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May 06

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The NEW Market Wizards : Jack D. Schwager

I have not read the Original Market Wizards written by Jack Schwager; but maybe I will after taking in his well-known 1992 book The New Market Wizards.  Jack interviews in this book “legendary” traders and asked them straight questions about their trading style, biggest wins, biggest loses, the psychology of trading, their motivations for trading, their beginnings – you know a typical Larry King type interview.

Now it’s worth bearing in mind that these are traders that made their money prior to the internet revolution and intraday charts. The traders in this book, when interviewed would have been trading off Daily charts, sometimes handwritten each day and making phone calls to their brokers. many of them traded for large hedge funds before trading their own money and many used fundamental indicators that technical; which kind of makes sense as this is before the dawn of “charts at your fingertips”. One guy remembers being turned down by his broker to trade hourly !

What’s amazing is that regardless of the instrument they traded or the timescale much of their advice is still true today for the internet/home based trader.

The nuggets that keep resonating with me thru the book time and time again are :

  1. Develop your own trading strategy and stick with it. Flitting from one instrument and one strategy to another is a sure-fire way to disaster. Also, if you use someone else’s you will always blame their strategy when it doesn’t work. Find yours and own it! – LBR
  2. Never be Greedy – always leave money on the table – LBR
  3. Never fear the markets or be fearful of making a mistake. Respect sure, but not fear – LBR
  4. Courage. It’s no good seeing something to trade if you don’t act on it – BL
  5. Never let a Loser get out of hand. You need to know that you can be wrong many times and still have money in your account. BL
  6. Match your personality to your trading style.
  7. Degrees of Freedom : Three to four indicators are fine for any system – WE
  8. RSI, Fibonacci, stochastics and Cyclicity are statistically flawed in order to continuously make profits
  9. Have a Plan : It forces discipline
  10. What is a Professional Trader : Rational, Analytical, Emotionally Controlled, Practical and Profit OrientatedME

A little tiresome at times reading about how he/she lost $9million in 3 minutes and how they started in life on the floor etc etc. Amazon sell this for £7 so worth it for the few golden gems you will extract.

The traders interviewed and the chapters are (with links to their wiki bio page) :

Part I: Trading perspectives

Part II: The World’s Biggest Market

Bill Lipschutz

Part III: Futures-The Variety-Pack Market

Randy McKay
William Eckhardt
Monroe Trout
Al Weiss

Part IV: Fund Managers and Timers

Stanley Druckenmiller
Richard Driehaus
Gil Blake
Victor Sperandeo

Part V: Multiple-Market Players

Tom Basso
Linda Bradford Raschke

Part VI: The Money Machines

Mark Ritchie
Joe Ritchie
Blair Hull
Jeff Yass

Part VII: The Psychology of Trading

Charles Faulkner
Robert Krausz

Part VIII: Closing Bell


Have a good read

Jimmy

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Permanent link to this article: http://intradayforextrading.co.uk/2010/05/06/the-new-market-wizards-jack-d-schwager/

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