Amazon Summary

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.

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Part I: Trading

Highlights

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“You just stay focused on what you have to do. Exactly.”

“One of my favorite patterns is the tendency for the markets to move from relative lows to relative highs and vice versa every two to four days. This pattern is a function of human behavior. It takes several days of a market rallying before it looks really good. That’s when everyone wants to buy it, and that’s the time when the professionals, like myself, are selling. Conversely, when the market has been down for a few days, and everyone is bearish, that’s the time I like to be buying.”

“I discovered that you can’t train people how to trade by just imparting knowledge. The key to trading success is emotional discipline. Making money has nothing to do with intelligence. Think of all the bright people that choose careers on Wall Street. If intelligence were the key, there would be a lot more people making money trading.”

“You don’t want to have a position before a move has started. You want to wait until the move is already under way before you get into the market.”

“If instead of saying, “I’m going to do this trade,” you say, “I’m going to watch myself do this trade,” all of a sudden you find that the process is a lot easier.”

“My goal on Wall Street was never to get rich but to stay in business. There’s a big difference. If you’re out of the business, you can never get rich. That’s why you have to be especially cautious when you’re trading a larger position size.”

“Excellence and achievement have a structure that can be copied. By modeling successful people, we can learn from the experience of those who have already succeeded.”

“About every two generations—roughly every forty-seven to sixty years—there’s a deflationary market. For example, in respect to the commodity markets, we’re currently in a deflationary phase that began in 1980. Over the past two hundred years, these deflationary phases have typically lasted between eight and twelve years. Since we’re currently in the twelfth year of commodity price deflation, I think we’re very close to a major bottom in commodity prices.”

“Now it’s no longer sufficient to assume that because you trade with the trend, you’ll make money. Of course, you still need to be with the trend, because it puts the percentages in your favor, but you also have to pay a lot more attention to where you’re getting in and out.”

“If trading (or any other job or endeavor) is a source of anxiety, fear, frustration, depression, or anger, something is wrong—even if you are successful in a conventional sense,”

“I find that major trends are now frequently preceded by a sharp price change in the opposite direction. I still make my judgments as to probable price trends based on overall market action, as I always did. However, with a few exceptions, I now buy on breaks and sell on rallies.”

“The worst thing that can happen to you in the markets is being right and still losing money. That’s the danger in buying on rallies and selling on breaks these days.” —Randy McKay

Book Summary & Highlights: The New Market Wizards: Conversations with America's Top Traders By Jack Schwager