Market Overview

Jack Schwager Says he is Still Learning from Market Wizards

Last week, Benzinga spoke with Jack Schwager, author of Hedge Fund Market Wizards: How Winning Traders Win.

Schwager says that, despite his many years as an active trader, he still picks up tips from his interviews with the market wizards that he speaks to.

"I think the process of doing these books has made me a better trader," he said. "If I didn't have the benefit of experience, I'd probably be a losing trader. I'm a profitable trader. I'm not a great trader but I'm certainly better than I would be if I hadn't learned what's right and what's wrong. There are lots of general principles. In this book, one trader who users an approach very personal to him and breaks all the rules by selling into rallies and having open risk, one thing that I found interesting about him is that, even when he was wrong on positions he would make money by being very active. He would constantly take money off, every time the market moved in his favor. Those small profits moving in and out of the position could very often more than offset his losses. It reinforced something that I believed in anyway, which is that it shouldn't be viewed as static and there is a lot of value in trading around a position."

When asked how a 20-year-old could get in his next book, Schwager said, "That'll take some time. I'm generally looking for people with records of at least ten years, and return in a consistent way. Anybody can double their returns by taking twice as much exposure. The trading skill is return-to-risk, not just returns. You have to come up with a methodology, and one that does control the downside. There's not one formula. It's not obvious, it's not easy, and all of the traders in the book are strikingly different. Some of the approaches are the opposite of each other, yet they all do well."

Finally, when asked about the best piece of advice he's ever been given, he said, " It's really a collection of a lot of things that were valuable over the course of many interviews in a lot of books. I try to single out the things that I think are most important. Other people may pull out things that are not on my list of 40."

Follow me @BCallwood.

Posted-In: Hedge Funds Trading Ideas General Best of Benzinga

 

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