5 Books on the Psychology of Self-Improvement Every Trader Should Read

Taking a break from the markets over the holidays but hoping to continue your trading progress?

You can spend some time improving your trading psychology with my selection of favorite self-improvement books that can help build a solid trading mindset.

Note that this list covers a more general scope of nonfiction books that may also be useful in other aspects of life besides the good old trading classics, e.g. Market Wizards, Trade in the Zone, or my personal favorite, Daily trading coach.

1. Influence: The irresistible attraction of irrational behavior

First up is an amazing page-turner in the genre, written by Ori and Rom Brafman. To swing explores problems that people are aware of but can’t seem to avoid or can’t seem to get out of.

The book deals with concepts such as diagnostic shiftwhich is the inability to see beyond the original hypothesis, despite evidence to the contrary, and the chameleon effectwhich is a person’s habit of taking on the traits attributed to him.

Traders can be vulnerable to these particular psychological pitfalls, which tend to heavily influence their decision-making process. In addition, the research and anecdotes in the book also delve into the hidden motives associated with danger and risk, both of which are a common part of the trading world.

2. The art of thinking clearly

This Rolf Dobelli book is an easy read that can be digested in short bite-sized bites spanning two to three pages with 99 thinking errors that almost anyone can be prone to.

Some of the more notable sections include: “Why Watching and Waiting Is Torture,” “How to Save People Out of Millions,” and “Don’t Take the News Anchors Seriously.”

The art of thinking clearly also covers a wider range of common biases and cognitive errors that traders should be aware of, such as availability bias or giving weight to information that is more readily available, retroactively or believe that we knew the event was going to happen all along, and result shift or evaluate the quality of the plan based on the outcome rather than the decision-making process itself.

3. Think again: The power of knowing what you don’t know

Written by organizational psychology professor Adam Grant, it’s also one of my top recommendations when it comes to developing self-awareness as a trader.

After all, it helps to be on top of your emotions – be they negative or positive – to make more objective trading decisions.

Think again focuses attention on importance questioning and rethinkingnot only our own perceptions, but also those presented to us by others, such as authority figures or news sources.

The book also emphasizes the importance of having a growth thinking which explores the possibilities of learning something new, even if it involves our core beliefs being proven wrong and shattered.

4. Habits of high performance

Need help improving your good shopping habits?

This book by one of the world’s highest-paid productivity coaches, Brendan Burchard, is a useful guide to creating science-based and fact-based systems that can transform you into a more productive and focused person.

Based on the author’s research of high-performing performers in 190 different countries, the secrets of their success can be narrowed down to six common main features: finding clarity, generating energy, increasing necessity, increasing productivity, developing influence and demonstrating courage.

These actionable steps can be key to turning your to-do lists and regular trading tasks into more focused habits that can translate into consistency and profitability.

5. Code of emotions

Last but not least is this gem from holistic physician Dr. Bradley Nelson that explores the inner workings of the subconscious mind.

Although it may be too metaphysical for some, Code of emotions can be your personal private therapist on your bookshelf (or e-reader) as it contains simple exercises that can help explore past traumas that may be hindering your trading decisions or life in general.

By trying to unlock and understand these “trapped energies” that may be interfering with your mental state, the author aims to bring clarity to the way you think.

That way, you can be more critical of initial negative reactions rather than letting them dictate your overall behavior. Sounds useful for dealing with market surprises and trading losses, right?

Any other psychology or self-improvement books you’d like to add to this reading list?