The New Market Wizards

Every day, movement in the financial markets creates winners and losers. Yet some traders are able to consistently outperform the markets—not only winning most of the time, but winning big. These traders use different methods, but they all have an edge the average trader lacks. How do they do it, and what can they teach the typical investor? Schwager explores these questions in conversations with seventeen “market wizards.”

Organized by market, the discussions cover currencies, futures, fund managers and timers, multiple-market players, and options. A section on the psychology of trading includes talks with a behavioral trainer and a hypnotist, both traders who also work with traders. Finally, the lessons of the master traders are summarized in a list of forty-two observations on success in trading.

Some of the major conclusions: Traders must develop a method, then follow it religiously. Many types of methods succeed, but the one chosen must be suited to the individual’s personality. Innate trading talent is useful, but anyone can develop skills through practice—and successful traders all work very hard. Money management and risk control are essential to long-term success, but cannot substitute for consistent trading strategy. Discipline and patience are required; emotional involvement in the process leads to poor decisions.

THE NEW MARKET WIZARDS is aimed primarily at serious investors with knowledge of the markets, but novices will profit from brief essays on futures and options, explanatory notes, and a glossary. Schwager is a fine interviewer, equally capable of following up on highly technical matters or on interesting personal anecdotes. He includes many “most memorable trades” stories (good and bad), and tries to paint a complete picture of the interviewees as people, not just as “super traders.” So although there is much technical material, the discussions are far from dry. The result should be rewarding reading for anyone with an interest in the financial markets.