The New Market Wizards: Conversations with America's Top Traders

Market Wizards #2

by Jack D. Schwager

In The New Market Wizards, successful traders relate the financial strategies that have rocketed them to success. Asking questions that readers with an interest or involvement in the financial markets would love to pose to the financial superstars, Jack D. Schwager encourages these financial wizards to share their insights. Entertaining, informative, and invaluable, The New Market Wizards is destined to become another Schwager classic.

Genres: Finance, Business, Nonfiction, Economics, Money, Psychology, Audiobook

512 pages, Paperback

First published November 1, 1992

About the author

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).

Reviews

[Duffy Pratt · Rating 3 out of 5]

I wish someone would do a series of interviews with a bunch of failures.

I found these interviews enjoyable, and there were several good tips and lessons that came through. But lets face it, these people for the most part are trading huge lot sizes, lots so big that they will move the market with their trades, and the types of things they take into account don't have all that much to do with the kinds of things that a small trader faces. Some things carry over, but very much does not. Also, the book is kind of dated, and many if not most of these traders started trading in the pits. My guess is that trading in the pits is a very, very different activity than sitting alone in a study and staring at a computer screen.

Here are two common threads that I find very interesting. First, almost every trader seems to agree that psychology is more important than the trading system a person uses. The important things are stuff like confidence in your system, discipline to trade it properly, not second guessing yourself, resisting greed and fear, etc... That's all well and good. And yet, every trader in the book has had Schwager agree not to reveal proprietary stuff about the systems that they trade, and often they refuse to answer specific questions because it will reveal secrets about the systems they trade. Anyone else see the tension in these two positions?

Back to my original thought. It's OK to interview a bunch of really successful people and then say what they all have in common. There's a whole aisle of business books that do exactly that, with dreadful names like "The Top 10 Secrets of Highly Successful People". Guess what -- they work hard; they take risks; they have self-confidence; and blah blah blah. But what about the failures? How many budding entrepreneurs shared all of the same "secrets", and yet did not make a go of it? Why isn't anyone interviewing the failures? It seems to me that their stories would be at least as interesting and probably more educational. And if you could find a common thread in why people fuck up (other than that bad shit just happens to lots of people), that would be information that was really worth having.

[Brian R. · Rating 5 out of 5]

This is the fourth time that I've read this book and I will say that all of the necessary disciplines for trading are withing it and each time I read it they sink a little deeper into my subconscious. The first time I read these interviews I was an intern on a trading desk and the topics are no less relevant as a full analyst for an alternative platform that generally has his head buried in math than they were for a green nineteen year old hoping to grasp the basic concepts of an industry. Given the incredible explosion in volatility Mr. Market displayed in 2008 it is especially prescient to revisit the basic principles of what makes active investing a superior approach.

[George Jankovic · Rating 5 out of 5]

Re-read of the second book in the Market Wizards series. Schwager continues where he left off interviewing top investors covering different investment styles. The big one in this book is Stanley Druckenmiller--one of the very few best investors of all time who managed George Soros's Quantum Fund for many years.

It's a great read and almost as good as the first one. Five easy starts.

[Tim O'Hearn · Rating 3 out of 5]

Much better than the first book. The responses are more varied as are the traders' backgrounds. However, most of the success stories boil down to discipline, contrarianism, and superior knowledge of pricing models in an era where nobody knew how options pricing worked. An interesting look at a point in history but, don't be fooled- it's history.

[May Ling · Rating 5 out of 5]

Summary: Excellent book particularly for those that are looking to make a career in trading or the markets in general.

This was recommended to me by my mentor to improve my abilities. There are a few different ways to take this book:

1) Trading psychology. After you've learned your craft well enough to be on auto-pilot for continuing to grow your skills, the next important thing for longevity relates to psychology. This book is excellent for appreciating this.

2) The people that are interviewed are truly A+. I love that Schwager mixes in a variety of asset classes and styles within the liquid an semi-liquid markets. Although each market has it's nuance, the reality is that the general idea of trading has very portable elements. Schwager captures this.

3) The Q&A format is very approachable and to the point.

4) There are so few female traders, that I absolutely loved that he included Lina Bradford Raschke and

[Doris]

I have the 2006 version of Market Wizards and it is an EXCELLENT book. My intentions are to get all his Market Wizard books and read them.

There are a lot of things I learned from the 2006 copyrighted version, so I look forward to reading his prior versions.

I love the style in which Schwager interviews each top trader, psychologist. One can gain much insight from those who go before you and how they came about their success, but also more importantly, the pitfalls.

Schwager does a good job summarizing the common trades of all top traders, which are the traits I have learned to develop.

[Stirling Mortlock · Rating 3 out of 5]

Pretty good, but the book was mixed. Honestly there are a lot of styles that don't mesh well with mine, and a lot of interviews that probably confused me more than helped me.

The clear standout is the interview with Stanley Druckenmiller. The guy's brilliant, and it's so hard to find interviews with him that any insight into what he thinks is greatly appreciated. Really wish the whole book was just picking Druckenmiller's brain.

One that I was not expecting, but was really good, was Vic Sperandeo. He really made an impression on me. I might check out Sperandeo's book after this; I like the way that guy thinks.

[Jon · Rating 5 out of 5]

Excellent insight that is still prevalent today. I enjoyed learning about the emotional aspect of trading stocks and the importance of finding your own way.

[Mario Russo · Rating 5 out of 5]

More than practical advice, this is a must read for anyone interested in psychology of investments, trading, human behavior and insights that can be applied to other areas.

[Alejandro · Rating 4 out of 5]

I find the Market Wizards book series great because they offer practical advice coming directly from the world's top traders. The entire book is based on real experiences from decades ago (I read this book in 2021), which I found interesting as I learned how professionals dealt with periods of high volatility back then. Each trader interviewed has a unique style and approach to trading, so you won't fine the "perfect approach" in this book but rather a set of principles that they all share and partly explain their success.

[Aziz · Rating 5 out of 5]

The book gives a different point of view of trading. While most of trading book taught us the theory and how to trade, this book shows us not the theory but the experience. We will learn not the steps to be a trader or the calculation or anything like that, we will learn how’s trader’s life. Personally, I learned a lot about psychology and emotion from this book, some rule of thumb in trading, and more trading book recommendations from the pros. I really like the book as the content is also easy to understand

[Jairo Fraga · Rating 4 out of 5]

Another fine book, which I enjoy reading, and usually comes with useful stuff for your trading.

An interview on the first half of the book, by William Eckhardt, "the mathematician", was very pleasant, as he does mechanical trading, and is very successful at it.

Another good interview is one by Stanley Druckenmiller and how he said that Soros didn't care if he wins or loses, because he is confident that he would be able to win on other trades. Also, Soros traded very big and would get angry at his traders that are doing fine and happy with small positions, not wanting them to take profits yet, but to ride them.

I liked Gil Blake style of trading too, as he says, a critical ingredient to be a good trader is to have a maverick mind, a blend between an artistic side and a scientific side.

Some so and so interviews with institutional options traders and a useless interview about NLP and other not very interesting about hypnosis and trading.

This book is a bit worse than the first book, but still I recommend it.

Estimated reading time: 12h

[Jørgen Astrup · Rating 4 out of 5]

Great book, but I can't seem too be as interested in trading as in other part of investing. enjoyed the interview of druckenmiller

[Heikki Keskiväli · Rating 3 out of 5]

Always few very interesting stories withing these pages but unfortunately quite few and far between. Must read for traders but some insights for long-term investors as well. Druckenmiller one was clearly the best.

[André Jan · Rating 4 out of 5]

Two things:

The people who make the market efficient don't believe in the efficient market hypothesis.

The easiest way to make it big is to get in early before others do the easy stuff. If these people started 30 years later they probably would have had the same success but in crypto/AI instead

[Grace · Rating 5 out of 5]

From Top 12 Investment Books to Start Off 2017

The New Market Wizard, by Jack Schwager, was the first finance related book I read prior to starting my internship at UBS. It’s a collection of interviews with traders that have a proven track record of overwhelmingly positive returns. It’s not just about stocks. The author also interviews traders that deal with commodities, currencies, and options. Some are well known, while others are less so, but they all give you a good idea of the different principles and thought processes of veteran traders.

Every trader in this book has his own method of trading and you’ll be surprised at how different these strategies are, some even contradicting each other. It should be noted that the book was released in 1992, prior to the implementation of Dodd-Frank Reform, which restricts depository banks from participating in proprietary trading. Nowadays, banks deal with client execution trades and work off of commission. Nonetheless, the advice in this book is still relevant to traders who are developing their own core principles and strategies; find which trader’s goals align with yours and modify your approach to the market based on that. Although I prefer this version, the prequel to this book, The Market Wizard, is worth checking out as well.

[Alejandro Sanoja · Rating 4 out of 5]

Just as good as the first book of the series "Market Wizards".

You get hard and undeniable facts about trading, you get different perspectives and different styles that you can relate to and also you get a little bit of "mysticism" a little bit of the intangibles and the "zen" part about trading. "Trading without trading".

Credit must be given to Jack D. Schwager because he has an excellent ability to ask questions and he can even change the subject and get off topic and still give great value by the information he gets out of people.

He asks same things over and over but a little different and he gets the very deep and true answers out of everyone.

When you are reading the book you feel like you are actually at the place of the interview, is almost like you were part of the conversation.

MUST read for anyone that is interested in trading of the financial world.

[Wayne · Rating 5 out of 5]

Another great read for any trader who is interested in the views of some of the greatest traders there are/have been. This was a follow up to the first book and takes place about 3-4 years later. He does a good job of referencing back to the first book rather than repeat any information and as a result I find it a great compliment to the previous material.

[Clare · Rating 3 out of 5]

Interesting follow up to his first book - these interviews are useful and informative in a way that only strikes one after completing the book. Drawing together the common threads throughout is where the utility lies.

[Tamas Ne · Rating 5 out of 5]

I found it even more amazing than the first one.
After reading both books, it became clear that what I have been doing wrong, and where should I start looking for my edge. It also gave me numerous psychological and technical tipps. A must read.
Thank you Mr. Schwager!

[Peter · Rating 5 out of 5]

Inspiring and great, as all the market wizards books I read so far. You wont learn much about trading, but if you are a trader it will keep you inspired and going.. and it makes for a great bedside book, to read and relax.

[Ronald Huffman · Rating 4 out of 5]

This book is a little dated these days, but the interviews are fantastic. I didn't use it as a how to guide for trading. However, the insight into the great traders interviewed is invaluable.

[Dias Ramdan]

very good book, inspiring, shud be a good start for anyone especially trader

[Velvetink]

tubel

[Michael McGee · Rating 3 out of 5]

Pretty good

[Pat Murphy · Rating 4 out of 5]

Very interesting interviews of tp investors in America.

[Derek Tiddy]

fair

[Chris Esposo · Rating 3 out of 5]

Listening/reading a Jack Schwager book is like listening to a bunch of podcast episodes of a show, some useful information, but ultimately it’s unclear if you really should be paying for the “privilege”. This is not to say that the content isn’t enjoyable (or occasionally informative). Yet, when I purchase a book on finance or investing, I’m hoping to gain some kind of practical knowledge, and despite the age of these interviews (the *first* Gulf War is fresh in everyone’s minds), I think there is some value here (indirectly), in hearing how professional and successful traders navigated unexpected events, or handled losing (and winning) streaks to deliver consistent portfolio growth.

This is the third of Schwager’s series I’ve listened to/read, the first two being his first “Market Wizards” and “Hedge Fund Market Wizards''. I don’t recall the first book at all, it was so long ago (and may have to see if it makes sense to revisit it). “Hedge Fund Market Wizards” I read just under 2 years ago, and felt it was a bit of a mess. One thing that makes reading & retaining information easier is if there’s some kind of transparent pattern/well-defined narrative to the text. In a book like this, that may be challenging to achieve, given that the text is literally a collection of interviews of disparate peoples in the industry. I recall thinking the “Hedge Fund” text was challenging in this regard. That being said, Schager does organize his interviews by theme, so that confusion may come from the lack of work I’ve had in the industry.

This text is different, although similarly organized, I found the material here significantly easier to contextualize and understand, again probably because the topics here are “bread and butter” with respect to any trader, whether you engage in it professionally, academically, or in some retail capacity. Unlike the Hedge Fund wizards, I even got some interesting insights out of the text, the primary thing being that the contemporary debate between discretionary and system trading seems to be skewed way towards the discretionary among Schwagger’s gaggle, and there may be a simple explanation for this: namely they represent the extreme tail of performers, and the ‘tried and true’ advice often given to “ordinary folks” to have a well-defined system, that one abides to and maintains fidelity to with respect to triggers and execution is a system that will get you “80%” of the way there in terms of your potential net.

What I mean by this is that perhaps “systems” trading is good ‘up to a point’, and does deliver a net profit significantly higher than the mean. However, there may be a dramatic difference between the top performing systems-traders and the even the lower-performing elite discretionary ones, because even the ‘systems’/quantitative options traders Schwagger interviews admit to engaging in a fair amount of discretionary actions. One might argue that these people were discussing trading events 30+ years ago, with many of the “big events” discussed being how the various individuals traded the Gulf War, and the 87’ crash. Stll, there are some familiar names in here, including: Drukenmiller, Bill Lipschutz, and BIll Hull, who have done well for themselves in relatively modern times. Though Drukeniller sees me to have incorrectly called the latest Covid-recession, and I recall him having some alarmist (and overly negative) statements on the nature of that recession in the first few weeks of the event (but then again you can’t win them all).

There were a couple of traders I hadn’t heard of that were interesting here too, including Jeff Yass and William Ekhardt, who apparently studied mathematical logic at the PhD level prior to starting his trading career. Though again, an interesting observation made by all of these quants is that they had to adjust significantly their expectations that formalism would extract significant dividends in terms of predicting/modeling real-life behavior. In effect, their technical training was valuable, but only indirectly. In the case of Mark/Joe Ritchie, they weren't even formally trained, yet they apparently developed one of the most sophisticated options trading systems to that date, what they did have was a “technical intuition” (as contradictory as that may sound).

Overall, the book was an interesting read. I don’t know if I learned much from it, though I gained the “knowledge” or a reflection of some experiences on how the careers of these men (and one woman) so that itself is valuable for someone who may be engaged in amateur trading (or just interested in the field). I think this book mates well with a more formal text, or as an enrichment reading after training on technique or after a year or two of trading experience. Conditional recommend

[Domas Pitrėnas · Rating 5 out of 5]

1) be sure that trading is for you
2) examine your motives
3) match the trading method to your personality
4) have an edge (use macro, sentiment, stats, math, history, psychology)
5) derive a method
6) developing a method is hard work
7) skill < hard work
8) effortless trading- good trading
9) money management and risk control (on day trading never more than 1-2 percent of portfolio to risk)
10) have a trading plan
11) discipline
12) understand you are responsible, do not blame others
13) be independent ( no one knows for sure)
14) be confident
15) losing is part of the game
16) trade only when confident and optimistic
17) urge to seek advice - a sign of closing
18) the virtue of patience
19) importance of staying and not taking profits
20) develop low risk idea
21) varying bet size ( poker, blackjack)
22) scaling in and out of trades
23) being right is more important than genius
24) don't worry about looking stupid
25) action is more important than prudence ( more money has been lost doing nothing rather than taking action)
26) catching part of the move is fine
27) maximize gains, not the number of wins
28) learn to be disloyal
29) pull out partial profits
30) hope is a four letter word
31) don't do the comfortable thing
32) you can't win if you have to win
33) think twice if the market let's you go too easily
34) a mind is a terrible thing to close (openmindedness)
35) the market is expensive place for excitement ( trade to win)
36) be calm and detached
37) identify and eliminate stress
38) pay attention to intuition
39) life's mission and love for the endeavor
40) the elements of achievement
41) prices are not random, markets can be beat - Zero sum game
42) keep trading in perspective

size is a huge advatage in FX, because large orders change psychology of the market
benefits of future market: standardized contracts (quantity and quality), excellent liquidity, ease of going short or long, tremendous leverage, low transaction costs, ease of offset (limit up, limit down), guaranteed by exchange.

Maths: we need blunt statistical instruments, price distributions have more variance than normal distribution one would expect, price change distributions have infinite variance, most standard stats tecniques are invalid. Explanation: variance is a mean of the squares of the deviations from another mean, consider simple one dimensional random walk generate by tosses of a fair coin, if we sample this process, we find that waiting time between ties tends to be short, however sometimes heads or tails gets far ahead, wait enormous amount of time (martingale), if you draw enough sample data one can draw as large average as one wants. Accept or reject weights for indicators, division is equal, either full size or nothing. Size of an angle in charts is a false method (no method angle tecniques are), angles depend on choice of units and scales. Advice:
outstanding result- a goal, be skeptical of a system, if need delicate assumptions, try to disprove a system. Human mind sees patterns in random data, we form opinions on certain cases, we are prone to mistakes, biases etc.
Very important is conditional probability: even if trade looks like a piece of candy, if other participants aren't buying- it's for a reason and conditional probability shows the disadvantage.

[Juan Rivera · Rating 4 out of 5]

When I was about 25 years old, at the time of great inflation in Mexico, I was a successful investor in the Mexican stock market, increasing my investment 5 times in 9 months. But as always when things are done unconsciously and without knowing, in 1987, in the stock market crash in October, I lost everything I gained.

It was a great life experience that I don't think I have recovered from yet, in the sense of never seeing investing again as something that I can have fun with and make money on. But I learned a lot about how to handle and behave in a catastrophic situation of the magnitude that I suffered.

Many memories of those times brought me the book "The New Market Wizards: Conversations with America's Top Traders" by Jack D. Schwager.

The author mentions interviews with great and successful traders from the 80s and early 90s.

Memories of those when trading was done by phone, contracts had to be signed at the brokerage houses, checks were collected when necessary. Other times.

I was surprised to see that many of these traders had a good October in that year. But I learned something: to be successful in investments you have to have a system, and follow it. At that time my system was not fundamental or technical analysis but the "tips" that my friends from the stock market gave me. That is why I was not successful. Can I ever be a good trader?

At the end the book brings 42 rules that I think you have to read and reread carefully to make the reading worthwhile.