ZF Capital » Jack Schwager

Thought of the Day (June 6, 2010)

ElfLord — Sat, 05 Jun 2010 21:36:49 +0000

It took me over a decade to figure out my natural direction. I’d suggest that you take the time to seriously ponder whether the path you are on is the one you want to be on. Perhaps your journey will then be shortened.

– Jack Schwager, The New Market Wizards

Thought of the Day (May 27, 2010)

ElfLord — Wed, 26 May 2010 21:40:21 +0000

Hope is a dirty word for a trader, not only in regards to procrastinating in a losing position, hoping the market will come back, but also in terms of hoping for a reaction that will allow for a better entry in a missed trade. If such trades are good, the hoped-for reaction will not materialize until it is too late. Often the only way to enter such trades is to do so as soon as a reasonable stop-loss point can be identified.

– Jack Schwager, The New Market Wizards

Thought of the Day (May 10, 2010)

ElfLord — Sun, 09 May 2010 21:15:31 +0000

It is critical to choose a method that is consistent with your own personality and comfort level. If you can’t stand to give back significant profits, then a long-term trend-following approach– even a very good one– will be a disaster, because you will never be able to follow it. If you don’t want to watch the quote screen all day (or can’t), don’t try a day-trading method. If you can’t stand the emotional strain of making trading decisions, then try to develop a mechanical system for trading the markets. The approach you use must be right for you; it must feel comfortable.

– Jack Schwager, The New Market Wizards

Thought of the Day (April 4, 2010)

ElfLord — Sat, 03 Apr 2010 21:17:39 +0000

Participants in the market may well be gambling. If you don’t have a method (i.e., and edge), then trading is every bit as much a gamble as betting in the casinos. But with a method, trading — or for that matter, even blackjack — becomes a business rather than gambling.

Fortunately for traders, whereas the casinos can bar players because they become too proficient, the market has no way of eliminating the skillful traders (other than behaving in a manner that seems to confound the greatest number of people the greatest amount of time). Therefore, if you can devise a method to beat the market, no exchange can come to you and say, “We’ve noticed that you’re making too much money. You can’t trade here anymore.”

Once you have a method, you still need money management to prevent an adverse streak from taking you out of the game. It is critical to keep in mind that even if you have the edge, you can still lose all your money. Therefore, the bet or trade size must be small enough to keep the probability of such an event very low.

– Jack Schwager, The New Market Wizards

Thought of the Day (March 12, 2010)

ElfLord — Thu, 11 Mar 2010 21:42:38 +0000

Is trading success dependent on innate skills? Or is hard work sufficient? There is no question in my mind that many of the supertraders have a special talent for trading. Marathon running provides an appropriate analogy. Virtually anyone can run a marathon, given sufficient commitment and hard work. Yet, regardless of the effort and desire, only a small fraction of the population will ever be able to run a 2:12 marathon.

Similarly, any one can learn to play a musical instrument. But again, regardless of work and dedication, only a handful of individuals possess the natural talent to become concert soloists. The general rule is that exceptional performance requires both natural talent and hard work to realize its potential. If the innate skill is lacking, hard work may provide proficiency, but not excellence.

In my opinion, the same principles apply to trading. Virtually anyone can become a net profitable trader, but only a few have the inborn talent to become supertraders. For this reason, it may be possible to teach trading success, but only up to a point. Be realistic in your goals.

– Jack Schwager, The New Market Wizards

Thought of the Day (February 26, 2010)

ElfLord — Thu, 25 Feb 2010 21:08:29 +0000

Whether you win or lose, you are responsible for your own results. Even if you lost on your broker’s tip, an advisory service recommendation, or a bad signal from the system you bought, you are responsible because you made the decision to listen and act. I have never met a successful trader who blamed others for his losses.

– Jack Schwager, The New Market Wizards

Thought of the Day (January 26, 2010)

ElfLord — Mon, 25 Jan 2010 22:03:05 +0000

Shortcuts rarely lead to trading success. Developing your own approach requires research, observation, and thought. Expect the process to take lots of time and hard work. Expect many dead ends and multiple failures before you find a successful trading approach that is right for you. Remember that you are playing against tens of thousands of professionals. Why should you be any better? If it were that easy, there would be a lot more millionaire traders.

– Jack Schwager, The New Market Wizards

Thought of the Day (January 6, 2010)

ElfLord — Tue, 05 Jan 2010 21:52:38 +0000

I think one reason why so many people try to pick tops and bottoms is that they want to prove to the world how smart they are. Think about winning rather than being a hero. Forget trying to judge trading success by how close you can come to picking major tops and bottoms, but rather by how well you can pick individual trades with merit based on favorable risk/return situations and a good percentage of winners. Go for consistency on a trade-to-trade basis, not perfect trades.

– Jack Schwager, The New Market Wizards

Thought of the Day (December 27, 2009)

ElfLord — Sat, 26 Dec 2009 21:04:39 +0000

You can’t win without an edge, even with the world’s greatest discipline and money management skills. If you could, then it would be possible to win at roulette (over the long run) using perfect discipline and risk control. Of course, that is and impossible task because of the laws of probability. If you don’t have an edge, all that money management and discipline will do for you is guarantee that you will gradually bleed to death. Incidentally, if you don’t know what your edge is, you don’t have one.

– Jack Schwager, The New Market Wizards

Thought of the Day (September 22, 2009)

ElfLord — Mon, 21 Sep 2009 22:50:16 +0000

Even great traders sometimes have completely wrongheaded ideas when they start. They ultimately succeed, however, because they have the flexibility to change their approach. Benjamin Franklin said, “One of the greatest tragedies of life is the murder of a beautiful theory by a gang of brutal facts.” Great traders are able to face such “tragedies” and choose reality over their preconceptions.

– Jack Schwager, Stock Market Wizards