Lessons Learned From Unknown Market Wizards
In the 1980’s Jack Schwager was a commodity analyst with a large Wall Street brokerage house. He had the idea of writing a book that would consist of interviews with top traders exploring their methods, mindset, and money management techniques to better understand what separates the great traders from everyone else.
In 1989, the original Market Wizards book was released and quickly became an international bestseller. In that book, Schwager created legends out of traders who had proven that they had had massive success in trading the financial markets. Now three decades and four Market Wizards books later, Schwager has penned another classic, Unknown Market Wizards.
Attempting to summarize Unknown Market Wizards is quite challenging. In every interview there are tidbits of wisdom on how traders learned to overcome fear and greed in their trading. The very unique aspect of this series is that Schwager purposefully sought out unknown retail traders who were relatively obscure to the trading world. Upon documenting and verifying their track records, he could immediately see their performances were nothing short of extraordinary.
The interviews in Schwager’s books provide tremendous insight on what it takes to be successful in the markets. What makes the series so appealing is one can easily relate to the successes and failures that many of the traders have had throughout their careers. In the early Market Wizards books, almost every interview was filled with a tremendous trading failure that forced the trader to admit that this “trading thing” offers tremendous potential for those who know what they are doing.
Ed Seykota, stated it this way during his interview in the original series: “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money. 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. It can be very expensive to try to convince the markets you are right. If you can’t take a small loss, sooner or later you will take the mother of all losses.”
The unique “hook” and magnet in Unknown Market Wizards is that the traders being interviewed are just ordinary traders who have achieved extraordinary. In spite of their anonymity, these traders performance records rival, if not surpass, the best professional managers of all time.
Some of these amazing interviews include:
– A trader who transformed an initial account of $2,500 into $50 million.
– Another trader who achieved and average annual returns of 337% over a 13-year period with very low drawdowns.
– A trader who blazed his own path without fundamental or technical analysis and made tens of millions of dollars in the last decade.
– A former advertising executive, who writes a daily newsletter mostly for himself to create clarity of his own thoughts in determining how to trade. He uses classical chart analysis to achieve a 58% average annual return over a 27-year trading span.
– A junior tennis player in England who gave up his promising career in Tennis for trading and generated a nine-year track record with an average annual return just under 300%.
Schwager encourages these traders to share their training, education, experiences and tactics as they discuss their best and worst trades and trading philosophy. It’s fascinating how people from all walks of life discover trading and then work diligently to develop skill and proficiency.
Schwager sprinkles humor and insights about fear, greed, uncertainty, and risk throughout. Each trader showcased brings their own style to trading. Some focus on exploiting directionless markets by selling option premium. Others are bear market enthusiasts who look for big, massive downtrends and steer clear of everything else. Others focus on one or two markets that they have found they consistently win in and ignore everything else.
Overall, what each trader demonstrates is that great trading is never about how much you make when you are right. Instead, each trader focuses on losing as little as possible when they are wrong. In fact, they almost all uniformly claim that learning how to lose was the pre-requisite that allowed them to become hugely successful traders. Often, very simple lessons are the ones that pay a lifetime of dividends, like the idea that the most critical aspect of risk management is position sizing.
Unknown Market Wizards reminds all traders there are many approaches to making money in the markets. However, each trader has to find an approach that works within their set of risk parameters. After discovering this approach, they can exploit this “edge” over and over and over again.
With VantagePoint Software, the edge over the last 29 years has been artificial intelligence. We pride ourselves in being the market leader in A.I. trading software. We “Empower Traders Daily” with a powerful set of tools that each trader can customize to find and exploit opportunities in the market.
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IMPORTANT NOTICE!
THERE IS SUBSTANTIAL RISK OF LOSS ASSOCIATED WITH TRADING. ONLY RISK CAPITAL SHOULD BE USED TO TRADE. TRADING STOCKS, FUTURES, OPTIONS, FOREX, AND ETFs IS NOT SUITABLE FOR EVERYONE.
DISCLAIMER: STOCKS, FUTURES, OPTIONS, ETFs AND CURRENCY TRADING ALL HAVE LARGE POTENTIAL REWARDS, BUT THEY ALSO HAVE LARGE POTENTIAL RISK. YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THESE MARKETS. DON’T TRADE WITH MONEY YOU CAN’T AFFORD TO LOSE. THIS ARTICLE AND WEBSITE IS NEITHER A SOLICITATION NOR AN OFFER TO BUY/SELL FUTURES, OPTIONS, STOCKS, OR CURRENCIES. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED ON THIS ARTICLE OR WEBSITE. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
