Like a prospector panning for gold throughout the Klondike in the 1890’s, I scour the internet daily for little nuggets that will help us learn more about ourselves and improve our trading. Sometimes I find gold dust right under my nose, on my computer, like I did this week.
New Market Wizards
I’ve had Jack D. Schwager’s “THE NEW MARKET WIZARDS, Conversations with America’s Top Traders” pdf on my hard drive for years. Recently, I pulled it out, blew off the dust and took another look. Although this book was originally published in 1992 (that was the dark ages, wasn’t it?) much of it is still relevant today.
Schwager is best known for his best-selling series of interviews with the greatest hedge fund managers of the last three decades. He has authored many books on trading and is very well respected in the industry.
Today I’m going to bring you the Preface of, ” THE NEW MARKET WIZARDS, Conversations with America’s Top Traders” I found hiding in plain sight on my computer and then the concluding thoughts.
I’m not going to change a word, just cut and paste.
“Here’s what I Believe
“1. The markets are not random. I don’t care if the number of academicians who have argued the efficient market hypothesis would stretch to the moon and back if laid end to end; they are simply wrong.
“2. The markets are not random, because they are based on human behavior, and human behavior, especially mass behavior, is not random. It never has been, and it probably never will be.
“3. There is no holy grail or grand secret to the markets, but there are many patterns that can lead to profits.
“4. There are a million ways to make money in markets. The irony is that they are all very difficult to find.
“5. The markets are always changing, and they are always the same.
“6. The secret to success in the markets lies not in discovering some incredible indicator or elaborate theory; rather, it lies within each individual.
“7. To excel in trading requires a combination of talent and extremely hard work-(surprise!) the same combination required for excellence in any field. Those seeking success by buying the latest $300 or even $3,000 system, or by following the latest hot tip, will never find the answer because they haven’t yet understood the question.
“8. Success in trading is a worthy goal, but it will be worthless if it is not accompanied by success in your life (and I use the word success here without monetary connotation).”
He Finished off with These Thoughts
“I am frequently asked whether writing this volume and the first Market Wizards helped me become a better trader. The answer is yes, but not in the way people expect when they ask the question. No trader revealed to me any great market secrets or master plan unlocking the grand design of the markets. (If this is what you seek, don’t despair, the answer is readily available-just check the ads in any financial periodical.)
“For me, the single most important lesson provided by the interviews is that it is absolutely necessary to adopt a trading approach precisely suited to one’s own personality. Over the years, I have come to clearly realize what I really like about this business is trying to solve this master puzzle: How do you win in the markets?
“You have all these pieces, and you can put them together in a limitless number of ways, bounded only by your creativity. Moreover, to keep the game interesting, there are lots of pitfalls to lead you astray, and some of the rules keep changing in subtle ways. There is even a group of very intelligent people telling you that the game can’t be won at all.
“The really fascinating thing is that, as complex as this puzzle is, there are a multitude of totally different solutions, and there are always better solutions. Trying to solve this wonderful puzzle is what I enjoy.
“On the other hand, I have also come to realize that I do not like the trading aspect at all. I do not enjoy the emotionality of making intraday trading decisions. When I am losing, I am upset, and when I am on a hot streak, I am anxious because I know I can’t keep it up. In short, it is not my style.
In contrast, there are people who thrive on and excel at the actual trading. One person who in my mind epitomizes this type of approach is Paul Tudor Jones, whom I interviewed in Market Wizards. When you watch Paul trade, you can see he’s really charged by the activity. He bubbles over with energy, taking in information from a hundred different directions and making instantaneous trading decisions. He seems to love it, as if it were some challenging sport. And loving it is probably why he is so good at it.
“For many years, I participated in both discretionary trading and system trading. It is, perhaps, no coincidence that in the course of working on this book, I came to the conclusion that it was system trading that suited my personality. Once I increased my efforts and commitment to system trading, my progress accelerated and I felt that the approach fit like a glove.
“It took me over a decade to figure out my natural direction. I’d suggest that you take the time to seriously ponder whether the path you are on is the one you want to be on. Perhaps your journey will then be shortened.”
Couldn’t have said it better myself Jack.
We’re the Plan in “Plan your Trade and Trade your Plan” – TraderJanie
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