The Trader’s Summer Reading Series: Episode 4— Market Wizards: Interviews with Top Traders
A book packed with a combined hundred+ of years of expert trading advice.
Option Screener and The Wheel Screener are trader-friendly option screeners that analyze, classify, and categorize all options available on the market on a given day. The team is always more than happy to share their technical insights, market opinions, and methodologies here on Medium. This article continues our summer reading series, where founder Chris will be reading trading and market books all throughout the summer. We hope you’ll join us, and we hope you enjoy the article!
This Week’s Book: Market Wizards: Interviews with Top Traders
Market Wizards: Interviews with Top Traders was published by Jack Schwager in 1989, with a newer version and preface published in 2012. As the title states, it is quite literally interviews with top traders, directly conducted by Schwager with the traders themselves.
Book Takeaways
Where do I even begin? This book is absolutely packed with insights from top traders of all sorts, styles, and instruments: macroeconomic-only traders, technical-only traders, long-term traders, scalp (short-term) traders, swing traders, futures-only traders, and stock-only traders. In a true Q&A interview style, the book goes through interviews with more than a dozen top traders
Marty Schwarz
The first trader that stood out to me personally was Marty Schwarz. He was a trader that had a decade of large losses before becoming one of the best traders in the world — sporting a maximum of 3% drawdown per month — truly astounding. As Marty himself states “I’m proud of my futures trading, because I took $40,000 and ran it up to about $20 million with never more than a 3 percent drawdown.” If you know anything about trading, from beginner to expert, or just have a long-term portfolio, you realize these numbers are absolutely mind-boggling.
Schwarz also mentally resets his profits to 0, regardless of what happened in the previous year or years of trading: “That’s my philosophy: January 1, I’m poor.” Remarkable discipline.
As one could expect, Schwarz is an extremely hard worker. Schwager states that even when he came to Schwarz’s office, already after the market closed, Schwarz was poring over charts and models for the day of trading.
Mark Weinstein
Mark Weinstein also sports a nearly unbelievable track record: “Out of the thousands of trades I made during that time, I had 17 losers, but nine of them were because my quote machine was down, and when that happens, I just get out of my position.” and, very simply put: “I haven’t had any losing weeks during that time, but I have had some losing days.”
Like Schwarz, Weinstein is also a hard worker, building extensive technical models that provide him with his edge. He only takes trades that pass multiple confirmation stages. If even one stage, indicator, or part of the setup is off, Weinstein won’t take the trade. This is likely how he achieves such astounding win rates.
Richard Dennis
A key star in our second book in the Trader’s Summer Reading Series, The Complete TurtleTrader, Richard Dennis is featured in Market Wizards and, at the time, was considered one of the most famous and legendary commodity traders.
Dennis was quite prophetical in the trend-following portion of the interview: “There will come a day when easily discovered and lightly conceived trend-following systems no longer work. It is going to be harder to develop good systems.”
If anyone reading this has tried to develop a profitable trading algorithm, then you know this to be only all too painfully true!
For recommended reading, Dennis recommends — and now we’re getting super meta — people interested in getting into trading read Reminiscences of a Stock Operator. It turns out this was the first book we reviewed in our Summer Reading series:
Quotes
There are a huge number of quotes that can be taken from this book. Here are some that jumped out:
- “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money” — Ed Seykota, pg. 172
- “In my judgment, all great traders are seekers of truth.” — Michael Steinhardt, pg. 218
- “[A story of how a guy is trying to trap turkeys, but ultimately lets them all get away]…This is the attitude of the typical investor who can’t bring himself to sell at a loss. He keeps expecting the stock to recover. The moral is: To reduce your stock market risk, stop counting turkeys.” — William O’Neil, pg. 229
- “The market is nearly always wrong. I can assure you of that.” — James B. Rogers, Jr., pg. 314
Top Trader Commonalities
If summed up into a few points, nearly all the traders had the following points on what makes a top trader:
- extremely hard work in building your edge is a must
- cut losers quickly
- let profits ride
- reduce size/exposure after a large loss and/or losing streak
- discipline to follow your system and rules
- patience in taking trades and managing them
Our Rating
Now, the moment you’ve all been waiting for, our Official Wheel Screener Book Rating™! We have to rate Market Wizards: Interviews with Top Traders a 5/5 star rating:
⭐⭐️️️️️️️️⭐️⭐️⭐️
If you want to get into the heads of the world's most performant and best traders, this is it!
Thanks & Stay Tuned!
Tune in to the next episode to find out what book we’ll review next!
Until next time,
-Chris & The Wheel Screener Team
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