What separates the world's top traders from the vast majority of unsuccessful investors? Jack Schwager sets out to answer tis question in his interviews with superstar money-makers including Bruce Kovner, Richard Dennis, Paul Tudor Jones, Michel Steinhardt, Ed Seykota, Marty Schwartz, Tom Baldwin, and more in "Market Wizards: Interviews with Top Traders," now in paperback and ebook.
This classic interview-style investment text from a financial expert is a must-read for traders and professional financiers alike, as well as anyone interested in gaining insight into how the world of finance really works.Filled with anecdotes about market experiences, including the story of a trader who after wiping out several times, turned $30,000 into $80 million and an electrical engineer from MIT whose computerized trading has earned returns of 250,000 percent over sixteen yearsIdentifies the factors that define a successful traderNow availabe as in digital formats.
One of the most insightful, bestselling trading books of all time.
Jack Schwager is a recognized industry expert in futures and hedge funds and the author of a number of widely acclaimed financial books. He is currently the co-portfolio manager for the ADM Investor Services Diversified Strategies Fund, a portfolio of futures and FX managed accounts. Previously, Mr. Schwager was a partner in the Fortune Group, a London-based hedge fund advisory firm, which specialized in creating customized hedge fund portfolios for institutional clients. His prior experience includes 22 years as Director of Futures research for some of Wall Street’s leading firms and 10 years as the co-principal of a CTA.
Mr. Schwager has written extensively on the futures industry and great traders in all financial markets. He is perhaps best known for his best-selling series of interviews with the greatest hedge fund managers of the last two decades: Market Wizards (1989), The New Market Wizards (1992), and Stock Market Wizards (2001). The latest book in the series, Hedge Fund Market Wizards is due to be released in May 2012. Mr Schwager’s first book, A Complete Guide to the Futures Markets (1984) is considered to be one of the classic reference works in the field. He later revised and expanded this original work into the three-volume series, Schwager on Futures, consisting of Fundamental Analysis (1995), Technical Analysis (1996), and Managed Trading (1996). He is also the author of Getting Started in Technical Analysis (1999), part of John Wiley’s popular Getting Started series.
Mr. Schwager is a frequent seminar speaker and has lectured on a range of analytical topics including the characteristics of great traders, investment fallacies, hedge fund portfolios, managed accounts, technical analysis, and trading system evaluation. He holds a BA in Economics from Brooklyn College (1970) and an MA in Economics from Brown University (1971).
As the title indicates this book consists of a series of interviews with some of the best most successful traders in the world.
Not only does this book cover a wide variety of trading techniques, it also covers a wide variety of markets as well (treasuries, futures, commodities etc.). The book also sheds light on the personal traits and characteristics of successful traders. By reading the different interviews one starts to see the commonalities but also the differentiators between them. It is very intriguing to read one very successful trader present opposite techniques than the next trader being interviewed.
A must read for any serious investor. This book is filled with wisdom from start to finish – for both novice and advanced traders. One will also find that much of this wisdom applies to any career.
Below are excerpts from this book that I found particularly insightful:
1- “You also have to follow your own light. Because I have so many friends who are talented traders, I often have to remind myself that if I try to trade their way, or on their ideas, I am going to lose. Every trader has strengths and weaknesses…As long as you stick to your own style, you get the good and bad in your own approach. When you try to incorporate someone else’s style, you often wind up with the worst of both styles. I’ve done that a lot.”
2- “Don’t ever feel that you are very good. The second you do, you are dead.”
3- “What are the traits of a successful trader? The most important is discipline – I am sure everyone tells you that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win.”
4- “I have two basic rules about winning in trading as well as in life: (1) If you don’t bet, you can’t win. (2) If you lose all your chips, you can’t bet.”
5- “The stock market is neither efficient nor random. It is not efficient because there are too many poorly conceived opinions; it is not random because strong investor emotions can create trends.”
6- “I don’t see how you can invest in American steel without understanding what is going on in Malaysian palm oil. As I explained before, it is all part of a big, three-dimensional puzzle that is always changing.”
7- “Although the styles of the traders are very different, many common denominators were evident:
1- All those interviewed has a driving desire to become successful traders – in many cases, overcoming significant obstacles to reach their goals.
2- All reflected confidence that they could continue to win over the long run. Almost invariably, they considered their own trading as the best and safest investment for their money.
3- Each trader had found a methodology that worked for him and remained true to that approach. It is significant that discipline was the word most frequently mentioned.
4- The top traders take their trading very seriously; most devote a substantial amount of their waking hours to market analysis and trading strategy.
5- Rigid risk control is one of the key elements in the trading strategy of virtually all those interviewed.
6- In a variety of ways, many of the traders stressed the importance of having the patience to wait for the right trading opportunity to present itself.
7- The importance of acting independent of the crowd was a frequently emphasized point.
8- All top traders understand that losing is part of the game.
This is a re-read of one of my top 10 investment books.
What do Bruce Kovner, Paul Tudor Jones and Jim Rogers have in common? They are some of the best investors of all time and they are among the hedge fund managers interviewed in this book. Imagine top investors explaining what they do! Well, that's what you get in here. Some of them give you more details, others less, but you still can learn a lot.
Most of these guys invest not only in equities, but also in currencies, commodities etc. as "macro" investors so it's good to broaden one's perspective. Most of the investment tenets usually apply no matter what the asset class is.
The second key element that finally put me into the winner's column was the realization that risk control was absolutely essential to successful trading. I decided that I would never again allow myself to lose everything on a single trade—no matter how convinced I was of my market view. I think the secret is cutting down the number of trades you make. The best trades are the ones in which you have all three things going for you: fundamentals, technicals, and market tone. First, the fundamentals should suggest that there is an imbalance of supply and demand, which could result in a major move. Second, the chart must show that the market is moving in the direction that the fundamentals suggest. Third, when news comes out, the market should act in a way that reflects the right psychological tone.
While you are in, you can't think. When you get out, then you can think clearly again. Perhaps the most important rule is to hold on to your winners and cut your losers. Both are equally important. If you don't stay with your winners, you are not going to be able to pay for the losers. You also have to follow your own light. Every trader has strengths and weaknesses. Gut feel is very important. I don't know of any great professional trader that doesn't have it. Being a successful trader also takes courage: the courage to try, the courage to fail, the courage to succeed, and the courage to keep on going when the going gets tough. Albert Einstein said that the single most important question is whether the universe is friendly. I think it is important for everybody to come to a point where they feel inside that the universe is friendly for them. I think that, in the end, losing begets losing. When you start losing, it touches off negative elements in your psychology; it leads to pessimism. I am very open-minded. I am willing to take in information that is difficult to accept emotionally, but which I still recognize to be true. For example, I have seen others make money much faster than I have only to wind up giving everything back, because when they started losing, they couldn't stop. When I have had a bad losing streak, I have been able to say to myself, "You just can't trade anymore." Trading is emotion. It is mass psychology, greed, and fear. It is all the same in every situation. For most great traders, early failure is more the rule than the exception. Despite an incredible long-term performance record, Michael Marcus began his trading career with an unbroken string of trading losses. Moreover, he wiped out not just once, but several times. The moral is: Early trading failure is a sign that you are doing something wrong; it is not necessarily a good predictor of ultimate potential failure or success. Never EVER commit more than 5 percent of your money to a single trade idea.
At that moment, I realized that the markets were truly capable of taking money away every bit as fast as they gave it to you. That made a very strong impression on me. You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money. I'm not sure one can really define why some traders make it, while others do not. For myself, I can think of two important elements. First, I have the ability to imagine configurations of the world different from today and really believe it can happen. I can imagine that soybean prices can double or that the dollar can fall to 100 yen. Second, I stay rational and disciplined under pressure. They are strong, independent, and contrary in the extreme. They are able to take positions others are unwilling to take. They are disciplined enough to take the right size positions. A greedy trader always blows out. I know some really inspired traders who never managed to keep the money they made. One trader at Commodities Corporation—I don't want to mention his name—always struck me as a brilliant trader. The ideas he came up with were wonderful; the markets he picked were often the right markets. Intellectually, he knew markets much better than I did, yet I was keeping money, and he was not. Position size. He traded much too big. For every one contract I traded, he traded ten. He would double his money on two different occasions each year, but still end up flat.Whenever I enter a position, I have a predetermined stop. If the market is in the midst of a trading range,it makes no sense to put your stop within that range, since you are likely to be taken out. I always place my stop beyond some technical barrier.First of all, a loss of money itself slows me down, so I reduce my positions. The only thing that disturbs me is poor money management. Every so often, I take a loss that is significantly too large.
It is a tremendously exciting game. There are opportunities all the time. Forgetting trading for a minute, one of the reasons I am in this business is that I find the analysis of worldwide political and economic events extraordinarily fascinating. It doesn't feel like work, except when you lose—then it feels like work [he laughs]. For me, market analysis is like a tremendous multidimensional chess board. Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large. The general rule is: The less observed, the better the trade.
If you don't work very hard, it is extremely unlikely that you will be a good trader. First, I would say that risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half. My experience with novice traders is that they trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks. I didn't know what I was doing. The advantage was that at least I got to do it with small amounts of money. I like to say the tuition was small for what I learned. You shouldn't be too surprised if you really screw up. Since then, I have learned that when you have a destabilizing loss, get out, go home, take a nap, do something, but put a little time between that and your next decision. When you are getting beat to death, get your head out of the mixer. Looking back, I realized that if I had had a trading rale about losses, I wouldn't have had that traumatic experience. I always say that you could publish trading rules in the newspaper and no one would follow them. The key is consistency and discipline. There is another point that I think is as important: You should expect the unexpected in this business; expect the extreme. Don't think in terms of boundaries that limit what the market might do. If mere is any lesson I have learned in the nearly twenty years that I've been in this business, it is that the unexpected and the impossible happen every now and then. If you feel too good when things are going well, then inevitably you will feel too bad when they are going poorly. I wouldn't claim that I realized that after three years of trading, but after you've done it for twenty years, it either drives you crazy, or you learn to put it into perspective. Being a trader is like being a boxer: Every now and then, the market gives you a good wallop. After twenty years you get a bit punch-drunk. At the beginning trade small because that's when you are as bad as you are ever going to be. Learn from your mistakes.
He taught me that trading is very competitive and you have to be able to handle getting your butt kicked. No matter how you cut it, there are enormous emotional ups and downs involved. First of all, never play macho man with the market. Second, never overtrade. My major problem was not the number of points I lost on the trade, but that I was trading far too many contracts relative to the equity in the accounts that I handled. "Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?" I am always thinking about losing money as opposed to making money. Risk control is the most important thing in trading. Don't ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in. There is nothing better than a fresh start. The most important rale of trading is to play great defense, not great offense. Every day I assume every position I have is wrong.
Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead. Everything gets destroyed a hundred times faster than it is built up. It takes one day to tear down something that might have taken ten years to build.I know from studying history that credit eventually kills all great societies.Don't focus on making money; focus on protecting what you have.“In trading, just as in archery, whenever there is effort, force, straining, struggling, or trying, it’s wrong. You’re out of sync; you’re out of harmony with the market. The perfect trade is one that requires no effort.” The most important thing is to have a method for staying with your winners and getting rid of your losers.
The most important is discipline—I am sure everyone tells you that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win. You should have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can't let a losing trade get to you emotionally. When you are starting out, it is very important not to get too far behind because it is very difficult to fight back. Most traders have a tendency to take risks that are too large at the beginning. They tend not to be selective enough about when they take risks.Because I knew I wanted to be in the business, and I didn't care what I did, or what I got paid. My biggest slip-ups occurred shortly after I got emotionally involved with positions.The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. I handle losing streaks by trimming down my activity. I just wait it out. Trying to trade during a losing streak is emotionally devastating. Trying to play "catch up" is lethal. Psychologically, I tend to alter my activity depending on performance. I tend to be more aggressive after I have been winning, and less so after losses. I feel my success comes from my love of the markets. I am not a casual trader. It is my life. I have a passion for trading. It is not merely a hobby or even a career choice for me. There is no question that this is what I am supposed to do with my life. a. Cut losses. b. Ride winners. c. Keep bets small. d. Follow the rules without question. e. Know when to break the rules. Charting is a little like surfing. You don't have to know a lot about the physics of tides, resonance, and fluid dynamics in order to catch a good wave. You just have to be able to sense when it's happening and then have the drive to act at the right time. Many are called and few are chosen. Society works by the attraction of the many. As they are culled out, the good ones are left, and the others are released to go try something else until they find their calling. The same is true for other fields of pursuit. A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That' s the kind of thing winning traders do.A winning trader has two traits: 1. Не/she loves to trade; and 2. Не/she loves to win.
People' s trading performance probably reflects their priorities more than they would like to admit. I don't judge success. I celebrate it. I think success has to do with finding and following one's calling regardless of financial gain. One of the world's largest coffee traders invited me to his house in London. When I walked into his library, I noticed he had just about every book ever written on power. He took me to one of the finest restaurants I have ever been at. At dinner, he asked me, "Larry, how can you know more about coffee than me? I am the largest trader in the world. I know where the boats are; I know the ministers." "You are right," I answered, "I don't know anything about coffee. In fact, I don't even drink it." "How do you trade it then?" he asked. I told him, " I just look at the risk." Well this great meal lasted for several hours. Five times he asked me what I did, and five times I told him that I managed the risk. Three months later I heard that he had blown $100 million in the coffee market. He obviously didn't get the message. And you want to know something? He does know more about coffee than I do. But the point is, he didn't look at the risk. So the very first rale we live by at Mint is: Never risk more than 1 percent of total equity on any trade. By only risking 1 percent, I am indifferent to any individual trade. Risk is a no-fooling-around game; it does not allow for mistakes. If you do not manage the risk, eventually they will carry you out. While the speculator doesn't have the product knowledge or the speed, he does have the advantage of not having to play. The speculator can choose to only bet when the odds are in his favor. That is and important positional advantage. Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don't take a hard look at risk, it will take you.About risk: Larry, when you are on a motorcycle, never argue with a car. You will lose." The same lesson applies to trading: If you argue with the market, you will lose. Not only didn't he take the sell signal, he actually wound up going long. Sure enough, the market went down. I told him, "Get out!" but he insisted, "The market will come back." Well, he didn't get out, and he lost the mansion and everything else. Now he lives in a rented box on a street with a hundred other ticky-tacky houses. To this day, I still remember the name of his estate: "Beverly." He is still one of my best friends, and his loss of that huge house had an enormous emotional impact on me. He had it and lost it all! And all because of one trade. The irony is that if he had followed his system, he would have made a fortune on that trade.
We don't trade markets, we trade money. Frankly, I don't see markets; I see risks, rewards, and money. When a market makes a historic high, it is telling you something. No matter how many people tell you why the market shouldn't be that high, or why nothing has changed, the mere fact that the price is at a new high tells you something has changed. I have two basic rales about winning in trading as well as in life: (1) If you don't bet, you can't win. (2) If you lose all your chips, you can't bet. All I bring to the party is twenty- eight years of mistakes. Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. You need to believe in something, but at the same time, you are going to be wrong a considerable number of times. Anything is possible with persistence and hard work. It can be done, and your own determination to succeed is the most important element. Yet, it is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower. The secret for winning in the stock market does not include being right all the time.The key is to lose the least amount of money possible when you are wrong. Letting losses run is the most serious mistake made by most investors. The public doesn't really understand the philosophy of cutting losses quickly. Would you drive your car without brakes? One day, he had a dozen turkeys in his box. Then one walked out, leaving eleven. "I should have pulled the string when there were twelve inside," he thought, "but maybe if I wait, he will walk back in." While he was waiting for his twelfth turkey to return, two more turkeys walked out. "I should have been satisfied with the eleven," he thought. "If just one of them walks back, I will pull the string." While he was waiting, three more turkeys walked out. Eventually, he was left empty- handed. His problem was that he couldn't give up the idea that some of the original turkeys would return. This is the attitude of the typical investor who can't bring himself to sell at a loss. He keeps expecting the stock to recover. The moral is: To reduce your stock market risk, stop counting turkeys. I remember selling a $100 stock one time and it eventually went to $1.1 didn't have any idea it was going down that far, but what would have happened if I had held on to it? One mistake like that and you can't come back.
First-time speculators want to make a killing in the market. They want too much, too fast, without doing the necessary study and preparation or acquiring the essential methods and skills. They are looking for an easy way to make a quick buck without spending any time or effort really learning what they are doing. The majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable. They could get out cheaply, but being emotionally involved and human, they keep waiting and hoping until their loss gets much bigger and costs them dearly. The single most important advice I can give anybody is: Learn from your mistakes. That is the only way to become a successful trader. The greatest thing about the market is that it is always fun to be looking for that next big winner— trying to find the stock with all the characteristics that are going to make it have a big move. To me it is like a giant treasure hunt. Somewhere there is going to be a big winner, and I am trying to find it. When did you turn from a loser to a winner? When I was able to separate my ego needs from making money. When I was able to accept being wrong. Before, admitting I was wrong was more upsetting than losing the money. I used to try to will things to happen. I figured it out, therefore it can't be wrong. When I became a winner, I said, "I figured it out, but if I'm wrong, I'm getting the hell out, because I want to save my money and go on to the next trade."One of the most suicidal tilings you can do in trading is to keep adding to a losing position. Whenever you get hit, you are very upset emotionally. Most traders try to make it back immediately; they try to play bigger. Whenever you try to get all your losses back at once, you are most often doomed to fail. That is true in everything—investments, trading, gambling. After a devastating loss, I always play very small and try to get black ink, black ink. It's not how much money I make, but just getting my rhythm and confidence back. I shrink my size totally—to a fifth or a tenth of the position that I trade normally. I've always had my biggest setbacks after my biggest victories. I was careless.The great thing about being a trader is that you can always do a much better job. As a trader, you are forced to confront your mistakes because the numbers don't lie.Before putting on a position always ask, "Do I really want to have this position?" The rale: Bottom fishing is one of the
There are certain interviews I found useful and interesting (Bruce Kovner, Paul Tudor Jones, Jim Rogers etc) with a lot more that I found pretty much useless. Given Schwager’s background, there is a significant amount of emphasis on technical trading, which is quite off putting given the academic research around this type of trading. Furthermore, parts of the book may feel dated for some now that over 30 years have passed since the book was first published. I did enjoy that focus on commodities trading, as that is a niche/area of the market that nobody really seems to care about anymore.
That said, the book is famous for a reason - Schwager seems to have gotten some very candid thoughts from some distinguished traders. I also did enjoy his own commentary at the beginning and end of each interview as it added additional color to the Q&A. It's not really a book that should give anyone a template of how to trade (though like Jim Rogers, I prefer the word investing), but should help some people better understand how to be successful in financial markets.
It really didn't do anything for me. The majority of the traders gave very dry and mostly-uninteresting responses. Despite Schwager's desperate attempts to paint colorful bios and make the traders more memorable, you're essentially reading the same thing over and over again. It's so repetitive that I'd recommend flipping to the afterword and memorizing the points in summary. Then, look up each trader and pick the ones that most interest you.
This is not a how-to book rather it offers insights into what has made some of the most successful traders in the financial markets that way. The bottom line is there is only work, work and work. Also a little focus wouldn't hurt either. Despite what is portrayed in the popular media the traders interviewed in the book do not have expensive Ivy League educations for the most part.
I almost didn’t start this book because it’s several decades old and I thought the information would be dated. However, the strategies described by the interviewees are generally applicable now. And even better, the interviews don’t just describe what works but also describe (in detail) mistakes made and what not to do.
Kitap alanında çok başarılı olan 15 farklı trader ile yapılan röportajlardan oluşuyor. Genel olarak oldukça akıcı olduğunu söyleyebilirim. Röportajı yapılan traderların deneyimlerini okumak, maceralarına tanık olmak oldukça zevkliydi. Genel olarak kitaba dair en kalıcı bulduğum şeylerden birisi, birlikte röportaj yapılan trader'lar arasındaki benzerlikler ve farklılıklardı. Farklılıklar alım satımı yapılan malın ne olduğundan (hisse, opsiyon, emtia/döviz, tahvil..), takip edilen zaman dilimine (dakika, saat, gün, hafta, ay..) vs. gibi şeylerin yanı sıra izlenilen sistemlerin doğasından da kaynaklanıyordu. Bu trader'lardan kimileri yalnızca teknik analize odaklanıp temel analizi dikkate almazken kimileri temel analize çok odaklanıp teknik analize odaklanmamayı, kimileriyse ikisine de odaklanmayı tercih ediyor. Kimileri sistemlerini trendfollowing üstüne kurmuşken, kimileri dönüş noktaları yakalama, kimileri ise belli fiyat aralıklarına oynama şeklinde kurmuş... Bence yapılan röportajların gösterdiği şeylerden en önemlisi birbirine oldukça zıt görünebilen bu sistemlerin ve yaklaşımların bile doğru kullanıcılar elinde kar sağlayabileceği şeklinde. Bir strateji bulmanın yanı sıra aynı zamanda psikolojik yapınızın bu strateji ile uyumlu olması da gerekiyor.
Aslında hayatını borsaya vermiş bir sürü insanın deneyimlerini dinlemek, bahsettikleri bazı temel gözlemleri kendimde ve insanlarda da gözlemlemek güzeldi. Ayrıca bazı şeyleri deneyimleyerek tecrübe etmektense başkalarının deneyimlerini önceden dinleyip hazırlıklı olmanın ayrı bir güzelliği var. Kendimi doğrudan bir trader olarak görmesem de kitapta bahsedilen bazı konuları kendimle de bir hayli özdeşleştirdim, bunlardan en önemli ikisi: kar/zarar durumuna göre değil, market yapısı ve sisteme göre hareket etmek ve zararları kesip, kara oturmak şeklindeydi.
"Zararı kes, kara otur", "materyalistik düşüncelere göre değil, market yapısına göre karar al", "riski ciddiye almazsan patlarsın" gibi temel fikirler de kitap boyunca bir sürü trader tarafından vurgulanıyor.
Bunun haricinde kitaptaki traderların çoğunluğunun gösterdiği bir takım özellikleri yazar son sözünde şöyle özetlemiş:
" [İlgili trader'ların] Tarzları birbirinden çok farklı olmasına rağmen, hepsinin birçok ortak paydası olduğu açıktır:
1. Kendisiyle röportaj yapılan bütün bu trader'ların başarılı olma arzuları vardır. Birçok durumda amaçlarına ulaşmak için büyük engelleri aşmışlardır. 2. Hepsi uzun vadede kazanmaya devam edebileceklerini gösteren özgüvene sahiptir. İstisnasız olarak, yaptıkları işlemleri paraları için en iyi ve en güvenilir yatırım olarak görmüşlerdir. 3. Her trader kendi işine yarayan bir yöntem bulmuştur ve bu yönteme sadık kalmıştır. Disiplin kelimesinin en çok kullanılan sözcük olması çok dikkat çekicidir. 4. En üst noktaya ulaşan bu trader'lar yaptıkları işi çok ciddiye almaktadırlar; uyku saatlerinin önemli bir kısmını piyasa analizleri yapmaya ve trading stratejileri geliştirmeye ayırmaktadırlar. 5. Röportaj yapılan bütümn bu kişilerin işlem stratejisinin en önemli unsurlarından biri, tavizsiz olarak gerçekleştirdikleri risk kontrolüdür. 6. Birçok trader doğru pozisyon fırsatının kendini belli etmesini bekleme sabrını gösterme üzerinde durmuştur. 7. Çoğunluktan bağımsız hareket etmenin önemi sıkça vurgulanan noktalardan biridir. 8. Zirveye ulaşan bütün bu trader'lar, kaybetmenin oyunun bir parçası olduğunu anlamıştır. 9. Hepsi yaptıkları işi sevmektedir."
This book was as interesting from the standpoint of character studies as it was from the subject matter of successful trading of financial instruments. The summations at the end of the interviews were as valuable as the interviews themselves. It is clear that no matter how spectacular and consistent the success of any of these traders, they all approach their mutual fascination from the standpoint that they are a work in progress, and that no one masters the market, any more than a surfer masters the ocean. The final interviews dealt directly with how one's experience with investing is but a reflection of one's own psyche, and how one can use this insight to improve oneself.
Having said that, while there were unanimous similarities in the traders methods and practices, there were also stark contrasts between their beliefs. One trader who had made tens of millions or hundreds of millions trading would declare a belief in a trading principle as fact, and then another equally as successful would declare the exact opposite in a later interview. One common thread however (but not absolutely universal) was the belief that one must be willing to take losses in stride in order to win. Don't let the past time frames of these interviews feel that their value is diminshed- rather, it gives one an opportunity to see what doesn't change in trading practices even though the markets change all the time.
Market Wizards is a collection of interviews conducted by Jack Schwager, an excellent and knowledgeable investor himself. The subjects of the interviews are some of the best traders in the U.S...all hugely successful and consistent winners. The interviews were not designed to highlight specific trading techniques....at least not to the extent of instructional. The most valuable feature of the interviews was the common patterns in thinking found amongst these traders. For example, viewing trading as a business; disciplined risk control; hard (very) work; learning to lose without fear or ego injury; etc. The only downsides to the book were the repetition and shallowness of some subjects....there were many times when I wished Mr. Schwager to probe deeper into an interesting or provocative response. Overall it was a good book, but not a great one. One that I think all serious traders should read, but it is not a book you cannot put down.
A must read for aspiring traders I think. This book opened my eyes on how professionals think, and trade. Nowdays people want to learn from forumes and youtube videos from the so-called "gurus" or "High impact members" etc. And this couldnt be farther from the truth. After reading this book I decided that I wont hang on those crappy forums anymore, but I will read more intellectual material such as this book.
I liked this book a lot. Jack Schwager made a tough work, trying to make this book interesting to read, collecting all those interviews. I liked a lot that stories cover different types of traders: from risky intuitive daytraders to slow and fundamental investors. Some interviews are pretty dull, but Schwager tried to lighten them up as hard as he could :D Some interviews are just amazing - bright and full of insights.
There is no book that I have re-read as often as this one. The interview with Ed Seykota is the most profoundly wise thing I've read. "Everyone gets what they want out of the market." Many's the time I've wondered what inner want is being served by a self-sabotaging behaviour.
A classic, but completely outdated. It was written to be timely, not timeless and many of the institutions, techniques, and even exchanges and associated market systems no longer exist. The world is much faster now (see 'Flash Boys').
Highly recommended to novice traders or anyone who is thinking to invest or trade, since the general principles remain the same.
Things I have learned which are necessary for being a successful/good trader from this book are: • Patience • Hard-work • Risk Management >> cut your losses • Be emotionless while trading • Trading is first and foremost, making money is a by-product • And learn how to take a loss!!
Although it covers the market movements happens in the early '80s, the insights provided by the traders are really helpful for the long run.
Phenomenal read. The part that makes this book so informational and excellent is the fact that there are multiple interviews from great traders. This eliminates the chance for a singular perspective with bias. I like that there are an overlapping of ideas from the different traders. These are the lessons that you'll want to keep in mind and take with you first. This is the definition of a book that you would want to reread over the course of time because you'll be able to gain new lessons and perspectives from it each and every time.
This is why biographies can be so helpful: they provide the narrative as to why certain rules or patterns make sense. They give the context of success and help you understand the specifics of the situation instead of slapping formulas onto your life and hoping for the best. Very insightful book. Still don’t know squat about trading, but it was great to dive in the deep end.
* “The reasoning is conceptually flawed. Even if everyone had all the same information, there’s no reason to assume they would reach the same decision as to the appropriate price of a market or security.” * “The best trades are the ones in which you have all three things going for you: fundamentals, technicals, and market . First, the fundamental should suggest that there is an in balance of supply and demand which could result in a major move. Second, the chart my show that the market is moving in the direction of the fundamental suggest. Third, when news comes out, the market should act in a way that reflects the right psychological tone.” * “The first thing I would say is always a bit less than 5% of your money on any one idea. That way you can be wrong more than 20 times; it will take you a long time to lose your money... the next thing I would advise is to always use stops.” Always know where you will get out before you get in.” * “If you become unsure about a position, and you don’t know what to do, just get out. You can always come back in. When in doubt, get out and get a good night’s sleep. I’ve done that lots of times and the next day everything was clear.” * Hold your winners; cut your losers. * “A good trader can’t be rigid. If you can find somebody who is really open to seeing anything, then you have found the raw ingredient of a good trader.” * “Albert Einstein said that the single most important question is whether the universe is friendly. I think it is important for everybody to come to a point where they feel inside that the universe is friendly.” * “Do you focus on any particular types of stock? I don’t trade the DOW Stocks. I prefer the little ones, because they are not dominated by the big professional traders who are like sharks eating each other.” * “The moral is: early trading failure is a sign that you were doing something wrong; it is not necessarily a good predictor of ultimate potential failure or success.” * “What I am looking for is a consensus that the market is not confirming. I like to know that there are a lot of people who are going to be wrong.” * “First of all, I try very hard not to risk more than 1% of my portfolio on any single trade. Second, I study the correlation of my trades to reduce my exposure.” If your positions are highly correlated then you are really trading one position that is X times as large.” * “If you don’t work very hard, it is extremely unlikely that you will be a good trader.” * “What advice would you give the knob is trader? First, I would say the risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position out to be, cut it at least and a half... Besides overtrading, what other mistakes too nervous traders typically make? They personalize the market. A common mistake is to think of the market as a personal nemesis. The market, of course is totally and personal; it doesn’t care whether you make money or not. Whenever a trader says ‘I wish’ or ‘I hope’ he is engaging in a destructive way of thinking because it takes attention away from the diagnostic process.” * “I always say that you could publish trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up a list of rules that are 80% as good as what we taught our people. What they could do is give them the confidence to stick to those rules even when things are going bad.��� * When things go bad, traders shouldn’t stick their heads in the stand and hope it gets better. They should analyze what went wrong in order to not make the same mistakes. * “Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you were very good. The second you do, you were dead.” * “When I trade, I don’t just use a price stop, I also use a time stop. If I think of market should break, and it doesn’t, I will have to get out even if I am not losing any money.” * Should you study poker strategy? Bielfeldt talked about the relevance of poker strategy to trading. “You don’t just play every hand and stay through every card, because if you do, you will have a much higher probability of losing. You should play the good hands, and drop out of the poor hands, for fitting the ante.” * Study Ed Seykota if you’re serious * His trading style is basically trend following, with some special pattern recognition and money management algorithms. * “What are the trading rules you live by? Cut losses. Right winners. Keep that small. Follow the rules without question. No winter break the rules. I don’t think traders can follow rules for very long unless they reflect their own training style. Eventually a breaking point is reached and the trader has to quit or change, or find a new set of rules he can follow. This seems to be part of the process of evolution and growth of a trader.” * “A lot of people would rather understand the market then make money.” * “I think that if people look deeply enough into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it.” * Should you read the book bet the dealer? “I came away with the idea that successful investment was really a matter of hours, and if you could compute the odds, you could find and test methods that could beat the market.” Let the law of large numbers work in your favor. * If you trade you should have a good, quantified reason to assume that you are going to achieve a significantly superior return for investing in stocks. * Study William O’Neal for the art of great stock selection: CANSLIM. * O’Neal’s advice: “I believe that every person should own their own home, own real estate, and have an individual stock account or own mutual funds.” * Book recommendations: How to Make Money in Stock (O’Neal), How I Made Two Million Dollars in the Stock Market (Darvas), and Reminiscences of a Stock Operator. * “The more disciplined you can get, the better you were going to do in the market.” * Avoid stocks under $10. They are there for a reason. * “When a brokerage firm wants to hire you, they’ll give you anything. Once you were there, they are far less responsive.” * “Why do most traders lose money? Because they would rather lose money than admit they’re wrong.” * The market will go higher than you think it can and lower than you think it will. * “The biggest mistake I made was having a specific target of what I wanted out of the trade.” * “Don’t trade until an opportunity presents itself. Knowing when to stay out of the market is as important as knowing when to be in them.” * “Any final advice that you have for the beginning trader? You have to learn how to lose; it is more important than learning how to win. If you think you were always going to be a winner, when you lose, you will develop feelings of hostility and end up blaming the market instead of trying to learn why you lost. Limit losses quickly.” * “What other things are important to your trading success? The realization that when you don’t care, you do well, and when you try to hard, you don’t do well.” * Don’t view trading in terms of money. To Baldwin, money is only a means of keeping score. By contrast, most traders tend to think of gains and losses in terms of their monetary implications – a frame of mind that only gets in the way of making trading decisions. * Scale in and scale out of positions, so that you can spread out your risk. * “You should review your rules at the beginning of the day and review your trading at the end of the day. If you followed your rules, even if you lost money, pat yourself on the back. If you didn’t follow your rules, then mentally rehearse what you did and give yourself more appropriate choices in the future.” * “Are you implying that some people actually want to lose money on a subconscious level because it fulfills some other positive intention? How common is that? Half the traders I work with have problems of this nature. I think it’s very common.” * “I’ve already mentioned how one can use body posture, breathing, and muscle control to manipulate one’s mental state. To try this out for yourself, go into a shopping mall and notice how other people walk. Duplicate a dozen or so walks for yourself and notice how your mental state changes with each one.” * “For example, suppose you were at your desk and you become aware that you are in a mental state that you would like to change. Get up out of the chair. Walk away about 4 feet and then look at how you looked in that chair. Notice your posture, your breathing, your facial expressions. Then imagine how you would look if you had the sort of mental state you would like. When you can see that clearly, sit down in the chair again and assume the position that you just imagined.” * “Trading is a matter of probabilities. Any trading strategy, no matter how effective, will be wrong a certain percentage of the time. Traders often confuse the concepts of winning and losing trades with good and bad traits. A good trade can lose money, and a bad trade can make money. A good trade follows a process that will be profitable (at an acceptable risk) if repeated multiple times, although it can lose money on any individual trade. A bad trade fall is a process that will lose money if repeated multiple times, but may make money on any individual trade.” * Aspiring traders need to find an approach that fits their personality, instead of being on a quest to find the secrets that unlock the market. Why? Because you can stick to your rules.
The best book in the series, from my perspective. First, because the traders interviewed include so many of the absolute best, such as Paul Tudor Jones, Ed Seykota, Marty Schwartz and Jim Rogers. Second, because I was mostly interested in futures trading, which is the primary coverage of the book. As with the entire series, there will be a discussion around a variety of trading techniques and markets, so whatever you are interested in (bonds, commodities or equities), you will likely find interesting interviews and discussions.
On this old but gold book, Jack Schwager interview many succesful traders, that are still well known, like Richard Dennis and his turtle traders, and Ed Seykota.
It's entertaining to read those interviews, and although you won't be presented with any ready to trade strategy, as it isn't the focus, you can learn how succesful traders made their fortunes.
Usually, as I knew beforehand, succesful traders wins not that much of their trades, but when they do, they win big, cutting losses soon and letting the winners ride. The interviewer seems to be a bit shocked when getting to know, for example, that Richard Dennis doesn't tries to catch a bottom/top, but he rides the trend, like Ed Seykota also.
There is an important emphasis on the psicology of masses also, like not wanting to be with them, and also not caring about losing/winning a lot of money, so that doesn't affect your judgement. You don't trade for excitement, but for win, although you must love to trade and to study the markets.
There is a good interview with Dr. Van Tharp at the end, which he points what he found top traders believe: "Money is not important, It's ok to loss in the markets, Trading is a game, Mental rehearsal is important for success, They've won the game before they start." I think I will stick with the first two, which indeed pave the way to success.
A good book, and I will surely read the others from the author.
The book covers 17 different traders who share their successes and failure's encountered. Most started with very little capital and were able to build a successful trading mentality by developing a discipline that worked for them during certain market environments. Each trader has fundamental trading rules that are followed in a very strict sense. Some believe you must be disciplined and consistent others wait for price movement before trading than use fundamentals to make trades, still others study long term trends along with current price patterns and fundamentals before picking buy/sell position. Most claim there losses are a result of not following there own rules. This book reveals that each of these successful traders has a passion and love for trading, as it appears that is what made them successful. In the last interview, Dr. Tharp has completed a study that suggests 3 factors in duplicating successful trading beliefs, mental states, and mental strategies. The book explains how these factors affect your ability to trade successfully. This was a good book that contained enough detail to keep me interested but not to much to make it boring.
Probably the best book I've read on the Markets so far. I got so much out of this book, in a much deeper philosophical sense rather than actual techniques these traders employ.
If you're like me, who doesn't have friends that are serious Traders or Investors, let alone Legendary Status Traders as per the Market Wizards interviewed in this book, this book is the closest thing to meeting your life changing mentor. Plenty of different styles these millionaires use, different views to the market and common rules they live by in the markets.
Biggest points I'm taking away from this book is: 1) My next direction into learning more about Elliot Wave Principle, 2) Under-trading and Being patient to wait for the perfect chances, 3) Risk control (no risking more than 5% on one idea). Must read if you're a serious trader.
Most important lessons I learned from this book have to do with risk management. Even if you don't want to be a trader, you can generalize a lot of the strategies used by the interviewees and become more adept at understanding, calculating, and responding to risk.