I have a few
including
Never listen to anyone who has his ownTV show…
You linked/liked these when written, Barry:
Investors’ 10 Most Common Behavioral Biases: http://rpseawright.wordpress.com/2012/07/16/investors-10-most-common-behavioral-biases/
My Investing Checklist:
http://rpseawright.wordpress.com/2012/06/29/my-investing-checklist/
Awesome
Thanks for this, its a great idea to keep updating it!
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
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.
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?
What a wonderful post!!! Full of very pertitent insights
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
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
@WallaWalla – best general book is Benjamin Graham’s ‘The Intelligent Investor,’ with the updated commentary by Jason Zweig. You cannot go wrong here.
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
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
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.
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.
Take a look at the first Market Wizards book by Jack Schwager
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.
http://www.great-trades.com/Help/ganns%20never%20failing%20rules.htm
http://www.quoteswise.com/george-soros-quotes-3.html
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.
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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