Summary of Market Wizards

I enjoyed reading Jack D. Schwager's MARKET WIZARDS (interviews with top traders), because interviews in this book are straight forward detailed and very informative. I selected this book, because it is very interesting to me that how did these top notch traders reached at this level of trading. So I can evaluate the efforts, struggles and learn to implement on myself, to improve my trading skills. In this book Mr.Schwager has interviewed those traders who have struggled during the last 3 decades of the 20th century. All the traders are from the United States of America. And they talk about:

* Futures & currencies.

* Stocks.

* Trading floor.

* The psychology of trading.

* The interbank currencies market.

Trading provides great frontiers of opportunities in our economy. It is on of the very few ways in which an individual can short with a relatively small bankroll and actually become a multimillionaire. Of course, only a handful of individual (such as those interviewed in this book) succeed in turning this feat; but at least the opportunity exists.

The author interviewed 17successfull traders and experts. And they have a common approach about the trading. They all agree that if they know all these things at the starting time then they were successful traders in the beginning of there trading careers. But all of them learned trading with time, experience and hardworking. Now we can see them as successful traders.

As author admits about lack of experience in trading business in his earlier times of his career, as he has expressed in the book " Although I have been a net profitable trader over the years ( substantially multiplying a small initial stake on two separate occasion), I had a definite sense of failure about my trading. Given the extent of my knowledge and experience about markets and trading. As well as the fact that on numerous occasions I had correctly anticipated major price moves. I felt that my winning were small potatoes compared to what I should have made."

Each of the traders interviewed in this book has achieved incredible success. What sets these traders apart? Mostly people think that winning in the markets has something to do with finding the secret formulas. The truth is that any common denominator among the traders had more to do with attitude than approach. Some of the traders used fundamental analysis exclusively; some other traders employ only technical analysis and some other traders combine the two techniques. some traders operate on a time horizon measured in hours or even minutes, wile others typ9ically implement positions that they intend to hold for months or even years. We all know that trading methodologies vary widely. The book taught me important commonalities in trading, attitude and principles.

FUTURES AND CURRENCIES

The first person in the book was interviewed MICHAEL MARCUS. He started his career as a commodity research analyst for a major brokerage house. The author asked him a major question that,

"Did you know what were you doing wrong then?"

At the beginning of his trading life. He answered,

"Good question. Basically, I had no real grasp of trading principles; I was doing everything wrong. Then in 1971 while at my broker's office, I met one of the people to whom I attribute my success."

So that means that everyone who starts the trading (even who are successful) they need some help from the experienced people and very wide research on the market analysis.

BRUCE KOVNER is a successful name in the world of trading futures and currencies and market. In his interview, he talks about SUBJRCT INTREST RATE THEORY and he said, "I fell love with the yield curve." The yield curve is the relationship between the yield on government securities and their time to maturity. For example, if each successively long-term maturity provided a higher yield than a short-term maturity for example five-year T-notes at a higher yield than one year T-bills--the yield curve would reflect a continually rising slope on a graph.

STOCK TRADING

Mr.Schwager interviewed a successful stock trader MICHAEL STEINHARDT. His superior performance has been achieved by using a myriad of approaches. He is both a long-term investor and a short-term trader. He has the ability to shift major chunks of the firm's capital into other investment vehicles, such as treasury securities. If Mr. Steinhardt felt that it will be the best investment choice.

Author asked Mr.Steinardt.

"Do you have any trading rules that you could define?"

He replied,

"No. I don't have any rules about stops or objectives. I simply don't think in these terms."

What do we understand from this conversation? We learn that there are no set rules for the trading, we learn with experience and concentration on the history of the specific stock. And still we cannot decide that how a specific stock will behave. Because, there are no set rules for the market change.

THE PSYCHOLOGY OF TRADING

The author interviewed Dr.Van K. Tharp Ph.D. Who is a research psychologist. His strongest interest is in the psychology of winning especially as winning applies to the market. He had written five books on successful investing which provides the core his investment course.

Dr.Tharp said that, "I think that lack of skill is in itself, a psychological implement to trading, people do not test a systematic approach or do not test their approach because of poor judgment, lack of goals internal conflict, etc. So, perhaps the area they need help in overcoming