One of the most popular ways of learning trading is via trading books. As a method of trading instruction, trading books have several advantages but also a few disadvantages, and unfortunately there is one disadvantage that has the potential to outweigh all of the benefits.
Advantages of Trading Books
Trading books are low cost (compared to other instruction methods), and a trader could easily buy a dozen trading books for the cost of a seminar. Trading books are also somewhat flexible, in that the student can choose the books that they want to read.
There are many different types of trading books, which in theory should cover every aspect of trading. For example, there are trading books for each trading style (e.g. scalping, swing trading, etc.), for each type of market (e.g. stocks, futures, currencies, etc.), and for each trading type (e.g. discretionary, system, fundamental, etc.).
Trading books are a form of individual instruction (as opposed to a large seminar), because they allow the student to learn at their own pace, and focus on the information that they believe is necessary.
So far it appears as though trading books are a very efficient way of learning trading, but unfortunately there are some significant disadvantages that need to be considered.
Disadvantages of Trading Books
One of the disadvantages of learning trading from trading books is that trading books are not really instruction at all. While trading books might be able to provide all of the necessary information, they cannot actually instruct the student (e.g. adapt to the student). For example, a professional trader would be able to see their student making a mistake, and correct the mistake, whereas a trading book has no such ability, and relies upon the student to catch their own mistakes (assuming that they even know that they are making a mistake).
The main disadvantage of trading books as a method of learning trading is that a lot of trading books are not very good. Many trading books provide either incorrect information, minimal information, or even no useful information at all. Trading books are very good at making select statements, and substaniating those statements with specifically selected charts or statistics. Trading books are not good at showing every aspect of being a professional trader in real time. Even the trading books that are good cannot possibly provide all of the information that is necessary to be a successful trader, and therefore trading books are not the best way of learning trading.
How To Use Trading Books
Trading books definitely have a role to play in trading instruction, but that role is as a supplementary source of information, rather than the primary source of instruction. In other words, I recommend that new traders receive trading instruction from a live instructor (such as at a seminar, or individual instruction), and then use trading books as an additional reference.
Trading books can also be used by experienced traders who want to learn about additional aspects of trading (e.g. currency traders learning about stock options), because these traders should already have enough knowledge and experience to decide whether the information they read is correct or not, and be able to fill in any missing information with their own knowledge.
