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Day Trading Books

As opposed to books about Investing

The Electronic Day Trader
by Marc Friedfertig and George West, Amazon.com Price 30% Off (List: $34.95)
The authors are affiliated with Broadway Trading LLC.
Book Web Site

Originally published in May of 1998, The Electronic Day Trader was one of the earliest and is still one of the best selling of the day trading books. Friedfertig and West have the right backgrounds for writing a book about day trading and it is evident in the book. Friedfertig earned an MBA from Columbia Business School and has extensive exchange trading experience, while West has trading and market making experience dealing with institutional investors. Many of the day trading books are superficial and have little substance on the whys and hows of day trading. But this one gets down to the nuts and bolts of the markets, specialists, market makers, the bid/ask spread, the stock exchanges, how they work, and the difference between speculating, gambling and investing. The authors argue that day traders provide the liquidity that is the cornerstone for our markets. They discuss the evolution and structure of NASDAQ and ECNs and the groundbreaking study Why Do NASDAQ Market Makers Avoid Odd-Eighth Quotes? by William G. Christie and Paul Schultz. The book also includes many references to events that have shaped the industry as well as previous writings like Reminiscences of a Stock Operator. This is also one of the few books with a logical discussion of the academic criticisms of technical analysis. They argue that "The truth about technical analysis is that both traders and academics are wrong. Neither of them understand why technical analysis may work. The truth is that good traders will make technical analysis work, and bad traders will not." Their follow-up book titled Electronic Day Traders' Secrets (30% Off List: $29.95) is co-authored with savvy business writer Jonathon Burton and it includes interviews with successful day traders (Electronic Day Traders' Secrets Web Site.) That book includes a lot of fluff, but also has some worthwhile discussions. For instance, "technology is no substitute for training. Day traders today who do not take the time to educate themselves about trading are destined to fail. Finally, the unfortunate fact is that most day-traders today do lose money . . . The rule changes have made it possible for individuals to participate more fairly in the markets, but they are up against market makers and other professionals who have consistently made money in those markets and are good at what they do. Market makers are well-trained and well-capitalized traders." See also Tips From The Electronic Day Trader from ABCNEWS.com (7/23/98) and The Net Effect Of Day Trading from Inter@ctive Week (11/23/98). Click here to order Electronic Day Trader.

Secrets of the SOES Bandit
by Harvey I. Houtkin and David Waldman, Amazon.com Price 30% Off (List: $29.95)
The authors are affiliated with All-Tech/Attain

Written by Harvey Houtkin, the original "SOES Bandit", this book explains what SOES trading is and the type of personality best suited for trading. The book deals with the market mechanisms, the evolution of NASDAQ, and Houtkin’s strategies for trading. Day trading arose from the carnage of the October 19, 1987 market crash. Houtkin was an arbitrageur and was apparently ruined that day when his firm, Domestic Arbitrage Group, was wiped out after customers failed to cover. Houtkin was one of the first SOES traders and his All-Tech order-entry firm was among the plaintiffs who won a 1993 federal appeals court case that forced the Securities and Exchange Commission to allow wider access to SOES. Much of the book chronicles Houtkin's legal struggles with the SEC and the brokerage industry on behalf of the former "gardeners, hairdressers, and even lawyers" that he says he has trained to trade successfully. While some of Houtkin's book is disorganized and repetitive, readers who stick with it will learn some of the fundamentals of day trading and about terms like "wiggles," "jiggles," and "head fakes." He argues that people fail at it because they don’t have the discipline to cut losses short, and because they fail to follow appropriate techniques and disciplines. It also includes the background behind the infamous paper titled Why Do NASDAQ Market Makers Avoid Odd-Eighth Quotes? by William G. Christie and Paul Schultz as well as some other academic papers about market pricing, and NASDAQ market makers. After reading Secrets you just might find yourself supporting the day traders rather than the regulators and market makers that control most of the exchange order flow. All-Tech had filed with the SEC to go public in 1998, so much information about Houtkin's firm can be found at EDGAR sites. In late 1999 the firm had 25 offices around the country and annual revenue had doubled the prior year to more than $30 million. See also Day Trading's Bad Boy from Upside (9/30/99). Click here to order Secrets. The following are some excerpts from the book.
There is no magic wand that anyone can waive to make you successful, independently wealthy, and completely happy. There is no veiled incantation, magnetic lodestone, patented formula, or arcane process any one individual can use to move general market prices, because a market is millions of people interacting for their own personal reasons.

Putting faith in your broker do the right thing is like Little Red Riding Hood trusting the wolf.

Payment for order flow is akin to a kickback paid to your broker by the party representing the opposite side of your trade. Your broker pockets the referral amount, usually unbeknown to you because the disclosure is couched in vague language in the fine print on the flip side of your confirmation. This practice creates conflicts of interest that are mind-boggling in their impact.

How to Get Started in Electronic Day Trading
by David Nassar , Amazon.com Price 30% Off (List: $24.95)
Nassar is affiliated with Market Wise Trading, Inc.

This book is less technical and not as thorough as the two prior books, but includes some interesting discussions. See Words of Warning from a Day-Trading Evangelist from Business Week (10/18/99) for more about Nassar and the book. Click here to order Nassar's book. The following is an excerpt from the article.
To me, there are three different reasons a person gets into the market. One is greed. Two is the excitement that gamblers often feel. That manic-depressive personality -- they're all over the board, and they hang their whole financial existence on their ability to trade or gamble. And three is passion. If it's not number three, don't do it.

Reminiscences of a Stock Operator
Edwin Lefevre, Amazon.com Price 20% Off (List: $19.95)

Reminiscences of a Stock Operator is a classic (originally published in book form in 1923) that is cited by many traders as one of the greatest books ever written about the markets. Authored by Edwin Lefevre, it is the fictionalized biography of Larry Livingstone (a pseudonym for well-known speculator Jesse Livermore). Lefevre apparently never observed Livermore trading, but spent several weeks interviewing him. The story begins when Livingstone, just out of grammar school, gets a job as a "quotation-board boy" at a stock-brokerage office. After developing a feel for the markets Livingstone begins to initially track his trades on paper and six months later makes his first trade (via what were called bucket shops) making a handsome profit of $3.12 in the process. Livingstone would go on to make his first $1,000 at the age of 15 and eventually moves on to New York where he makes and loses fortunes several times. Along the way, Livingstone becomes ridiculously wealthy and finds his positions (or rumors thereof) become the attention of the media and other influential traders. Readers experience the triumph of his winning bets as well as the pain of Livingstone's losing trades along with the heartache of his falling heavily into debt. Livingstone eventually recovers to pay off his debts and again achieves tremendous wealth. In a sense, he grows up and puts some money into trusts for his wife and "boy" because he "knew that a man will spend anything he can lay his hands on." Most of Livingstone's trading seemed to derive from his feel for the tape and the market, but he generally believed in buying as stocks rose and selling as they declined. While all of the activities described in the book are made out to be strictly on the level, many commentators use terms like "scheme" to describe the way Jesse Livermore achieved his wealth. Although the book ends with Livingstone as a rich man, in real life (as Worth Magazine describes it) Livermore "ultimately went spectacularly broke and killed himself." (See also quotes from the book - #1, #2, and #3) Click here to order Reminiscences of a Stock Operator.

Market Wizards and The New Market Wizards
by Jack Schwager, Amazon.com Price 30% Off (List: $16.00)

Another favorite among day traders is Jack Schwager's Market Wizards (as well as his follow up The New Market Wizards). Jack Schwager subsequently started his own firm by the name "Wizard Trading". Market Wizards includes interesting interviews with some well-known (and some lessor known) traders like Paul Tudor Jones and William O'Neil, as well others that would more appropriately be described as investors (e.g., Jim Rogers). New Market Wizards includes more interviews with some well-known investors like Stanley Drukenmiller and Richard Driehaus.

Other Day Trading Books
The following books are included for illustrative purposes.
This list should not be construed in any way as a recommendation.

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