Learning to trade with Jack Schwager


Being a trader is one profession where even seasoned veterans have to continue improving their skills. Even if you have reached certain heights in trading, a little advice from renowned market players never hurts. Especially if it comes from someone like Jack Schwager, a man who has won fame as a prophet, trader and tutor, and the author of numerous books and trading manuals.

Who is Jack Schwager?

Today, Schwager’s name is known to literally everyone who is in the financial markets. His round of interviews with the world’s most successful traders (with many of whom, by the way, Jack is a very good friend) is reprinted every year and has been translated into nearly all languages of the world. His “Market Wizards” book series introduces readers to the legendary traders and their methods. As for Schwager himself, his skills in this area are beyond reproach. Today he is the head of the Fortune Group financial company and a portfolio manager at several large funds.

Like many other stars of the American futures market, Schwager entered the market early – right after graduating from college. He didn’t start trading right away, though. Instead, he worked as an analyst for a small financial company in Chicago. After coming to grips with the market, he thought he could predict price behavior with some degree of accuracy. However, his company didn’t really pay attention to the self-proclaimed analyst, so Jack decided to try his luck on his own.

Naturally the first two-thousand-dollar deposit he had borrowed from a University friend was lost all too quickly. Perhaps every trader’s success story has these kinds of sad moments. But Schwager says it was his errors and the pain caused by major losses that stood behind his subsequent trading success. It seems like you have to run into the same trap once or twice before you learn the obvious. Nevertheless, here is some advice from the main “market wizard.” We hope it will help you improve your trading and avoid losses.

Simple but important advice by Jack Schwager

  • It is vital to realize the difference between short-term trades and long-term deals. The latter, according to Schwager, is more important for successful trading: it is these kinds of deals that bring most of the profits.
  • Each long-term deal must be carefully planned and thought-out. You have to make a clear plan for each turn of events. On the other hand, when you are looking at the ticker and your intuition tells you to go ahead, perhaps it is worth testing the idea, even with just a small amount of money.
  • Do not focus too much on finding the best price to open or close a deal. If you see a good trade and realize you cannot enter the position at the limit – use market orders to avoid missing a good trend. The same applies to closing, particularly with losing deals.
  • Do not grow your position close to your first entry into a trade. If the market moves in the right direction and then rebounds, perhaps your original plan wasn’t that good and the movement against you will continue.
  • If you are into long-term trading, try not to miss the last hours on Friday. The best time for analysis is when markets are closing for the weekend: Friday night usually makes the situation as clear as possible. This is usually the time to lock in profits – or cut losses.
  • After the price for a security passes another historical maximum, many traders start shorting the market. Schwager says this behavior is wrong: his experience tells him the price will continue growing for a while before making a turn.
  • Neglect and laziness are a trader’s biggest enemies. Normally we all have many “bad habits” that stand between us and profits. But it is our neglect that often makes us ignore the obvious and repeat the same disastrous mistakes.
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