The Market Wizards Book Series By Jack Schwager

In this post, we discuss the Market Wizards book series by Jack Schwager and how you too can become a market wizard. A market wizard according to our definition is a trader or an investor who can consistently beat the market. Did you read our previous post on the 40 books that every investor should read. If you haven’t then you should go through that post and jot down the list of 40 books that can help you tremendously in your career as an investor.

Jack Schwager is most probably the one who had coined the word market wizard with his first book, ” The Market Wizards- Conversations with America’s Top Traders.” If you have been trading for a while you must have read this book. If you haven’t read it till now, then we suggest you should read it. It is a highly inspirational book in which top traders talk about their early struggles as a trader, their ah ha moment and then success and after than complacency and then loss. Success and failure come like the rhythm of a pendulum in life. In the video below Marty Schwartz who is one of the original market wizards mentioned in the best selling book by Jack Schwartz speaks about himself and his trading methods and style.

If you want to become a market wizard, you will have to take trading as a game and a passion. In the above book, you can feel the enthusiasm these market wizards show about trading by telling how eagerly they start their day with the plan to beat the markets. In the above book, you will meet Richard Dennis, a trading legend who started with around $450 and then turned it into a huge $200 million fortune. You also meet Bruce who once was a NYC taxi cab driver then started trading with borrowed money on a credit card and went on to make billions. Reading this book is going to inspire you and you will certainly feel that you too can become a market wizard. You just need enthusiasm, determination and effort.

The above book was followed by another great book by Jack Schwager, ” The New Market Wizards Conversions with America’s Top Traders.” In this follow up book, Jack talks about a new generation of market wizards that followed the first older generation. In the new generation you meet Stan Druckenmiller who alongwith George Soros beat the Bank of England and made a cool $1 billion in 1 day. Ever thought of beating a powerful central bank? Well these guys did it and proved that central banks are not that powerful when it comes to modern day financial markets. Then you also meet Linda Bradford Raschke another new market wizard.

In his new book, Jack Schwager sums up his lessons from the first four books. He talks about traders who failed miserly spectacularly a number of times before they achieved success. Today we live in the age of hedge funds. Hedge funds rule the markets. Hedge funds are privately owned funds where rich people invest. Hedge fund managers promise high returns to these rich people. So how do they achieve high returns? By taking high risks most of the time. In the process of taking high risk, some of these hedge funds face death. The famous death case is that of Long Term Capital Management that suddenly faced a death spiral. It was liquidated by the FED and the Treasury Department before it could bring down other firms and the financial system.

The first Market Wizard book was written by Jack Schwager in the late 1980s. The next book was written in late 1990s. Markets have changed a lot. In his new book, “Hedge Fund Market Wizards How Winning Traders Win,” he talks about these hedge fund traders. Most of these hedge fund traders are quants. These quants use sophisticated mathematical models in their trading strategies. We as retail traders are pitted against these hedge fund traders. We need to know how these traders trade the markets. This understanding can help us improve our trading systems.

Hedge funds have been reviled in recent times as the cause of so much market volatility. Hedge funds have also been blamed for the bringing of the stock market crash of 2008. Most of these accusations are not based on facts. Hedge funds are infact doing a useful function by looking for the inefficiencies in the market and then exploiting it. When the market inefficiency gets exploited, it vanished as soon as it become known. So this function of looking for market inefficiencies is infact making the markets more efficient.

Now if you haven’t read the above book, you should read them. These books are going to introduce to a multitude of traders who talk about their trading failures and success in their interviews with Jack Schwager. These interviews will help you become a better trader and a better investor. Markets are changing and they will keep on changing. But one thing will never change. Guess what is that? The principles on which buying and selling takes place. You need to understand those principles because it is the principles that will help you develop a strong trading system. Just as Jack Schwager says in the above video, you need to develop your own trading approach. Just keep this advice given by him in your mind. Many great traders failed miserably many times in the beginning before they became successful. The key to success is risk management. Focus on risk management. This is the key to success!!

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