Books - Bitcoin Options trading/Cryptocurrency Algorithmic Trading
These are some of the books that I recommend for anyone trying to self-educate to become a better cryptocurrency derivatives trader. I have included audiobooks because if you’re anything like me then you will be eager to continue devouring trading information even whilst doing other activities such as driving or running etc. Audiobooks make that possible.
This list is a mixture between text-book and stories/biographies. It is the stories that capture the imagination and make us think and open up our creativity. The text books give us the tools to execute.
While none of the books listed are specifically about algorithmic cryptocurrency / Bitcoin Options trading, the lessons learned from trading other asset classes is transferable because the psychological responses to trading are borderless and timeless.
Read, take notes, have fun.
(Audio – Kindle – Paperback – Hardback)
We start off with what is probably my favourite book ever. Written nearly 100 years ago, it is a “fictionalized biography” of renown speculator of the time – Jesse Livermore. Jesse Livermore was such a prolific trader that many at the time thought that the 1929 crash was down to him and his operation.
The insights, motivations, rationale and principles behind speculating are the same now as they were in Livermore’s day. Much can be gleaned about trader’s psychology from someone who went from broke to multimillionaire and back again 3 times.
Livermore started trading in OTC ‘bucket shops’ of the day, which in some ways can’t help but remind me of the cryptocurrency / bitcoin exchanges of today.
Understanding Options – Michael Sincere
(Kindle – Audiobook)
Less than 5% of people understand how options work. The Bitcoin Options market is still in its infancy and still fairly illiquid. It can be useful to be more aware and educated about financial derivatives and why traders would use them.
The book is very much an introduction, it covers basic strategies like covered calls, buying/selling calls/puts. I listened to this via Audible and found it easy to follow along with while driving or doing other tasks.
Market Wizards & New Market Wizards – Jack D. Schwager
(Audio – Kindle – Paperback – Hardback)
Another favourite. The Market Wizards books are a series of interviews of successful traders of many different instruments, strategies and backgrounds. The traders interviewed do present tips and advice without being too specific on their strategies but the real value is found by reading between the lines. By reading between the lines you start to be able to answer the questions such as; what kind of attitude do successful traders have towards trading/money/emotions? etc.
Schwager interviews algorithmic traders, discretionary traders, traders of stocks, traders of commodities. The variety and array of successful traders presented in this book will guarantee that you are inspired by at least one of them.
Pit Bull: Lessons from Wall Street’s Champion Trader – Martin Schwartz & Paul Flint
(Paperback – Hardback – Audio CD)
I came across Martin Schwartz in the Market Wizards interviews above. Martin Schwartz, nicknamed ‘Pit Bull’ made millions trading stocks, futures and options.
Trading today is quite far detached from the pit trading of the 1980s and 1990s as described in this book but the lessons and insights are useful for any trader.
Pit Bull is an easy read and a motivator.
Japanese Candlestick Charting Techniques – Steve Nison
(Kindle – Hardback)
I actually have this book in the old hardback form. The Japanese candlesticks that are ubiquitous in traders’ charts today are a relatively new introduction to the West but have been used in Japan for centuries. Candlestick charting techniques were first used by rice traders in the early 1700s, yet the charting technique was first introduced to America in 1991 by Nison.
This book is full of illustrations and the traditional names for candle charting patterns. The only book you will need about candlestick reading techniques also explains how to combine these techniques with other indicators such as moving averages, MACD and Fibonacci levels.
A useful knowledge and an interesting knowledge to the crypto trader and true markets aficionado.
Python for Data Analysis – William McKinney
Part of the journey to creating an automated trading system is learning to code. It isn’t necessary to be a prolific programmer but a decent understanding of object oriented programming and data analysis is a minimal.
‘Python for Data Analysis’ mostly uses the Python library, Pandas, to work with and analyze data. There are many follow-along activities in this book that will provide you with the tools to analyze your own trade data.
Accessible for those new to programming and coding, this book won’t give you a broad understanding of those subjects but what it will give you is the quickest way to the methods to make a computer do what is useful and therefore interesting to you, giving you insights and hopefully an edge in the crypto / bitcoin markets.
Python for Finance – Yves Hilpisch
(Paperback – Hardback)
Python has become the standard in Cryptocurrency Trading Bot development. Python can be used in every part of the infrastructure. There are many open source libraries supporting cryptocurrency trading with Python.
This book can help guide you with concepts and tasks in the juncture where computer programming and finance meet. This book will not make you an expert in either Python or quantitative finance but it will provide many answers to questions you will have when trying to progress your knowledge of Python and how to use it to help you trade. Full of examples. A gateway to more advanced quantitative finance books.
Quantitative Finance – Paul Wilmott
For those of us that do not have formal training in finance and the mathematics of finance, Paul Wilmott offers a great introduction with ‘Quantitative Finance’. The maths is quite heavy (for those with a maths background) but those with an engineering or physics background shouldn’t have too many problems.
Paul Wilmott founded the Diploma in Mathematical Finance at Oxford University so if your goal is to become a self-made quant then his material is most likely going to be on your to-do list.
If you are interested to really know the workings of: The Black-Scholes Model, The Greeks, How to Delta Hedge, Swaps and financial theory, (concepts that are relevant to the cryptocurrency markets), this book is a great introduction and more in these topics.
(Kindle – Hardback)
Also known as the retail algo trader’s bible. Ernest Chan has introduced many to quant strategies. His material is very accessible, actionable and confidence building for those without much programming knowledge.
This clear and matter of fact description (and activities) of all the technical aspects of starting your own algorithmic trading business. You may have more questions after reading this book than when you started, but they will be more informed and directed questions.
The methods in this book are easy to follow and are transferable to the bitcoin / cryptocurrency markets.