Here is a selection of books that will help you learn trading basics and feel confident on the market. Notice that all the books on the list are in English.
If you are short of time and need a quick yet sufficient summary about trading essentials, you can always read articles in our Forex guide book.
Tradeonomics: A Four Step System to Trading Fundamental Analysis
Do you know the #1 reason why many retail traders perform underperform compared to their market counterparts - interbank dealers, hedge funds, financial institutions?Studies suggests that despite retail traders having strong requirements to be well informed they are not. They do not anticipate returns on trades, lack trading acumen and are emotional when trading. So what stops traders from being better informed, improving their trading acumen or eliminating emotional forces such as hope and wishful thinking? The answer is - it's not easy to gain that acumen! It's easy to be emotional about your trades, randomly guess where the markets are heading, read arbitrary post facto articles about currency pairs, stocks, bonds and commodities, create some trendlines, convince yourself where the market is heading and then pray. As a trader in the interbank market I relied purely on technical analysis for the first few years. Drawing trendlines, using technical indicators such as moving averages, MACD, RSI etc etc to predict returns in the FX markets. The results were frustrating - while I studied the art of technical analysis I never really understood the "fundamentals" behind the primary trend or an reversal of trends. What were these linkages between economic indicators, financial markets and central bank actions? To quote the guru of technical analysis -
"Market Analysis can be approached from either direction (Technicals or Fundamentals). While I believe that technical factors do lead the known fundamentals, I also believe that any important market move must be caused by underlying fundamental factors. Therefore, it simply makes sense for a technician to have some awareness of the fundamental condition of a market." - John J. Murphy, Technical Analysis of the Futures Market
The key to understanding markets is to make the connections between macroeconomic indicators, financial markets and central bank policies
Increase your financial intelligence by understanding markets
Did you ever read Robert Kiyosaki's book 'Rich Dad Poor Dad'? One of the important messages in Robert Kiyosaki's book is that we can increase our financial wealth by increasing our financial intelligence . He mentions that financial intelligence is made up of four technical skills - accounting, investing, understanding markets and understanding the law. The goal of this course is to learn one of those essential technical skills - understanding markets. The keys to understanding markets are to understand economic indicators such as growth, inflation, and interest rates; the impact of these indicators on financial markets; and the central bank's reaction to these indicators.
The use of an economic map
We make these connections between economic entities, factors, markets and central bank policies through the use of an economic map . The economic map helps us to understand how each small sub-component aggregates to the larger components, which in turn aggregate to the Gross Domestic Product thus giving us a wider perspective of how entities interrelate with one another.
Some of the economic indicators we will study are:
- The Quarterly GDP Report
- Car Sales Report
- Retail Sales Report
- Personal Income and Outlays Report
- Housing Starts
- Durable Goods Orders Report
- Factory Orders and Manufacturing Inventories
- Construction Spending
- Trade Balance Report
- Purchasing Manager's Index
- Industrial Production
- Leading Economic Indicators
- The Beige Book
- Consumer Confidence Index
- Consumer Credit Report
- GDP Deflators
- Consumer Price Index
- Producer Price Index