Market Wizards :Interview With Top Traders - Jack D. Schwager

Posted by Kris | Monday, October 15, 2007 | | 0 comments »

I have almost finished reading this fantastic book about some of the world's greatest trader and investor. The book is easy to read and enjoyable even if you are not into investing or a newbie to the world of stock trading.

Market Wizards is a book written by Jack D. Schwager and published in 1988 in which he interviews a wide range of traders with excellent track records of profitability.

The book contains four parts covering interviews with traders in a wide range of markets such as stock indexes, futures, options trading, commodities and currency trading. Their trading field are quite diversified as they are able to practically trade in anything that they can get their hands on!! Some of the traders prefer a certain market to do their trading though.

The interviews contain a mixture of facts about the trading careers of the interviewees, their philosophy, and many trading anecdotes. After each of the interviews, Schwager summarises what he believes are the key things to be learned from that particular trader.

The interesting part of this book is that at the beginning each chapter, it has a introduction on each interviewee's trading background and history. Some started with zero experience and through persistent, hard work became what they become today. A good mentor at the beginning of the journey really help them to overcome the initial learning curve. As they matured, they begin to developed their own trading methods and some even surpassed their teacher.

Any gurus out there reading this and is interested to accept disciples, please don't hesitate to contact me any time . :)

Below is a summary of what i think constitutes a good trader/investor/speculator that i digested from the book.

1. Sound capital and risk management. Religiously followed the game plan that they set after they entered their trade. Able to cut loss no matter how painful it is.

2. Nerve of steel. You really got to have that if even you are a small time trader. Trading with your hard earn money has a major psychological effect when it comes to making trading decisions. It is not like the Bursa Pursuit game where there are no real money involved and you can simply shoot which stock to buy. I bet a lot of the players do that :P

3. Never give up. Some of the interviewees paid hefty tuition fees when they started off to the extend of borrowing money from family and friends. I am not recommending you to do that though.None of them had a smooth journey. Even though they had mastered the fine art of trading, they do stumble sometimes during their illustrious career. But that did not stop them at all!!

4. They have a immerse passion for trading. They really enjoy what they do everyday and accepts winning & losing as part and parcel of the game. (who wouldn't be happy if everyday you are able to make small fortune). From the interviews, winning/accumulating wealth is no longer important for them anymore. It is the game itself that captured their souls.

5. Successful trader have small egos. Almost all the interviewees stressed that being able to admit a mistake and quickly get out of a losing position is vital for their survival.

6. Trading requires extensive homework and hard work. They don't listen to other stock gurus advice even though they acknowledged their capabilities and talents. They make their own judgement based on their trading style.
7. There is not such thing as luck in stock trading. Lady luck could not possibly give consistent profits like what these people are doing everyday for years. The trading world is not a big casino.

8. Never over trade and put everything on a single bet. It is a huge mistake to do so as you might lose everything in a single punt. This one of the popular mistakes that the traders did when they started. Over trading using margins will put immerse unnecessary pressure when the market turns against you.

My take on this book : 8.5/10 ( a good insight into the minds of what it takes to be a successful trader/investor)