Here are my top picks for the best books on risk management for traders. These books cover the importance of position sizing, stop losses, trailing stops, total risk exposure, leverage, risk of ruin, and surviving losing streaks. Risk management is a crucial aspect to profitable trading along with a trading system with an edge and the right psychology. A trader needs all three for profitability and risk management to simply not lose all their capital eventually.
How to position size based on market volatility and system goals.
The Black Swan: Second Edition: The Impact of the Highly Improbable by Nassim Nicholas Taleb
How to survive the rare high-risk events that happen in the markets every decade.
Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb
Understanding the dangers of having a fragile trading system that can’t handle volatility or outlier events.
The Ultimate Trading Risk Management Guide by Steve Burns
I wrote this book to explain to traders the math of managing risks through position sizing, stop losses, and surviving losing streaks.
A Trader’s Money Management System: How to Ensure Profit and Avoid the Risk of Ruin by Bennett A. McDowell and Steve Nison
How to integrate risk management into your trading system to ensure profitability.
The quantified math of optimal position sizing to fit your own trading system metrics.