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Market Wizards, Updated: Interviews with Top Traders Paperback – February 7, 2012
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Q & A with Jack D. Schwager, author of Market Wizards: Interviews with Top Traders
More than twenty years have passed since the first edition of this book was released. Is it as relevant today as it was then?
Absolutely. Markets may change and the specific techniques or systems that work best may change, but the underlying core principles that lead to trading success stay the same. And there is a good reason for that. Through all periods, market price moves reflect some combination of underlying fundamentals and human behavior. Since human nature doesn't change, the market's basic behavioral patterns don't change either. I believe that every conclusion I reached about the factors important to trading success in the first edition remains equally valid today. Perhaps the best testament to the continued relevance of Market Wizards in today's markets is that so many of the managers I meet who read the original edition early in their careers make it required reading for new traders in their organization.
Has trading fundamentally changed with the rise of the quants and algorithmic traders?
The growing role of algorithmic trading may have eliminated some market inefficiencies as sources of profitable strategies, and it may even have impacted the efficacy of some trading systems, but I don't believe it has changed fundamental market behavior. The same basic concepts that are critical to trading success remain as valid now as they were a generation ago when computerized trading was in its infancy.
What are these basic concepts?
Well that's what this book is all about. But to offer one example, I believe that developing a trading methodology that fits your personality, as opposed to seeking someone else's approach, is an absolutely critical element to succeeding as a trader.
Why do most traders fail?
There are many reasons. They seek easy answers. They listen to "experts" and chase trading fads instead of doing the hard work of developing their own methodology. They focus almost all their energy on determining trade entry points and all but ignore the more critical questions of trade exit and risk management. They listen to other people. These are a few of the reasons. Readers will find a lot more in the book.
Which trader interview in the book has been the most popular?
Readers will often tell me that a certain chapter was their favorite and by far the most important in improving their own trading. The interesting thing is that they always seem to mention a different trader. There is no consensus. Different readers will find different things in the book important. They will relate to different traders. It all goes back to the importance of finding your own approach in the market.
Have the interviews you did for Market Wizards been important to your own trading?
The interview and writing process has helped solidify in my own mind the principles that are important to trading success. At times, it has also had a very specific influence. A great example occurred last summer. At the time, the stock market was approaching the high end of a long-term trading range, and for a variety of reasons, I expected the rally to fail and was positioned on the short side of stock index futures. Then the government released an extremely bearish employment report. It was so negative that commentators couldn't even cite one offsetting bullish consideration, as they usually do. The market initially sold off sharply in response--"perfect," I thought of my trade--but by the end of the day, it nearly recovered the entire loss, ending the week near the recent high. From the perspective of a short, this was terrible price action. I thought I was in trouble. I was prepared to cover most of my position when the market opened on Sunday night. On Sunday night, however, the market opened lower. I immediately thought of Marty Schwartz's advice in this book: "If you're very nervous about a position overnight, and especially over the weekend, and you're able to get out at a much better price than you thought when the market trades, you're usually better off staying with the position." I did, and Schwartz's insight saved me a lot of money, as the market proceeded to move sharply lower in the ensuing weeks.
From the Inside Flap
The Investment Classic, Updated with a New Preface and Afterword
"I've read the book at several stages of my career as it shows the staying power of good down-to-earth wisdoms of true practitioners with skin in the game. This is the central document showing the heuristics that real-life traders use to manage their affairs, how people who do rather than talk have done things. Twenty years from now, it will still be fresh. There is no other like it." Nassim N. Taleb, former derivatives trader, author of The Black Swan, and professor, NYU-Poly
Praise for the First Edition
"Market Wizards is one of the most fascinating books ever written about Wall Street. A few of the 'Wizards' are my friendsand Jack Schwager has nailed their modus operandi on the head." Martin W. Zweig, PhD, Editor, The Zweig Forecast
"It is difficult enough to develop a method that works. It then takes experience to believe what your method is telling you. But the toughest task of all is turning analysis into money. If you don't believe it, try it. These guys have it all: a method, the conviction, and the discipline to act decisively time after time, regardless of distractions and pressures. They are heroes of Wall Street, and Jack Schwager's book brings their characters vividly to life." Robert R. Prechter Jr., Editor, The Elliott Wave Theorist
Featuring interviews with seventeen of the most successful market-beaters, including Bruce Kovner, Richard Dennis, Paul Tudor Jones, Michael Steinhardt, Ed Seykota, Marty Schwartz, and Tom Baldwin, Market Wizards is packed with real-life anecdotes from the trading world. From the electrical engineer from MIT whose computerized trading earned returns of 250,000% over sixteen years to the trader who, after wiping out several times, successfully turned a $30,000 investment into an $80 million fortune, Schwager identifies the factors that define a true Market Wizard.
- Publisher : Wiley; 1st edition (February 7, 2012)
- Language : English
- Paperback : 512 pages
- ISBN-10 : 1118273052
- ISBN-13 : 978-1118273050
- Item Weight : 1.31 pounds
- Dimensions : 5.9 x 1.4 x 8.8 inches
- Best Sellers Rank: #7,919 in Books (See Top 100 in Books)
- Customer Reviews:
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Top reviews from the United States
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The advice give by most of the traders is pretty general and I was not able to find any real gold nuggets. It's more of a historical piece of trading history than something that will actually help you in your own trading strategy. Overall, I think the book is an interesting read if you are curious about different trading and investing styles and/or would like to be more familiar with some of the trading legends out there, but don't read it expecting to walk away with some new trading knowledge that you can apply to your own discipline. That to me makes it an overrated book in my opinion. I purchased the book based on the rave reviews of those in the trading community, but found it to be dated and subpar at best.
Recommended by Sam Sieden and Bill Henner of Online Trading Academy. Glad I bought it.
By DG on February 17, 2018
To get the full benefit, it is necessary to read from beginning to end. What strikes me most is both the depth and breadth covered by the interviews. The book is divided into several segments, covering futures, equities, investors who follow economy-wide trends, and a little bit of psychological analysis. The key to learning from this book is linking the ideas from all the separate interviews together.
By the end, you will see subtle differences in the thinking behind futures, equities, and even stock option trading. Despite the various traders having a wide range of opinions and philosophies, you will find many commonalities in each interview. Though each trader used radically different methods, they all had a standardized set of rules that were followed and led to success. Most of these rules involved some benchmark for cutting losses.
Interestingly enough, this book is not written or condensed in anyway. It consists of outright transcripts of interviews Schwager conducted with the actual traders. I believe this style kept each page exciting because it actually felt as if I was present during the interview.
This is one of the essential reads for any young or old person wanting to engage the trading field, whether as a part time endeavor or as a career. Study Market Wizards, and use the wisdom of its pages to your money-making advantage!
Top reviews from other countries
Even today - over 25 years since I first picked it I refer to it frequently. I have also recommended or bought copies for juniors over the years.
Jack Schwager has written a number of 'Market Wizards' books but this one is still considered the classic.
For anyone interested in trading (or investing) I would recommend going through this book line by line. There are a lot of insights in the book that take a lifetime to appreciate.
If I met Jack I would thank him from the bottom of my heart - it changed my career path etc.
But of course most importantly you get to hear in their own words what approach top traders take to make large amounts of money from trading. The methods of the individuals was actually a lot more diverse than I was expecting and it soon becomes clear that many different paths can be taken.
I've found with some other trading books that the writers are not always top traders themselves and with so much info out there, it can be difficult to find quality advice. With trading books and any informative non-fiction, I would always say check your authors. See if they have the credentials. The traders interviewed in this book certainly do. Highly recommended to anyone with an interest in improving their trading.
It is structured in such a way that makes it easy to read and analyse. What would have been great is if the author provided a study guide as there are so many lessons in this book I cant keep up.
I also purchased the audible session via amazon because it was on offer. I would recommend reading this book whilst listening to audible because it makes it so much better.
The book ends with a very insightful interview with the psychologist Dr. Van K. Tharp who specialises in counselling traders and to extract common traits of successful traders.
I recommend this book to everyone who wants to get some insights of the mind-set of successful (and losing) traders.