Algo trading is where a trader relies on a computer algorithm to execute trade instructions. Successfully setting up these algorithms depends on how knowledgeable one is. The more you understand about the tenets of algo trading, the more you will succeed at it. It is, therefore, a good idea to read widely on algorithmic trading in order to master the skill before you start implementing it. Here are some of the best algo trading books for cryptocurrency traders and investors.
1. Algorithmic Trading: Winning Strategies and Their Rationale
This is one of the best books you can read as a beginner who is looking to start testing algo trading. It gives you deep insight into the tenets of algorithmic trading. Ernest Chan, the author of the book, is a seasoned trader so you will be learning from an expert in the field. The biggest selling point for this book is that Ernest does not merely provide theories but offers real algo examples that have worked for him.
2. Algorithmic Trading and DMA: An introduction to direct access trading strategies
This book gives quite a comprehensive outlook of the trading environment and direct market access. The book is quite lengthy (550 pages) but it is quite easy to ready because the monotony of text has been broken by useful diagrams all over the book. This is one of the books you might be tempted to read it as a novel but it is actually a textbook so you may want to read it like one – taking time to analyze and discuss the various sections as you flip the chapters. If you were to have only one reference book on your shelf on algo trading, then this would be the best pick.
3. The Ultimate Algorithmic Trading System Toolbox + Website: Using Today's Technology To Help You Become A Better Trader
As the title suggests, this book is geared at making you a better algo trader. The author provides invaluable information on the process of developing algorithms that work. If you are an experienced trader looking to hone your trading skills, then this is a must-read for you. But even the beginners can still learn a lot and become expert traders by reading this book. The book is only 371 pages so you can complete it in a couple of days. What makes this book unique is that it also comes with a website that has the source code that is described in the book. This book is designed to be easily readable to people that have no math or programming prowess so it is a great choice for those that are just beginning to learn algo trading.
4. Building Winning Algorithmic Trading Systems
Some critics believe this is more of a memoir than a textbook. Nonetheless, this is still one of the best books on algo trading. Kevin Davey, the author documents his journey from the time he was a data mining professional up to when he transitioned into an award-winning trader. It is important to point out that the book focuses more on testing as opposed to building algorithms. This makes it a great book for traders who already have an idea of algo trading and are looking for more information on how to test the trading algorithms.
Most of the books suggested above were written by traders who specialize in trading stocks on the NYSE. However, the same lessons can be extrapolated into the crypto trading environment so the information in the books is 100% relevant.