The Little Book of Market Wizards
Lessons from the Greatest Traders
Little Books. Big Profits Series

What differentiates the highly successful market practitioners?the Market Wizards?from ordinary traders? What traits do they share? What lessons can the average trader learn from those who achieved superior returns for decades while still maintaining strict risk control? Jack Schwager has spent the past 25 years interviewing the market legends in search of the answers?a quest chronicled in four prior Market Wizards volumes totaling nearly 2,000 pages.

In The Little Book of Market Wizards, Jack Schwager seeks to distill what he considers the essential lessons he learned in conducting nearly four dozen interviews with some of the world's best traders. The book delves into the mindset and processes of highly successful traders, providing insights that all traders should find helpful in improving their trading skills and results.

• Each chapter focuses on a specific theme essential to market success
• Describes how all market participants can benefit by incorporating the related traits, behaviors, and philosophies of the Market Wizards in their own trading
• Filled with compelling anecdotes that bring the trading messages to life, and direct quotes from the market greats that resonate with the wisdom born of experience and skill

Stepping clearly outside the narrow confines of most investment books, The Little Book of Market Wizards focuses on the value of understanding one's self within the context of successful investing.

Foreword by Peter L. Brandt xi

Preface xv

Chapter One Failure Is Not Predictive 1

Chapter Two What Is Not Important 9

Chapter Three Trading Your Own Personality 15

Chapter Four The Need for an Edge 23

Chapter Five The Importance of Hard Work 27

Chapter Six Good Trading Should Be Effortless 35

Chapter Seven The Worst of Times, the Best of Times 41

Chapter Eight Risk Management 47

Chapter Nine Discipline 61

Chapter Ten Independence 69

Chapter Eleven Confidence 73

Chapter Twelve Losing Is Part of the Game 77

Chapter Thirteen Patience 83

Chapter Fourteen No Loyalty 93

Chapter Fifteen Size Matters 103

Chapter Sixteen Doing the Uncomfortable Thing 115

Chapter Seventeen Emotions and Trading 125

Chapter Eighteen Dynamic versus Static Trading 135

Chapter Nineteen Market Response 145

Chapter Twenty The Value of Mistakes 157

Chapter Twenty-One Implementation versus Idea 163

Chapter Twenty-Two Off the Hook 167

Chapter Twenty-Three Love of the Endeavor 173

Appendix: Options—Understanding the Basics 177

Notes 185

About the Author 189

JACK D. SCHWAGER is a recognized industry expert in futures and hedge funds and the author of a number of widely acclaimed financial books. He is currently a principal of PortfolioFit (portfoliofitadvisors.com), an advisory firm that specializes in constructing tailor-made futures and FX managed account portfolios for clients, and the co-;portfolio manager for the ADM Investor Services Diversified Strategies Fund, a portfolio of futures and FX managed accounts. Mr. Schwager is also one of the founders of Fund Seeder (Fundseeder.com), a platform designed to find undiscovered trading talent worldwide and connect unknown successful traders with sources of investment capital.

Mr. Schwager is the inventor of the Jack Schwager Commodity Index (JSCI) family, a set of dynamically adjusted commodity indexes that incorporate spread structure, systematic inputs, and volatility-based risk adjustments. The indexes are scheduled to be launched in early 2014 in cooperation with Aquantum AG and UBS.

Mr. Schwager is perhaps best known for his best-selling series of interviews with the greatest hedge fund managers of the last three decades: Market Wizards (1989), The New Market Wizards (1992), Stock Market Wizards (2001), and Hedge Fund Market Wizards (2012). His latest book Market Sense and Nonsense, a compendium of investment misconceptions, was published in November 2012. He is also the author of the three-volume Schwager on Futures series and Getting Started in Technical Analysis. Mr. Schwager is a frequent seminar speaker and has lectured on a range of analytical topics including the characteristics of great traders, investment fallacies, hedge fund portfolios, managed accounts, technical analysis, and trading system evaluation.