4 Key Trading Psychology Books All Traders Need to Read

By NinjaTrader Team


In trading, as in any profession, it’s important to be aware of the role that psychology and behavior can play in your success or failure. The trading market is a dynamic and ever-changing environment, and your ability to adapt and respond to it can be influenced heavily by your emotional state.

If you’ve ever found yourself in a trade wondering what to do next, it’s likely your emotions were in full play. If you don’t have your emotions under control, you’re probably going to make some poor trading decisions.

There’s a wide body of research and books on trader psychology to help you understand the emotional factors that can affect your decision-making process, as well as better understand yourself and your interaction with the markets.

Here are four popular, comprehensive trading psychology books that all traders should read.

“Trade Mindfully” by Dr. Gary Dayton 

General trading psychology 

In this book, you’ll discover how to incorporate mindfulness into your everyday trading decisions. Mindfulness is a concept rooted in Eastern culture for its capacity to reduce stress and increase clarity of mind—useful qualities for traders looking to reduce or eliminate emotional decision making and the poor results that often follow.

You’ll examine the importance of high value actions (HVAs): specific actions that are under a trader's control. Learn how to form solid strategies based on a combination of these ideas and practices to help you achieve a higher level of trading consistency and performance.

Get a preview: Watch the recording of a recent NinjaTrader “See the Futures” livestream event in which Dr. Dayton discusses overcoming psychological emotions and obstacles to long-term trading success. 

Dr. Dayton is a psychologist who works with hedge fund managers, retail traders and investors to help them develop mental and emotional skills to maximize their trading potential.

“Trading in the Zone” by Mark Douglas 
General trading psychology 

This book will help you explore the underlying emotional reasons for a lack of performance consistency in traders and how to overcome deep-rooted mental behaviors that can undermine trading. The approach here is to look beyond the results of any single trade, accept the inherent risk, and know that losing trades is a fundamental reality of trading.

You will: 
  • Gain a deeper understanding of the psychological and emotional factors that can impact your trading performance and how to manage them effectively. 
  • Get valuable insights into the importance of discipline and risk management in achieving long-term trading success. 
  • See how to avoid these errors and make more informed trading decisions. 

Mark Douglas has many highly acclaimed, must-read books on trading and has been a trader coach for more than 40 years.

“The Psychology of Trading” by Dr. Brett Steenbarger 
Emotional patterns in futures trading 

In this book, you’ll discover how to identify emotional problem patterns that interfere with successful consistent trading. Learn how to recognize your emotional state and change problematic behaviors that can interfere with your decision making, and develop skills for better concentration and focus to respond more reliably to stressful situations.

You’ll see how thoughts and emotions can influence trading decisions, sometimes leading to irrational or impulsive behavior. By knowing how to recognize and manage these psychological factors, you can improve your trading performance. You’ll also examine the importance of setting clear goals and maintaining focus on them. 

Dr. Steenbarger is a professor of psychiatry and coaches professional bank, hedge fund and proprietary traders. 

“The Mental Edge in Trading” by Dr. Jason Williams  
Trading psychology from a scientific angle 

This book takes a more scientific approach to trader psychology based on interviews and testing of highly successful professional traders. Learn how to determine which emotions dominate your trading decision-making process, and discover methods to help you adapt your behavior to better handle difficult trading circumstances and conditions.

You’ll examine the importance of mental preparation and developing a winning mindset. Dr. Williams emphasizes the need for traders to cultivate a positive attitude, build resilience and confidence, and develop effective habits and routines to help stay focused and disciplined even during challenging times.

You’ll also explore the importance of developing emotional intelligence and self-awareness. Through exercises and practical tips, learn how to identify and manage your emotions and the emotions of others to help you make more informed trading decisions.

Dr. Williams is a trained psychiatrist and son of legendary trader and author Larry Williams.

These books and others like them can help you gain insights into the importance of trader psychology and how to manage your emotions to improve your performance.

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