Transcript for:
Insights from Jack Schwager's Interview

do you realize yourself at this point how much of an impact you've had on the entire industry both from the professional to the retail they do actually because actually through doing there are now been five Market wizard interview books and I found some of the best Traders I've ever interviewed were in that book maybe the single best Trader I ever interviewed was in that book one Trader turned literally 5,000 into well 50 million when I spoke to him but in the subsequent years and when I updated the book you know he turned it into 250 what makes you successful where so many other people aren't and the answers to that are price reflects everything that happens in the market there's a reason to believe that the price price and patterns in price could be meaningful but the key is lots of Traders I've interviewed were pure fundamental analysts and did extremely well for some people that's the way to go but for me what I discovered was a quote that I believe you've said but also has been reflected from one of your interviewees or some one of the traders that you knew personally was knowing where to get out before knowing you know where your profit is or before getting it why is that so important yeah so that's my out of all the books I've written all the advice I can get people if I somebody said Jack you know you got to give advice to trading but there's only one catch here you could only use 10 words and I know what the 10 words would be and it's [Music] the number one podcast in the trading space the fastest growing and that's thanks to every single one of you hey guys before we get into this incredible episode of words of wisdom I want to let you know how you can get a free trading plan very simple go in the link below you're going to see two links one for telegram there you'll get free mindset hacks a free technical course free updates and polls on the podcast and then the other link is our new email newsletter click that link sign up you'll get a free trading plan PDF sent directly to you and get incredible value all week long let's get into this episode welcome everyone back to the words of rdom podcast the number one podcast in the trading space thanks to all of you and our incredible guests talking of which we have an absolutely incredible guest with us today um I'm a bit nervous and I don't get nervous it's been a very long time and you'll all understand why this guest is renowned and famous across our industry I've heard about his work so many times in the podcast from other guests as well as when I was learning uh in my trading Journey too the his first book was a complete guide to Futures Trading and then of course the infamous Market Wizard series and I'm so happy to announce that we have with us today Jack schwager thank you for being here Jack thank you R glad to be here we're in a sunny Florida right sort of a four days straight rain yeah um well Jack I'm sure many people know your journey but just to start off the podcast just in case anyone doesn't could we just get a little brief introduction to sort of your journey and your career and sort of how you got to where you are today sure I basically fell into trading um unlike a lot of the people I interview who had an early passion for trading which is like actually like one of the Ts for uh great Traders they a lot of them tend to begin early that was not my case and also I'm not a great Trader so that makes sense um but in my case I didn't have any plans other than to do something analytical I I came out of graduate school for an economics degree was looking for a job and um I thought I'd get a job immediately I came out of an Ivy League school I thought you know I'd have a job the first day I looked I went to employment agencies went through that routine after a couple of weeks I was getting a little discouraged but I got finally got I did went to the times not the winter times but put an ad in the times and I don't if they still have it but those days you could do um you know looking for a job type of ad and I just did a a cheap like $15 ad two lines basically saying ma economics Brown uh you know minor math and looking for some analytical job B that was it and I got 15 calls I won't go into the into all the ones that 14 of them were complete garbage with like sales type of positions they try to get you pyramid schemes that type of thing one was a legitimate call and I went for the interview and that was for a commodity Analyst job and um I didn't know anything about Commodities and back e you know even today I don't you know there are some future scores but back then forget I mean that was not Futures were not anywhere had nothing to do with Academia even market and markets had very little do with Academia um so I I knew nothing and remember in the interview I was asked what do you know know what do you know about uh you know Commodities and I said well not much uh and the answer I gave was so stupid I still remember to this day I said something like gold you know and it's embarrassing how how naive I was but um that the director of research who was interviewing me um was writing a column for bar uh I was barens and he was doing a weekly column uh and he had he narrowed down the list for some reason I did something right in the interview but he narrated down to four people and he had each of us write an article on some Market which he then used as base research for his for his column so I got a sign copper and I then went to I lived in Brooklyn New York and there a this huge Library called grami Plaza I literally spent a week in that Library um just reading everything I could on copper you know from from some articles I could find uh yearbooks a uh Weekly Magazine it was medals bulletin from mcgo Hill there was a daily medal and I sort of became sort of tried to become an expert in comp in one week but and I wrote the article and it was later told that uh he had passed around the Articles and everybody to people at the office and everybody say pick this guy so actually the article I wrote got me the job and that that was a position as a re as an just a research analyst and that that's how I got involved in the business uh I really had no intention into going into markets it was just by by writing and by happen stance it's incredible so even even then your writing skills were it was my writing skills that got me got me into this whole business was your writing skills something that you developed over time or was it something you kind of had a natural ability for I discovered it I really didn't know I mean there were instances like uh I remember in college uh you know let's say history a couple happened a couple of times with like was a history and with some paper we had to write and I happened to miss the day of class but the following day I was told by by my classmates that the the the professor picked out my paper for its right you know for it for its good as as an example of a good written piece and read it you know so um anyway so there were instances but I didn't really know I just kind of discovered it w and as a research analyst what goes into that role what is it that you have to do yeah would well one that was one of the neat things is there was no definition uh to to what you should do it you you know I was assigned four markets at the time sugar cotton uh cattle and Hogs I think were the first four and um just have to sort sort of start doing research and I did start doing basic economic research and things and and somehow I I wasn't I shouldn't mention right here that in those early years I I not only knew nothing of technical analysis is but I was completely disdainful of it because just you come from an academic background you know the charts and you know all this stuff it's you kind of tend to automatically you come in well at least I came in but I think it's normal you come in biased against that type of thing you you think more in economic term you know economic fundamentals and so forth u i of course I changed my mind over the years but uh initially I didn't so so I was just doing that type of research and uh writing weekly uh weekly uh articles on each of those markets there was a in those days the brokage firms had the Futures departments had the uh they put out their own weekly publication on the markets and that was my job and in terms of research the majority of the audience have been trading probably within the last decade a lot different markets of course but in terms of research their ability to research or understanding when they visualize it and same with me would have been that oh go on Google you know go look at articles but it was a different time yeah so what did your level of rearch Google then we had no computers we had no we had no screens you know back I start in the early 70s you know so you know you had uh just and this will be completely alien uh to to most of your audience um but well we had like those were the days you had these huge like boards in the front of the room that would click as the pric has changed and you would like look you know look at the board and again I wasn't at the technical analysis but there were no even if I were there were no charts there was a weekly chart service that I discovered you know uh eventually but uh there was no you didn't have any screens you didn't have any even you didn't have a computer so if you get anything else that comes with it right and so what what was your process of research so you know it depends on the market but essentially uh let's take a market like Hogs right so you there's all sort of USDA statistics that come out and uh you know how many hogs are born and and uh what the relation you know when they intend to come to Market and you know what you had historical prices given the amount of hogs that were around and things of that nature and then you have Imports exports uh which weren't a major factor then uh but you have whatever anything has affects Supply demand and you would then do like stuff like regression analysis to sort of correlate the supply you know the supply to the um to the amount uh to to the price and uh also taking into account uh things like a uh steadily Rising demand maybe due to population things anything had to affect the the fundal fundamental Supply demand so that was the type of analysis I was doing so you'd basically get a general idea of well this Market should be you know hog should should be around 55 to 60 cents a pound or whatever and uh if they're trading at the 50 then you have a bullish bias it was that type of analysis okay and then you would be providing that to firms yeah yeah and I'd be writing that up in the weekly you know weekly letter and then based on sort of The Next Step from there the Traders or firms would be looking at and observing that information and then maybe comparing it to what they're thinking or seeing or you know their biases as well uh when you say the Traders you mean uh So based off your research yeah the next step would be that I imagine a firm would then take that on oh no they they would just distribute these were mailed out to clients okay so it wasn't yeah and the Brokers would get them too but they were mailed out to clients yeah okay I understand and then in terms of the complete guide to Futures as you said to me beforehand a lot of people don't know that was your first book right uh what would where did the inspiration for writing a book come from in the first place so I sounds conceded when I say this but I didn't think there was a good book on on Futures market analysis and at this point I'd been in the business of about oh 12 years I think it was and I decided Well and this was not no intention of sending a lot of copies or anything like selling a lot of copies or becoming a big name author anything that was not my mind I just wanted to write the best textbook on analysis of Futures markets that was that was my goal I didn't think there was a really good one out there and I wanted to write it so I took a sabatical I spent a year this again is pre you know before comp well computers P the PC was there in its infancy but I wasn't yet using it and you know it wasn't you didn't have uh it was just the beginning days of of PCS so it was done by hand uh and um you know so even like stuff like if I was doing regression analysis um and stuff of that nature I would actually doing by hand calculator not by Excel spreadsheets um the graphs I had to hand do and you know the publisher would eventually make him look better yeah but everything was done by hand and it was like a nearly 800 page book um um and mostly my own analysis and development I didn't use I used for for the regression ended up being that I was going to write one one chapter on regression ended up being a whole section like six chapters because I real realized hey I couldn't talk about regression till I explained St basic statistics and then then I couldn't stop at simple regression I had to go to multiple regression then I had to go to you know on and on so it ended up being a whole section I knew when I did it that would decrease sales of the book you know I kind of not semi fousy but not totally believe that the the sales of a book are inversely correlated to the number of formulas so it was against my interest but again I wasn't trying to do it I was just trying to write a text reference and so that was the that was the inspiration and that was the book and that actually was a catalyst interestingly uh for Market Wizards uh you know if I hadn't written if I hadn't done that book there probably would never have been a market wizard that's usually how it goes you know that's usually how it goes and you you took action in the first place you take great risk as well putting things out there and then it leads to something as long as you keep taking that action to something amazing like this and before we start going into really into more depth of Market Wizards and the whole series and and the impact that's what I want to talk about first is the impact do you realize yourself at this point how much of an impact you've had on the entire industry both from the professional to the retail let's take a break for a minute there guys cuz I want to tell you about the best prop in the entire industry Alpha Capital let's keep it nice and simple you want to get paid out you want to have institutional experience behind the firm you want to have their own broker so that you can trade on the best platform that all Traders love to use and on top of which they have their own technology as well so you you know they're here for the long term Alpha Capital has no commissions as well as part of their trading conditions which is absolutely incredible and not only that they're London's finest now if you want to join them 20% off using the code Riz and the link is in the description below now let's get back to the episode I I do actually because actually through doing there are now been five Market wizard interview books uh and um in as you know the first the first two were done 89 2 but once I got to the you know later ones I was then hitting people that had actually gotten into the business because they read the original Market Wizards and it became very common particularly in the later books that that everybody I interviewed already read you know my read one of more my my earlier books uh but the fact that it influenced a lot of people I interviewed to actually get into the business and that that came up a number of times uh so I I did realize that there was that impact and I do get yeah I do get that communication with people you know that change their life and that type of thing how does that make you feel it's good you know I try to be realistic about it I I I'm lucky I only get the good side I don't get people saying I read your book and I lost a fortune you know I just really the communication I get is always the positive side but I I know I'm getting a biased uh sampling uh but it is good it is a good feeling to know know that at least for many people I've changed their lives in a very positive way and uh so I've had an impact and it's been a positive impact so that's always good definitely and a massively positive impact I would say as well because as you said like even with myself I've heard not only just from my own Journey but also from so many people that I've interviewed how much Market Wizards helped them it's always been like a reference point and if anything it's almost like a go-to book like whenever someone starts trading when the usual question is is there any books or resources Market Wizards is normally right up there in the top of the list I know there's a number of hedge fund managers that kind of have anybody to hire read the books you know so definitely I've been told that before the book actually went out did you have a feeling you were onto something no I didn't uh I always try to do I always try to do something that I feel is as good as I can get it you know I if I'm going to do something I want it to be you want it to be as good as I can make it so I felt it was good um but I didn't know it was going to have that type of that impact and grow I did I did have the the goal of it being that uh because I do remember when I wrote the original Market Wizards there was a book which many of your listeners may be familiar with called reminiscence of a stock operator uh which was written back in the 1920s uh about the protagonist is Jesse livmore uh some people back in my day some people thought that the the author was a pseudonym for Livermore but it wasn't that he was a journalist and he wrote books and he wrote a couple of books on markets and this was one of them but he did such a good job of of capturing the mind of a Trader and everything that the book continued to kind of be relevant years later I read it 65 years after its publication or about that much and I was like amazed that gee hey I mean this is written by a guy from the days of bucket shops and stuff like that and the stuff is still still you know it really Rings true so I did have not that I was writing a similar book but I did have the idea that I wanted to when I was doing these interviews I wanted to have a goal that what I captured is something that would still be relevant 65 years from now you know that type of thing I I wasn't thinking of I wasn't interested in hey what's the market going to do for the next year or two or whatever I was interested in what are the truths about markets and trading that were true 100 years ago will be true 100 years from now so I did have that goal um so the fact that it seems the book now I don't know was it 35 years or yeah whatever it is um now I think it's gone this long it might well end up being the same type of thing so uh I didn't expect it but in my mind it was a goal it's so interesting what you say there in terms of you're trying to create something that has that lasting impact so what was it that you focused on then in terms of your questioning to LA to last that long to to stand this the test of time the question the questions I'm always trying to dig at is what makes you successful where so many other people aren't what is it what is it you know that that explains that and and the answers to that are are things that have long-term truth which which stay true even though markets change Market change changes changed tremendously but yet some of the a lot of the same principles stay true and my explanation for that is simply that what doesn't change is human nature you know we may go from electron we may go from from open outcry pits to to electronic trading we may go from from no you know no computers to computers to supercomputers you know we may we may go from from the quants being like a tiny fraction of traders to being having now multiple firms with hundreds of quants working for them so the markets changed tremendously yet some of the basic aspects of what it takes to be successful do not change at all it's interesting you mentioned that part in terms of the emotions because as we continue year on Year we're starting to see a lot more capability when it comes to algorithms and AI do you feel like that is something that could shift that perspective or not um well the it it's been around we've had this quantification of uh of trading for quite a while now and it definitely changes things for sure but it doesn't change to the point where the individual Trader can no longer find a successful route so I was surprised when I did the most recent book unknown Market Wizards um I was kind of not expecting to find what I and and as the name suggests I should explain what I decided to do there was to really go just after solo Traders people nobody knows and um and just find but who've been very successful so as getting people who who had very good long-term track records but just traded on their own nobody nobody knew them or anything like that uh and I wasn't expecting to get like you know super track records I just expecting to get people who did a lot better than the market and stuff um and I found some of the best Traders I've ever interviewed were in that book maybe the single best trador I ever individ was in that book and um and that was surprising to me because I wasn't I I said with all this with all this quantification and all all these hedge funds you would think that it's now the single guide can't get spectacular results but no I mean it still happens and and I think when the results are such that you could say well somebody's lucky yeah but not lucky for for 18 years and you know uh to name to give some examples I mean one of the Traders like what I should prefacing what they tend to do is also take M profits out and reinvest they're not letting their account grow compound or would be impossible but like one of the Traders a couple of Traders had several 100% average annual return over 12 15 18 years right you know um and those hyper results are just completely astounding now yeah they didn't compound it but still they're making those results you know that's that's incredible uh one Trader turned literally and turned 5,000 into well 50 million when I spoke to him but in the subsequent years and I updated the book uh a year ago um you know he turned it into 250 so uh just totally astounding that doesn't happen by luck what was your process of finding those Traders because as you said they're unknown yeah so several several ways one well the tradar just mentioned the one who turned to 5,000 ultimately to quarter of a billion dollars um I get an email and this Trader says at at the time you you may not you're not going to believe my story but I you know I started off a $5,000 account and and I turned into 50 million um and I wrote at that time I wasn't intending to doing them I just didn't have a plan to doing another a book and I said wrote them back I said well that's pretty amazing I said I'm not planning to do another book but um I'll keep your email on file and if I do a plan to it and you can prove it I think you have that's a great story so about a year later I decided to do another book and I got in touch with him and he sent me all his monthly statements you know from from 2005 or 2004 think I went something back in the mid 2000s all the way up you know you know 20 years worth almost um uh not quite but close to 20 yeah and uh yeah I mean the numbers were real right so um that's I so I I I didn't find him he found me yeah um and that becomes be by becoming recognized on a broader scale in the industry sort of I get the have advantage that people could find me like that right um some Traders I I just I just knew uh I knew uh the one person who really wasn't a um wasn't completely unknown because he had a big uh Twitter following was Peter Brandt yeah and Peter's a friend and I know him and all that and I always thought to myself and he was kind of a catalyst for doing the book actually I always thought he has so much wisdom about the markets and I always thought well I gotta I got to interview and and Peter's my age so he's you know getting on in years right um and I wanted to make sure I capture what he had to say for posterity you know while I could so um and so but Peter is still a solo Trader doesn't manage my other people's money is not known within the broader industry or it wasn't certainly before the book but he had a lot Twitter following so he was known through that um anyway so uh that's an example of somebody I knew and then I was involved with a firm fun seeder startup and which is had a trading platform for analytical yeah doing let me back it up had a trading platform that provided analytics for Traders all sorts of charts and analytics on their trading it was free the idea was that was a way to find these unknown Traders and uh then there was a another armor another company from Cedar Investments that would then use that data to find traders to to put together in product and uh so through that some of the Traders came through that and then I did a a a tweet some tweets on my own saying hey I'm looking to do another book if you are or you know somebody who's truly an exceptional Trader you know long track record is superb you know return to risk uh let me know and I got a number of suggestions that way so between those Avenues I I had a book's worth of people and how did that compare to your your first book I know that a personal connection of course we have we have no internet and we have nothing right um so the first book I knew some of the Traders uh the job I had talked about we talked about earlier that I landed that technical Analyst job well the person vacating that job uh was Michael Marcus who ended up being now he was leaving to in quotes become a traitor um and so he was cleaning out his desk day I came in from my first day of work and we talked a little bit he was still in New York for a few years and we used to get the ever for lunch and stuff like that so I knew him on a personal basis and uh Michael went on to uh commodi Corp where he he you know famous L turned well maybe famously through my book you know turned a $30,000 account into 80 million but Michael then um he hired Bruce Governor um and so for Michael I knew Bruce and I think a couple of other Trad you know from some of the Traders I got other Traders and and so that's how I got the that's how I got and then some of the Traders I uh I might have were were known at a at a more widely uh someone like Jim Rogers who was originally George Soros responder and was you know he kind of retired from that was just managing his own money and uh was teaching a course in Columbia because he wanted to teach it and sort of I I sent them my book The Complete Guide to the Futures markets and say look I'm not a journalist you I'm just I wanted to do seice book and trade and said you know you know got empted so I that's how I got the people in the first book do you feel as you just mentioned there I think that's quite interesting is that people may have been a bit more open to your interview versus as you say like a journalist or something like that because maybe there wasn't a particular angle that was going with it it was more so as you were saying the the value that could be given back to the wider Community right I mean yeah so I tried to convey that that that I'm not to doing trying to do any gotcha uh I'm really just trying to get to the essence of of trading and markets and what wisdom you might have to share um and I did something else which I've continued to do for every book which was to say to everybody look um I'll let you I'll send you a copy of the final draft and you can review it if there's anything wrong and if there's something you disagree with or whatever we can we can you know if it's wrong we can change it if we disagree with it we'll find a we got common a common agreement on how to handle that P that section or text or whatever uh and never it came up very rarely um and so that assurance that I would let them see the final draft that wouldn't just go out uh that I think was helpful in getting an interview but also helpful in getting them to be open because you know everybody otherwise would be sort of second G second guessing themselves about what they're going to say if it's going to appear in print yeah yeah in case they couldn't control have any sort of thoughts on going so yeah so that was I think that helped that was helpful in getting people and and more importantly maybe in getting them to be more open in the interviews definitely one thing you mentioned very early on there which I found very interesting was that at one point you didn't believe in technical analysis at all right what changed like what what was it that changed for you so what changed it was uh a couple of things and they were kind of related and it was very pivotal for my for myself uh I was a research after a couple of years in the business I I I um got a job I switched from being a techn just an analyst to getting a job as the actual research director uh also writing helped in that I there was a magazine at the time was called Commodities and eventually ended up being Futures then eventually changed again you know the name but back then it was called Commodities and I would I became a contributing Editor to that so that helped me get a job as a director of Futures research and one of my analyst was uh a technical analyst called Steve konowitz who became a very close friend uh um Steve and I shared an office and I noticed something I had a bunch of fundamental anal work reporting to me and had Steve is the only technical analyst and of all the analysts he was the only one who was more right than wrong right so I had to be open to it I said so Steve tell me what you're doing you know so and why and what so I from from him first of all I learned technical analysis and I I understood got an appreciation of why it could work was just simply that it's not mum jumbo it's it's not black magic it's it's the price reflects everything that happens in the market so there's a reason to believe that the price price and patterns in price could be meaningful so that's one ele element of it and I sort of started experimenting with that but the key is this is really critical and I don't do not mean here to demean fundamental analysis because lots of Traders I've interviewed were pure fundamental analys analyst and did extremely well with it so for some people that's the way to go but for me what I discovered was that a you know besides it not being that effective what I discovered was that it worked in contradiction almost to M risk management and one of the most important things I learned maybe the most important thing I ever learned in my journey uh in interviewing Traders and being and trading was that it's really risk management first and foremost you may think it's boring you may not think it's you know what you're interested in but it's the most important element if you don't have that you don't have anything and um that what I discovered was that fundamental analysis is in many ways very difficult to make compatible with with risk management so say I I think hey wheat the wheat Market is is uh is valued here it's five bucks you know a bushel and I think it should be should be six well it goes down to 450 and fundamentals have not changed what should I be doing I should be buying more so it's it's it's this ironic element that the more things go against you if the fundamentals don't change the more it would have you you know adding to the position I mean it could be a stock as well right you you like a stock at 50 you think it's going 100 well if it goes down to 40 and nothing is really changed you should buy more right and and of course that's exactly the opposite thing you should be doing from risk management standpoint you should be getting out or at least reducing your position if things are going against you so um and and I discovered was that it was really critical to to be able to control your risk and with technical analysis almost by definition if the market goes against you then it your analys is wrong uh so you know and it works by the way regardless of whether you're a trend follower or a contrarian because let's say if you're a trend follower it's obvious you know uh uh the market breaks out I think it's going higher and but if it comes back into the range then something's wrong the breakout you know my my my assumption this was a real breakout is wrong I'm out okay so it's very easy to make the risk the pick a stop that's consistent with your analysis uh same thing if you're if you're drawing to your contrari and you say okay this Market is coming into a range where there's lots of resistance it's oversold it's overbought I'm going to go short here but it shouldn't go to new highs or something like that or it shouldn't go XX X points beyond the old high so again you have a natural point where it shouldn't go and if it goes there so technical analysis is really beautifully compatible with risk management so for me ultimately that became the transition where I went from from being 100% fundamentals to being 100% technical so again for I and I think that may apply for a lot of people because of this risk management element but again there are lots of people who are pure fundamental fundamental analysts and make it work well is one key theme that I noticed from the market Wizard series is of course that everyone had a different style of trading and yet it's they still made it work but as you mentioned risk management seemed to be the the key theme that they would always mention in terms of what what would be their advice what would be normally their one thing it was either risk management or a lot of the time to trade with the trend is that something that you noticed as well yeah well risk management is you talk about common denominators it it's not was not 100% common denominator but pretty darn close there in fact when there was an exception it was so glaring that it was obvious and and I can only think of uh well I can think of a couple of exceptions um I can think of two right off the bat top but that's out of five books of interviews and for almost everybody else you know risk management was always really important I remember one particular Trader and they had mentioned in terms of well they I remember actually in the interview they only gave you a lot amount of time I believe it was an hour or or two maybe Max and you you'd even written in the book like you were thinking about how you might get there and be more comfortable and get more time and and you couldn't do it so what did you do in that scenario too yeah so you there that happened several times several times yeah I mean Richard Dennis was like that I mean Richard Dennis gave me an hour twice uh Ray Delio same thing he gave me an hour twice um so there were how many people uh that that were the worst one of all was Tom Baldwin and Tom Baldwin uh at the time he he was a pit trator uh in the bonds and he traded enormous size really enormous size he was one of the biggest traders in the pit just for his own account know I mean he's he's trading the size of of Morgan Stanley and Solomon Brothers you know whatever just for his own account um so and interesting enough he was like I foret what his job was originally he was like working in a supermarket something like that so it was a really good story so I I I had to get Tom you know so and I got Tom because there was another trador interviewed who a mutual was a friend and he sort of convinced Tom to do it and Tom didn't want to do it so i w i i was I interviewed him and unfortunately make things even worse it was St Patrick's Day in Chicago you know the R's green every's going out to the bars and you know the interview set up obviously after to Market hours because he's a pit Trader right so he comes back to the office and he's there and he's clear he's not going have a lot of time and people coming in hey Tom you get to meet us at you know yeah I'll be there so I knew I just this was like I I said I felt like I was a photographer who was trying to get a picture of a rare bird that was about to fly away in an instant you know and I knew I just had that before he could finish answering a question I had to have another one I couldn't let her and there was after about 35 40 minutes there was one point where there was like like maybe a 3 second you know pause between his finished answer before I get he's gone you know so that was like the toughest situation I had but somehow I I got enough to make a decent interview out of it incredible but it would have to be very had to be very intense yeah to you know for that uh for that period did you find that did you find it was each interview kind of was a bit unique due to of course different personalities different you know things that impacted the interview whether it be time or anything else did you find that each each one you had to use a different type of either questioning or angle uh there not so much that as as one of my things that I do um and I I think you do the same thing is in fact you you are doing the same thing is to have a conversation not to go in sort of a prepared you know question list of questions and then go to the next question regardless what the answer is because the answers often lead into more interesting an tangent sort of like you picked up on my comment about my not being a technical analysis sort of Ed that as one of your questions later on so I try to do the same thing so that I do really just universally but uh yeah different people there there may be different differences and it has to do with the length of also the interviews I've have interviews where I know there's more stuff but I just have to keep on M as long as I don't get thrown out just to keep on keep the interview going and as I mentioned to you before we started this uh this official interview here um you know that one Trader where first couple of hours I got nothing yeah and it ended up being my favorite chapter in in New Market wizard so that has that has to be adjusted to to the person uh in some cases it becomes almost impossible so the um trying to think the uh Gary yeah so there's a Trader Gary befi this is kind of interesting U remember I told I was a research director and and a research analyst and so in those days you got the wires that come across you have to make have to do daily comments at the end of the day for that would be broadcast to the to the Brokers and the you know all through different offices and what went on in the markets or and sometimes write a summary too so you'd look at you'd look at wires and I'd see you say the bond market it say okay you see this blh uh kind of being mentioned as a big Trader in the bonds you know along with names like Salomon Morgan and so forth and uh I kind of asked that Who the hell's blh I find out blh is one guy in Poria that's pretty interesting um so it turns out I mean here this is a guy who started trading one one lot two lot corns and all by the time I get to him and he's kind of not known other that I mean he's known but time this BL which is just one guy in poror it's not a firm um he's trading thousands of bond contracts at a shot and uh so I said that's a story right that's a story so I go interview him but he is do you know like Gary Cooper from the old westerns he a very he always plays these very you know one who very quiet guys very man a few words and that was that was BF just everything was like a one or two or you know it's it was it was terrible I just couldn't get him out couldn't dra draw anything out there was one point in the endie finally he says well you we're talking about the analogy between poker and trading and he said well you know could you kind of off the Record and he gives me and he finally says something that's interesting and and I I said well why didn't you want me to you don't want me to what's wrong with that so he says well I don't want to to make sound like trading his Gamble I said no you're making good points about you know probability and stuff like that so he let me use it but there was so little in that interview that was like good the interview itself that it's the only chapter in all the market Wizards books where my narrative is longer than the interview section yes I understand I understand and it's interesting you bring that up actually because it is actually a very interesting topic that I found is in terms of the analogy between c um poker and trading but just generally the relationship or the idea between gambling and trading what what is your opinion you've interviewed some of the best traders in the world and of course are they you could some might say are they just better gamblers for example but what would your thought process be on that in terms of is trading gambling is it a form of gambling is it was it just a very close relationship or or line that seems to be there let's take a break for a minute there guys cuz I want to tell you about the best trading tool on the market trade Zella the reason why trade Zella is the number one trading tool that every Trader needs is because you can do back testing automated journaling trade replay in-depth analytics and so much more and the greatest part about trade Zella is that it's all automated all you have to do is connect your mt4 and mt5 it will pull all your data onto the dashboard you can add playbooks you can just add notes you can add images from your trades and you can get the insights that is necessary for you to progress as a Trader now trade Zella is for absolutely everyone whether you're a crypto Trader whether you're a Forex Trader whether you trade prop firms it is for absolutely everyone and that is why thousands of Traders have signed up using my link here through the podcast make sure you use the code Riz 10 the 10% % off your monthly subscription or W for 20% off your yearly subscription the link is in the description below and let's get back to the episode well if it's done wrong it's a form of gambling so it can be certainly a form of gambling but traders who are successful it's not gambling it's the it's the exact opposite um because gambling by definition almost um you're you're always don't have the edge uh it's you know somebody's giving somebody's making the market and in order for them to make the market they they have to have the edge you know it's a casino whever whatever it is you know it's it's the person making the market has to have the edge or else they wouldn't be in business so you're starting out with for less than 5050 probability and over the long run you're going to lose money on that now if I guess if some people are exceptionally skilled they could still kind of make money like if somebody sports betting or something like that the odds are against them but if they're really skilled and are better than most people picking where the odds are off they could maybe still make money but it's beating the odds and I guess in in trading you the odds are against you too in that sense because it's it's it's 5050 in terms of Market go up Market go down but the slippage to put on the trade if you're not making if you're not the market maker you've got slippage so you so even there so it's but the thing is there has to be there has to be that edge um and uh there's uh I just like when I exercise I listen to music and um today just happened toist one of the songs I was listening to is a Bob Dylan song and um you know you can't win and the the the phrase was you can't win with a losing hand so you have to you know it may seem obvious but it's not a lot of people don't that's you have to understand that you can't win in the markets and you you with a losing hand which means you can't win and if you don't have some sort of edge M has to be some reason why you can beat that that that built-in Edge against you there's something about your your approach that gives you that edge and you have to be able to know what it is and Define it and another key theme I recognized from a lot of the interviews you made was that they would be very confident in their ability they would be they would back themselves they would almost you know they and most of all I found which was so interesting is that they loved it they loved everything about trading and a lot of them described it as like it's a game they would treat it as a as a game right and I found that interesting because there's a lot of Traders out there who don't actually they're not passionate about the markets they're passionate about making money which isn't necessarily a bad thing but I've always made made the thought or put a statement of saying if you're passionate about the money the issue is is that when you lose money which you inevitably will in trading especially at the beginning what happens then because it's the complete opposite of your passion you're not making it versus those who are actually passionate about the market as a buy product of that passion eventually will make the money as long as they have the edge of course what is your thoughts in terms of you've interviewed a lot of these Traders and they is that as a common theme as well yeah and in fact U I think that's it's been while since I looked at Market Wizards myself but I think the very last sentence or something uh one of the last sentences you have to love you have to love what you're doing you have to love trading that's one of the elements that that unites them and you see it in the language you know I remember Bruce CER talking about you know trading is like a three-dimensional chess game and Jim Rogers says uh trading is like uh there's a puzzle of 10,000 pieces and they're constantly taking away some pieces throwing in New pieces you know so what are those those are game-like analogies and that kind of tells you for Traders this is a game this is something there's enjoyment in that and they want to it's also a matter of figuring figuring out things that people can other people don't figure out so there's a challenge there as well which is part of the game so like a puzzle right so um it's very important I think that that love of trading is is is really really critical uh and it's true really for not just trading but anything I think if you look at successful people they're the ones who love what they're doing you know they're so and it could be any could be anything and they continue to do it they you know they might be they might be billionaires but they're still doing it because they just love the game right which doesn't have to be trading but in our case we're talking about the trading and it has to be true for trading as well as anything else if you don't love what you're doing don't expect to be great at it did you ever come across any Trader in in all that time who didn't really share a strong love for trading but still was somehow successful yeah no no I can't think of I can't think of a counter example I can't think of a counter example that says all for that I can think of an example of a Trader that was motivated uh in fact the trader we talked about earlier in unknown marker wizard who to turned 5,000 into couple hundred million um you know he got into it kind of absurdly in my mind because he was out of college didn't know what he wanted to do and he wanted to do something where he had to make a lot of money and I I always I normally tell people hey if you just want to get into the markets because you want to make a lot of money you're probably gonna fail but he but I guess because he had some sort of innate Talent he had an innate Talent of kind of picking up on Trends very early before people did he just that he had a he had that inate skill and it's I think that's why he succeeded but it wasn't a love of trading that got him into it he did get in for the wrong reason but he is the exception in that respect and it only worked for him because he had this critical innate skill which came out when he started trading interesting and would you say that is one question I ask a lot of Traders is this actually which is do you think anyone can be a traitor no no uh I think I think most people can end up being maybe net profitable uh but I certainly don't believe that most people can be great Traders uh any more than I think most people could be a great sports athlete in anything or a great musician or a great writer a great anything people have their individual talents and a lot of the people I interviewed I think just had real innate skill if for the markets now that innate skill could would be just almost an intuitive skill um you know like somebody like a Marcus had that in my mind great intuition he could look at um there could be a hundred things affecting the market but he would be able to pick out the one I remember we like I mentioned we used to have lunch together when he was still in New York and I was a cotton analyst and I did all this economic research I researched every cotton Market in the post World War II period And I came to the conclusion well there's only about four or five markets that were free markets because was in all those other years was a government loan program that was actually ending up providing a floor and the price didn't mean anything uh but that really I knew it didn't so that didn't give you much data to work with and I kind of Drew my conclusions from that although I knew I did my sample was too small it be meaningful but it's the best best you can do so we had a market where the price is like 25 or whatever and it's kind of similar to one of the seasons where the price went to 35 so I'm bullish Michael's bullish too but when it goes my my opinion was was go to 35 that's going to be near a top you know because that was the one anal analogous year we have Michael says no you know it's going much higher because of the that was the first year that China became a buyer of cotton and he understood with all the you know I did all the analysis he didn't do any of that but he just knew that the fact that China was a buyer and C that was the key and he stayed bullish for for months and months and months I started going short in the mid-30s and lucky had so little money that I was stopped out and you know couldn't couldn't stay short um so and it went up to 99 Cents that year so uh but he could pick he had that intuitive skill uh and uh or he talks about in the interview he's up late at night watching CNN or whatever and Russia invades Afghanistan and he immediately has the he immediately knows he picks up the phone calls the Hong Kong floor and buys thousands of gold contracts and and screws the people who all the brokers who sold it to him you know he said he he said he still can't go there because you know because they're mad at him you know because he you know he was the one who got him on the wrong side so um but he had that just immediate intuition and so you have people with that type of skill how important do you feel because it's a good example what you made there is in terms of timing how important is timing the markets at times uh timing I guess for most approaches it's it's one of the key elements and it has to do it has to do with um with the with the particular approach you the skill you know so so there were there are some approaches which are less where timing is less important I guess part of it is depends on the approach uh so not necessarily so I'm give you example uh so it's important for certainly for I think for a lot of technically oriented people but speci especially on the fundamental side not so much necessarily so I think of somebody like Martin Taylor uh Martin Taylor for your audience uh sake uh he was he was like an emerging primarily Emerging Market Trader uh when I interviewed him he was managing about7 billion and was in the process of giving all that money back except for about a billion which was his own money and some close friends and investors and the reason he did that was U because he was tired of people looking at monthly returns know people have to sort of all these allocators M yeah pickly the institutional allocators they're very tuned to to not getting too much of a Droid down in a month or whatever and so but he his thinking he was a pure fundamentalist and by that point he was trading both developed and and emerging markets and uh in the interview this came up his biggest trade at that point was Apple you know and it was also once in a while his track record was very very good but once in a while he'd have draw Downs into the teens and this was one of those times he was like down 177% or something and almost the entire loss was due to his position in APPA but he was like and so his timing was off obviously right but he was completely adamant there no way I mean he was actually I think adding to which again you shouldn't do from a from a mismanagement standpoint I going say there are some exceptions that I could think of when I I interviewed he's one of them and uh but he was so confident so sure in his analysis he explained to me that um well you know the he looks at he knows what the forward projections are and and what people Wall Street is basing their analysis on and he said they're just not taking into account the vast Global expansion that's going to happen in app particularly in China and so he knew that was coming he knew it wasn't Ved into the market and yes he was saying I'm right the market is wrong and and so his timing was off but six months after that interview Apple had double by the time you know you double in that time and so uh it's interesting at the same time his big short was Rim which 6 months later had gone from 50 to two you know something it so it's so interesting when you talk about in terms of like Risk and draw Downs for example because something that's very common and I think there's a very large misconception and I don't as usual with trading there's like a lot of the time not a right and wrong but there's a big misconception in the retail space I would say which is like static risk like just risking 1% and only 1% and anything above that is considered gambling and over risking and dangerous but from my experience when I've well not only reading your interviews and the interviews you've had but also just either watching interviews or even some of the Traders I've even met especially the ones who have gotten the returns that a lot of people try try for the millions the tens of millions to the nine figures and Beyond they they talk a lot about Dynamic risk meaning that when they have Edge and they and they can see and they have that gut feeling of of that edge is in this trade they then look to size in and they'll size in a lot more heavier into those particular trades rather than just sticking static 1% consistently what are your thoughts on that have you seen a pattern in that as well so so yeah for certainly for some Traders and for most Traders the idea of not risking more than a small percent like 1% on a trade or even a fraction of 1% is actually a good idea but again there are some important exceptions here a number of Traders pointed out that when you have real strong confidence on a trade you have to step on the accelerator like I think of particularly like Stanley dren Miller and talking about when he would went to work at Soros management and he gives he gives a story where where he got very bullish on the Demar and this was I think when the Wall came down you know whatever anyway um he goes into soros's office and he gives him his whole pitch and he says and Soros asks him uh you know how big's your position he says a billion he says you call that a position you know so the point being if you're that sure of this why do you only have a billion on and he says he credits Soros with a number of things but he credits Soros with teaching him that it's it's important to be a pig you know when when when you know you're you know when the opportunity is there he he relates the story of Soros when the uh Plaza Court back I think it was 8 3 uh where the dollar had uh had been strong for a long time and all the comties way down and there was this Accord the kind of strength you know weaken the dollar strength and uh I Japanese end is up 67 700 points overnight and Soros hears these people in his office the traders in his office outside are taking profits on the end he said stop stop anybody who's you know long you don't want it I'll take your position and he said the FED just told me that the end's going up for a year why do I want to sell it on the first day so you know that idea of really taking huge positions for some Traders that's a key to how they get these outside returns and dren Miller who in his 30-year career before he retired to manage his own money probably average close to 30% a year pretty you know on billions of dollars um pretty impressive but that average is we didn't have I think his losses he had very few losing years and they were small if they had them but he did have some very outsize winning years so it's not like he was making 30% a year 30% a year he had some years maybe with 80 and 90% right so that that's where and because those when he had the opportunity there was really a big opportunity he would he would as he said step on the accelerator yeah because I do find it interesting because I do agree like majority of Traders definitely should for the majority of the time be using that smaller risk whether it's 1% or even lower or around that sort of average but I do believe in terms of getting to the the sort of capital the returns that they are looking for like the ones they strive for is finding that that edge knowing where that edge is present building that intuition in terms of intuition though because I think that that intuition is something that is quite unique and it's kind of hard to sort of point at and say this is how you develop that this is how you can sort of start to trust your intuition more is there anything that you've found or any any of the interviews you've made where they've sort of pointed fingers to some things that have helped them to build that well intuition is an interesting thing it's it's real I mean intuition is a real thing and people may dismiss it well intuition it's kind of you know it's not that's not scientific it's not but people don't understand what is intuition intuition in my mind this is the way I would translate intuition is subconscious experience so it's not just something pulled out of the air you know you have a hunch well you may have a hunch but there's a reason for the hunch I mean for a good Trader because it reminds them of something that's that's that's similar in the past maybe maybe can't identify it uh but it's it's there and maybe it's not in the Forefront of your conscience but you know it and so so for some reason you think the Market's going up you have this hch is going to go it's not just out of wild BL mind uh you know pulling things out of the air stuff it's because it's triggering something in your experience that you may not subconsciously recognize the connection but it's there and that's what that's my mind that's what intuition that's what intuition is um it's that it's that type of thing and did you find it was like a common theme and they may not have specifically said intuition but more so may have reflected it as like like gut feeling or I just I had I just knew a lot of the time that was sort of the terminology used it like I just knew that this particular position or trade was going to pull through well you know there's um there's an interesting element of this that part of that also is related to the fact that we as humans just tend to have the wrong emotional response a wrong meaning that what we want to do emotionally is tends to be wrong in the markets uh it's just because that's the way we're wired that we as Bill eard explained the people people actually do worse than random because of human emotions because they're seeking comfort and the market isn't paying off for seeking comfort so you you you tend to want to do things that are that are wrong and some people can recognize that in themselves even and like a Trader I interviewed in the last book John nno mentions that let's say he's he finds himself that he's let he has a he's long gold and the market runs gold runs up and anything oh it's going to the Moon I got to Triple up you know and he in his case he say when he sees that when he when he goes from just kind of a solid based opinion on the markets to kind of being I got to get it before the market runs away that him is a signal that it's GNA react you know that he's wrong that for the short term at least it's G to go it's going to go the other way so almost in that case the intuition is tapping into your emotional response to to to to to know that that it's wrong and that you could do the opposite so that's that's another form another form of of of uh intuition and is a yeah that's come up a number of times in interviews that type of thing i' I've actually I just had a situation like myself U where I um I had I was looking for the dollar to and I I only trade in a hobby and just occasionally but I was looking for the dollar to to to weaken uh I thought I'm going on a premise that this is a top in so I had a position and number of currencies all you know all basically bearish the dollar and I analyzed the Swiss frank tech chartwise and and I picked my point my point was like 100 points50 points below the market and I kind of recognized though if I get that if I get that executed that my other positions I have on are going to lose money so I didn't want it to be right you know and my my instinct I was going through the charts was I got to cancel this order but I knew from past experience that when I cancel you know when I cancel an order because I don't want the market to go somewhere it usually ends up being that order ends up being right and so uh sure enough I was wrong on the at least on the timing of a dollar or at least for that short term you last week and and all you know dollar corrects and the currencies go again so I took a loss so I got stopped out of my really close stops and a lot of positions and sure enough the with Market went just down just enough few points Beyond where I had my buy so I got long to Swiss frank and today I raised it to break even so that's kind of an example where it was in and I'm I know putting myself out a good trade just the opposite say my intuition my emotional response is so bad usually that if I can recognize it um then I know I can bet against it so I'm response was hey I don't want the market to go here take it I take the trade off no but I knew then I should leave the trade on so that's that's a personal example yeah no I thank you for sharing that and I find it so interesting because I know a lot of Traders there like a big debate at the moment that is happening I wouldn't say too big but they're saying like trading psychology is what they call [ __ ] they're saying the trading psychology is not important but how they're reflecting that is saying that it's all in the skill set if you focus on the edge and when you're confident enough in the edge and understand that edge inside and out the psychology sorts itself out because of the confidence that comes with understanding that edge and how it performs over the long term Etc therefore those wins and losses And the emotions the heightened emotions that come with that start to dissipate start to sort of Flatline a bit more um and I find it interesting so I get the concept of what they're going for but equally when we talk about intuition and good feeling and just human psychology and emotions is it as simple as that is it as simple as that people are focusing too much on the fear the greed the fomo the over risking Etc and trying to find the hacks the mental hacks to solve that or is it that really they should be focusing on the edge and and having that edge in the first place well that that mindset that you mentioned where people say they have you know a method that works and they have an edge and they well that that's a way and if you assuming that part of that is married with risk man and management well that you've just described the way of managing emotions you know uh so you if you have a specific approach and it gives you specific entries and you always have a risk control to those entries and you have the discipline to do the entry and the uh exit exactly as dictated by your approach which has a proven Edge over time well what you've done is you've addressed the potential psychological weakness that tra that people have uh in trading you've you've kind of defined it away because you're not letting emotions enter into the equation you've got a specific entry you've got a specific exit and You' got the discipline to do both so in that case psychology no longer becomes important because you set up the methodology to eliminate emotions from Trading which is actually a good thing so it is interesting because I I feel like a lot of people don't focus on the most important aspect well not the most important aspect but one of the most important aspects of actually having an edge first doing the work to formulate that edge so to know the edge to the numbers of what that should look like and because of that they end up having a lot of psychological issues and the emotional issues and therefore what they tend to do is rather than focusing on the any form of the edge they're now spending their energy on psychological issues of okay you know I'm over risking why am I doing that and then their attentions all over here versus actually having Clarity in the markets of what they're looking for and why they're looking for that and how that performs already based on either past data or the data they've collected over time have you found from your experience that the traders that you've interviewed they've done extensive time to you know formulate an edge done the time to collect the data necessary have really put in time before they started to make any you know consistent profits or you know huge profits it was that they actually dedicated time and study and it might have not been and I would like to assume it wasn't a short period of time either yeah I I think that's generally true uh so and the amount of work can be can be immense so I think of some of the traders in the last book particularly I I know a few of them came out with binders of you know of they keep on all their past trades right so writeups of analysis of every past trade and what they were thinking how it worked out you know just reams of you know and then they review it like monthly just so to reinforce those lessons so um there's there's a lot of you know a lot of uh work that typically goes in for most Traders before they're successful uh that that's that's absolutely true yeah that's you know people's misconception is that trading is an easy way to make a lot of money you know it's that's that's that's what people think but that's not the that's not reality one thing I've heard you a quote that I believe you've said but also has been reflected from one of your interviewees or some one of the traders that you knew personally was knowing where to get out before knowing you know where your profit is or before getting in why is that so important yeah so that's my out of all the books I've written and all the advice I can give people I I I and I've said this before I said if they're if I if somebody said Jack you know you got to give advice to trading but there's only one catch here you could only use 10 words and I know what the 10 words would be and it's it's a line that Bruce CER had he was the first one first interview where I had that particular thought it came up a number of times but he was the first one he said I I know know where you know where you will get out before you get in and now that's so critical for a couple of reasons first of all if that's true then you've defined your risk on every trade you can no longer have this termoil should I stay with the market if it's going in should I should I get out you know if I get out here it's I'm gonna be getting out you've you've already made that decision you don't have to kind of beat yourself up and have that mental anguish about it you've you decided that before you get in now here's the thing why is deciding that before you get in so important because the only time you have true objectivity is when you do not have a position the minute you put that position on you've lost your objectivity any news article comes out you say well yeah this may be bad for the position but it's it's already discounted should be Market already knew this and you keep on making excuses everything is trying to translate it in a way that is okay for you cuz that's human nature you don't want to have made a mistake you don't want to be wrong so uh so you lose your objectivity however if you decide before you get in then you made that you said I think the markets could go up or down or whatever it is but if I'm right it shouldn't go here and you've made that in a completely rational sense because you had no you had no horse in the race you were fine you know you were thinking purely clearly there was no human emotion that was doring your opinion so that's why so I that's what I say of all there's tons of of advice that are in the books and in some books like you know they end the chapter I might have like 40 points from the the you know main but the single most important point that I think in all the books is that one thought I love that I love that and I think what you the the last portion of that was so important in terms of the calm mind or or the calm thoughts of okay before you're in the trade you're thinking clearly you're thinking objectively of okay this is the data this is the point where you know the risk makes sense but then when you're in the trade that's when the turmoil can begin and those thoughts of ignoring certain points and and sort of having a a bias and perception based on what you want to happen you start to ignore that's that's the trick there what you want to happen be careful you know uh and want I forget which interview it was but somebody says you know you don't want to be trading what you want to happen you want to be trading in what you know will happen you know you got to be very cautious that and again I gave you before I when I want to happen I I didn't want the market to be able to get to my by point this was Frank I definitely didn't because I knew I would be losing in the other positions so you got to be careful about what you you know what you want you what you want is not only irrelevant but often negative to your to your position another sort of misconception I've seen and it might be a it might be right for like a misconception is that you can never make huge sums from a large starting from a large uh a small sum right so such as 5,000 to to tens of Millions for example and that might be a right thought to have on the general basis like for the general you know Community it may not be a possibility but from a theme from a lot of Traders I've seen in the book they started very small in terms of their size and they've ended up in a position where they're trading tens of millions hundreds of millions even into the billions um what do you think to that is that something that is the Journey of that not necessarily that they started themselves with a small capital and themselves only got it to large capital and that due to their skill set over time and then being able to manage larger funds take invest to Capital on board that's what allowed them to scale or is it a possibility that Traders can take small sums with the right skill set and Edge and actually be able to develop to to large Capital well well certainly you know from my experience and Traders I've interviewed so I've had quite a number of traders who started small amounts and built into large amounts but well may also be maybe more common as not necessary that you you can have you also have the roots where like Trader doesn't compound as I mentioned quite a number of Traders because their technique this goes all the way back to I mean not only the Traders I interviewed more recently but back in the original Mark Wiz of Bonnie Schwarz uh Bonnie Schwarz had this ridiculous track record for like 10 years when I I mean he was just insane he in fact he was entering he was entering these uh trading contests uh and it were usually four month contest and sometimes it were one year but he was literally making hundreds of percent every four months it was crazy and this was documented and um anyway so he was he had this astounding uh return percentage returns hundreds and hundreds of percent a year and uh he only had like two losing months uh in that whole period they were minor very small losing months in fact he jokes uh he joked those those two months were the the months his kids were born he was distracted so he so this was crazy and and people and I I know when I give a talk sometimes I mention him this is his example um talk about Schwarz and I say you know I I know the ju guys in the sord are probably think hey wait a minute you know whatever it was like 600% 700% said compounded you know oh you know it was I remember the statistic it was 25% a month wow over like 10 years and I said I know a lot of you guys are kind of thinking um gee that 25 why doesn't he have like you know one5 of the GMP you know because he wasn't compounding he kept on pulling money out and putting it into the t- bills uh he couldn't trade he couldn't he couldn't make us he was a short-term S&P Trader he couldn't let he couldn't compound this trades like that because he would start affecting the market so uh so so in many cases the Traders don't compounded they they have very good tremendous return risk but they keep the trading size not small necessarily but it doesn't compound right and uh the other thing is where Traders go went a much larger size they no longer have the same percent returns somebody like a Bruce gumer when I interviewed him I still remember he had like a whatever it was a decade of 88% average return when he went and started kton years later and was managing tens of billions I mean it's not he's not going to do 80% a year I don't know what the track record was I think they did fine but you know God it was nothing like his his his track record as an individual Trader so uh there are a lot of different routes on that what is the reason behind the fact that once the capital starts to get larger the returns start to also reduce slightly or because you become you start to you start to get in your own way uh if you get too large you can't just you know enter enter into the market uh of huge size in and out without actually impacting you know creating a lot of slippage on your own so I think it you become a factor the these traders who do do very well when they're like they're not significant they can do whatever they want it's not going to affect the market but if you're becoming large enough to really impact the market then your own trading is is is getting its way so I think it's harder to it's harder to manage to manage large sums of money some people think oh these hedge funds have an advantage they manag the large no I think that's a disadvantage I think managing large sums of money uh could be could be a problem because a lot of people try and say that it's unrealistic to have even say 20% a month average return or 40% or 50% it's not possible some Tred to say but then again reflecting back to a lot of traders in the book you they have these returns they have these insanely powerful returns insanely incredible returns and it's not just a single Trader there's many traders who are doing it and they're doing it on higher capital in comparison to the general audience that we have with us but it seems to be the ones in the general audience who then try and give not all uh but some try to give this I would say a limiting belief of you know 2% on average return is what you should be going for as a Trader uh not two 2% on average monthly return sorry is what you should be going for as a Trader 2 to 3% you know anyone who's trying to say that you can get 10% or 20% a month is unrealistic and wrong uh but then when we reflect on people we' proven trap records and are trading actually more so substantially more Capital they're able to achieve these returns so but they are the exceptions they are the exceptions and and you know for for most people that would be highly unrealistic so is a difference between it can be done than it can be done by most people that's not the same thing so yes it can be done yes it has been done yes it's being done and yes you may be the person that can do it but realize that it's you're probably not mhm and it's not really and the whole idea of targets by the way is is not a particularly beneficial uh Concept in my mind and this has come up in a number of interviews most recently Trader am Sal in the last book who I asked him he used to he worked in a shop where prop shop where he saw lots of other Traders and was asking him well and he's one of the traders who had like I think a 300% return for over well over a decade what what was it that he saw in trade between difference between traders who who succeeded and failed and he said one of the things about traders who failed that he noticed was they tended to be have a target of making some percent every month and his his point was that if you have a target of trying to make x% every month there's you're going to be taking trades you shouldn't be trading and that's actually going to impact your trading results negatively because the market whatever your approach is the market is not a machine that that constantly favors every particular approach every month with the same potential in fact most approaches go through periods where there's very good opportunity and sometimes where it's very adverse to the approach but if your mindset is I'm going to try to make the same percent every month then you're going to find yourself trying to when months when the opportunities aren't there taking Trad that you shouldn't take and end up losing money so um the idea of targets is not a particularly beneficial one that is interesting because even when it comes to capital for the average retail Trader returns is definitely one thing that they a lot of the time put Targets on but equally a lot of them also put Targets on Capital amounts due to the certain things that they have access to whether it's uh the new age of what people call prop firms or these funding companies and they put and I believe it's a negative as well to do that where you're saying okay by I don't know six month's time or a year's time I want to be managing x amount of capital because it's just the pressure and the you're putting this weight onto your trading and as you say you then start to make decisions based on this thing that doesn't exist yet and yes it's good to have goals but I do believe in trading it can be very detrimental to the trader would you say that when people do that not not very similar to the targets as you just mentioned but when it comes to any any any form of sort of pressure or weight that can be added onto the trading it's just a negative to a Trader it's negative in the sense that the realization is the market isn't there to provide to to favor your particular approach the market will do what it will do and uh you can't force the market to fit what you want it to do so um you need to be flexible to to attune to what the situation is and if there are if there are very few opportunities don't tra don't trade what's been interesting with the market Wizard series is that the first one was back in 79 was it the first one was 80 88 I wrote it 88 came out 89 89 sorry yeah and then subsequently you did one very recently I believe in 2019 yeah 2019 then it was updated 2023 amazing so in that time though there's been huge changes in trading in the amount of access to trading as well and trading Styles and maybe even new markets have occurred is there anything that you saw different in Traders going from the original book to the latest book you know it's [Music] um not not really in in essence I mean the changes that occurred the big changes that occurred and we talked about earlier let's say you've gone from from pit trading to electronic trading doesn't really change the methodologies that are being used doesn't change how the Traders are trading uh the computer now the fact that we have all this computerization means that a lot of approaches that are being used couldn't be used before because computers weren't there to provide the data to to provide the the technical analysis whatever it might be so in that sense it's it's uh it's modified and the fact so let's take an example of chart analysis uh things that might have worked well 20 30 years ago maybe don't work so well anymore like uh Peter brand who is a chart chart analyst bottom line but he's clear that uh there's very dedge in chart analysis all it does is it tells him which which points have a potential of having a good return to risk ratio but the predictive but the predictive power is low and a lot of the technical patterns that may have worked 20 30 years ago he'll say now no longer works so he kind of focuses on those that still work so there's adaptability things do change as the markets change but not radically in terms of like new markets such as cryptocurrency for example was that is there anyone in the series that that sort of fit into that bracket with trading those sort of markets so yeah so I I personally never I didn't seek out any crypto Traders per se some of the traders that I interviewed also will trade crypto because anything that is prices price chart you know that trade or is affected by human emotion they'll trade so yeah so some of the Traders uh did trade do trade did trade uh crypto but it's just another Market I didn't I didn't interview any crypto Traders per se was the what are your thoughts in terms of like the changes you see in the industry so yes we've had Commodities you have Futures we have Forex we have the currencies as a whole we have so many markets and then something digital comes along which there's a lot of debates about of course the digital side and you know how much weight is there but what are your thoughts when you see this progression and new markets forming and a lot of it is still quite news a lot of it is still quite unknown uh and that people do find Edge there still but what are your thoughts in terms of when you seeing these these changes in the markets well as far from a trading perspective it's just another Market anything that is a that is liquid as buyers and sellers and you can buy and sell and has can as price patterns or whatever it becomes just another Market whether whether it's meaningful or not so a lot a lot of crypto currencies in my mind maybe probably the majority will ultimately be worthless okay um so that doesn't mean in the interim that they can't it's true of a lot of stocks too a lot of stocks right in any fed that comes along there's always a lot of stocks that that you know they're around that don't have any reason to to to exist and will burn through money and eventually go not but while they're there they're tradable it's just another market so I think crypto is in is in that category do you think it's very similar to the do com bubble I do I I do um you know to me it it seems that way uh in the sense that uh sure you could have Amazon's and you you know you might you know so would you translate Bitcoin or whatever it might be so you all have a couple maybe that that that survive uh maybe and do maybe very well although I'm I'm skeptical about that too but this I can I have rationalizations why it might be true but for the most part most of these uh you know when there's hundreds or thousands of these people are just making them up as as as as jokes and they traded huge money till they collapse yeah so that has all the signs and nfts you know just crazy you know where there's no rational reason why these things should have value so those cases I think uh that eventually they just go by the wayside so in that sense I think it will be it will era of nfts and crypto will be looked upon even if a few of the cryptos become still stay yeah extremely profitable longer term I think for the most part the bulk of it will be seen as a as a classic Mania it has all the ear marks of a classic Mania yeah because the reason I made that sort of comparison is because I I if I remember correctly there were back then there was a huge bubble every anything with do com included on it was essentially just getting Investments and was listed on stock market and would grow and sell and be in sort of buzzwords but then eventually it was the ones that only really fit into society and had infrastructure actually had value right that lasted after that time right the majority went by the wayside but there were a few that were super successful yeah yeah in terms of uh J gme for example yeah see we see the the the rally this was funny thing I watched a film I think it was just last night we watched it in in regards it just got made on t Netflix and it was all about that whole situation I didn't realize they made a film it was quite fast to make a film on it one the one on GameStop Yes on GameStop it's called um dumb money yeah yeah I saw it I saw it it was pretty good yeah yeah and I found it so interesting because people debate and the reason I'm I'm bringing it up is because people debate quite often about the market how it works is it buying and selling pressure is it just uh reflection of emotions is it you nowadays it's like is there an algorithm that delivers the price um but but then when I see it something like that happen it kind of becomes more obvious of it is between it's the relationship between the buyers and sellers and for the most part yes the institutions the big players are the ones who get to have more of control of that price just simply because of the size that they have within the markets but then when we see a situation like this take place it does it it kind of I don't know in my opinion it proves that the buyers and sellers are what the move the charts move the price well it it's a it's a classic demonstration of why the Market hypothesis is wrong because there are periods in the markets where prices deviate greatly from from where any Common Sense uh so there the saying the Market's always right well in the sense that you can't fight price and all that you lose money but the market is not always right I mean Traders make money by figuring out when the market is wrong and GameStop you know the idea that GameStop goes from 20 to 500 with no real change in and anything uh that that make that's that that was correct and then when it went right back down that was correct no and the same thing with the internet stocks you know same thing they they go up 600% and in 18 months they go down all the way back to where they started the index you know 17 months later no no tremendous amount of news is coming in that's bullish and on when they're going up and it's it it is that people are in this Mania oh my neighbors making so much money internet stocks or my my neighbors making money on GameStop whatever it is that they have to get in on the bandwagon and somebody is finally the last one when the Music Stops and is left holding the bag and it goes all the way back down again so that whole move up and down is just nonsense and that's essentially what what what was a GameStop it was just that it was uh it was U you know one guy influencing uh a bunch of other Traders take the position uh shorts having getting squeezed and having to then cover and and then then people then the Sockers are left the Sockers will come in three 400 $500 because they think it's going to a th000 now left holding the back so that's that's the way markets work it's human emotion going through these Manas which happens time and time and time again have we ever seen one where it happened on the same stock again because he's yeah well well you're just seeing it now on GameStop you're seeing a GameStop again uh yeah it's so interesting you have another you know you have all that's true of any me mem stock uh so something like djt right uh djt is kind of makes a few makes like four five million dollar and loses 500 you know 400 to make it right it's not it's not a business that's can that survivable in any sense um and yet it's trading at at at billions and billions of dollars is you know and there's no metric that can explain that there's no metric that can explain that so uh you get people do doing it because they w't express their political belief or something like that but it's and you see the the insanity I do have an article if people are interested I wrote several weeks ago um I put it on LinkedIn um why something titles like something why anybody who's long djt is a fool and it's because the option Market is is kind of reflecting the insanity of it most cases at at the market strikes and puts and calls are roughly in the same ballp part right but in djt the puts are immensely more expensive than than the than the calls and you think well why isn't that arbitraged away it isn't arbitraged away because people can't borrow the the stock except a tremendous cost to go short so that's how do you get that but the the option Market is telling you there's an insanity here I mean it's so far off from any normal option Behavior it's striking so what my basic point there was hey if you really want to be long DJ any as long she say a fool you should basically create a synthetic Arbitrage position you know you should basically sell the put and and buy the call you know and you'll have a you'll have a proxy long position and but you can actually make money because Distortion is so great that if the market doesn't come down sharply quickly enough you might still end up making money because the puts are so are so expensive uh so uh that's an example where the market inherently is telling you it's nonsense you know it's interesting you bring that up because I interviewed one Trader and his style is what he refers to is glitch trading and it was it was very interesting because I never thought of this as being an edge and it'll be interesting to hear your thoughts his whole Edge is finding discrepancies in trading platforms trading data and then just trading that so he goes for example let's say if one platform had one price another had another uh or if price was delayed on on one feed EX ET he would just that was his whole Edge was finding these glitches that's great that's really just an Arbitrage I mean arbitrages are hard because they usually get they usually get traded away quickly you know so uh but if if God bless him if he can if he can find Arbitrage opportunities in the markets that's kind of the best that's an ideal type situation because by definition there's there's no risk and uh and return but it's but those those trades don't last typically yeah exactly that's what he it's like the very quick and uh what he was because I asked the same thing and it was so interesting because he goes that it was a big thing more so a long time ago uh but the markets are more efficient now and then have upgraded over time but he said now the whole Edge when it came to that is over in crypto because it's so new it's unre that's a good point yeah so I could believe that I could believe that that's probably yeah and so if he found if he and that probably can exist exactly right so that'll eventually get uh traded away but uh as long as it's there that's a great approach I just found it fascinating because it goes outside sort of the general thoughts we have when it comes to Edge and I was like wow that's that's a great approach if that's something if that's some it's just so different that's what I love about the markets that's what I love about the industry is that there is no you have to do it this way just as we talked about technicals fundamentals one thing actually going back to that I think it was so interesting because there were some people you would intervie where they would literally say like I don't no one can make money just using technicals for example or vice versa like you know fundamentals are useless and as an interviewer you hear it and yet you know it's wrong what they're saying in the sense that there are people who make money using technicals and there are people who make money just using fundamentals and we we obviously don't we're not trying to bring our opinion and we not trying to convince them but what do you think that is where people have this really strong conviction that that's not possible but yet you know it is but it's like they their belief is literally like even cuz even now I've met people say scalping scalp trading like very quick in andout trades it's not possible they say but I know scalp traders who are very good equally um people who don't use fundamentals for example and they say those Traders they can't make money but I know traders who can and I just always find it fascinating where people are so sure and they they truly believe it's not possible to make money doing these things but as you know me and you have known and and especially yourself from interviewing these all these different types of Traders where do you think that comes from H because it's within their own framework of of what they see and believe uh that's the reality and uh and that's their people end successful Traders end up trading their personality and so part of that personality is somebody like a Jim Rogers part of his personality is the belief that it's all a matter of fundamentals and that you know technical nonsense just a bunch of nonsense and for the most thought for most people they're right I mean I Jim rogers's line was uh I never met a rich technician except those that sell their services that's his framework right um and in in that sense he's he can find the justification because it's true a lot of the people that are selling their services really aren't selling anything that works truly well um and so he's right but it it does not extend to the point that there AR M schwarzes out there that that can make technical analysis work extremely well so um it's like I when I sometimes when I give talks and I contrast to make the point that that there's no single approach to the markets and I I actually use Schwarz and Rogers as examples Schwarz says I spent 10 years as a fundamental anal analyst and lost money every year and I got rich as a technician and Rogers with his line about the cynical line about the market technicians they're complete opposite so who's who's right who's wrong wrong well in a sense they're they're both wrong that the other one that the about the other one's approach but they're right for themselves they fundamental analysis works for Rogers Tech analysis works for for uh Schwarz and it that it goes down to being critical that every Trader find an approach that works for them and understand that whatever that approach is there are there are people with completely opposite opinions of that it doesn't mean it can't work I find I find it fascinating I enjoy it CU I I I share the same thought as like that anything can work it really does come down to that edge but I just always find it fascinating when I hear people say it because it's such it's always such a strong conviction it's not like a passing comment it's never just like ah that doesn't work it's very much like that does not work and in sense they're right because most most practitioners of both of both broad spectrums fundamental analysis and technical analysis are not successful so in that sense they're right but it doesn't mean that there aren't the select minority who have an approach that does work in each in each category one thing we've seen over time so I remember one Trader you interviewed really reflected this as well is that there was a lot stronger they had a lot stronger Edge at a particular time and as trading became more accessible their Edge started to diminish in that side of things and then they had to adapt how much is the market or Market participants how much is that imp impacted the markets cuz there was a time where it was a much more select few who could actually trade sure it's made a big different something like take 10 Trend following as an example okay so first Marco Wizard's book I'm interviewing traders who late 60s you know whose track record is late 60s 70s 80s right so um uh from that that that time period Well you go back to then somebody like in Ed sakota Ed sakota started trading late 60s beginning 70s whatever uh late 60s I think but anyway he talks about um he would get a job at a brokerage firm so he could use their Mainframe over the weekend to computer to to program Trend following and his he wasn't programming anything super complex it was really just like Trend following program and stuff like that but he was one of the few people that were doing it the people weren't doing it yet and uh somebody like like Marcus was trading also trading trends but not doing it with a computer but who was also kind of considered sakota a mentor in a way uh they were connected um but um Marcus would you know do it he would just do it by by looking at the Johnson gate but that that whole approach that whole Trend fing approach Dennis that was Dennis's hey day as well and stuff like that so those those de that couple of decades Trend fing work really well but it came more and more popular and then you started getting as particularly once you got PCS and soft and charts charts available to everybody and all these books and all the Articles and forget nowadays all the stuff you have so once it becomes super popular it it it no longer can maintain the same efficacy anymore and so what happens is there is a rationale there is a reason why Trend following conceptually works and that is because there are Trends in markets the world is is filled with true trends I mean that's that's how the world Works uh for example if you get a shortage in a commodity or something like that well let's say there's a shortage in Copper it takes a years to open the copper M so things so it the thing can develop for quite a while and once once a whole bunch of mins come on stream or or shipping let's say ship Builders you get another great example a few number of years ago where there was a shortage of ship ship and and you have ship Builders like uh shipping rates go way up and ship Builders can do great and then there's an over Supply and it goes the other way but once those Trends start there's a reason why Trends stayer long so there there is truly rationale behind Trend following but what happens when it becomes too popular well it becomes to popular you start getting a whole bunch of fake breakouts and very short-term wild swings so it becomes very difficult to stay on the horse so the trends are still there but they become choppier and I haven't done the mathematical analysis but I'm sure I kind of believe that somebody you know did the analysis on on the variability of prices within the trend within Trends they would find that over the years there's there's a lot more variability there's a lot more short-term moves cter to the longterm Trend enough to make it unprofitable for a lot of automated Trend following approaches so yeah so that's how that's how changes in the market in this case technology uh and popularity combine to take a methodology that printed money and make it the Ed there's still some there's still some Alpha there but it's but return to riskwise you know there's a lot the draw Downs are very big too so there is an edge there but it's no longer the return risk that existed with the approach many years ago one thing I wanted to ask you in regards to that with your interviews you're a lot of the time going to their offices or even to their home at times as well was there any indication you saw from these traders of how they were living in the sense of like were they very lavish people very you know you see for example on social media the trading industry how it's presented on social media is very much lavish flashy things and a particular lifestyle to promote and to sell a service a lot of the time but these actual in you know these Prof professional traders that you've spoken to what was that what was the reality of that were they very lavish people or were they more s of focused on on the job and task at hand uh I think it depends on the individual you know certainly certainly in many cases where they had made tons of money they they did spend lavishly I mean and in other cases not particularly you know I think that's that becomes like a it's like anything else you know they're you know they there are people and you know say technology or something like that who've made fortunes and you know some of them live lavishly and some of them not not particularly you know that's fair and in terms of I mean Warren Bruff is a famous example not not technology but you know Warren Bruff is a same example right tremendously rich but kind of lives the same way he's lived all you know that becomes a personal that that goes to the personal you know the individual person definitely no definitely he's a prime example to be fair um I don't know how he still does it he still does it it's incredible um I guess it kind that reflects quite quite well in terms of he must just really love what he does to still be doing it abely absolutely he does I mean you could see it in anything he ever says yeah absolutely not doing so not doing it for the money that's it that's it and what about did you ever get to speak to the Traders on like sort of the routines that they would you know sort of have in place around their trading or and if so how important it was to their trading itself some Traders well there's they have every they typically have their routines right uh say you know brand you know brand won't trade like during a day or even much during a week at all really but every Friday we'll do his analysis of the markets uh some of the Traders I mentioned the binders right kind of have this methodology of writing up every trade and preparing for every trade and getting very focus on any trade they plan you know so they each person usually has some routine that fits with what they're doing amaz and I really wanted to ask you as well the the term Market wizard is very widely widely used now to refer to Traders and even people use it for certain branding or their username or their tag name and it's very much a recognized term within the industry but before you came up with the book was that a term was it a well recognized term no no I I think I can take credit for that but I don't even know where I got the the name I mean I just thought it was like a sounded like a good name I don't know where I got the idea or you know I don't know if it was my my idea my wife's idea I don't even remember you know that's incredible that's incredible and uh as I say it's so wildely recognized now and in terms of the the Publishers of the book at the time did they have any sort of indication of that this was going to be as successful no they uh I like my publisher now but I hate my publishers before but um they really blew it so um Market Wizards came out and um there was a Wall Street Journal article that reviewed the book uh in fact the I still remember the colins was Stanley angress and he gave it a nice write up and the book sold out overnight publisher just took months to get more copies printed it was crazy you know so the book book sold out and they don't have any copies you know it's like uh so uh no they certainly didn't have any idea and they didn't and they didn't respond quickly enough uh you know to to the situation so they kind of blew it in that sense I mean the book is the book has continued to sell year after year after year so so it's still yeah I guess in the long run it didn't make a difference uh and maybe maybe it was good that it maybe it was good that it wasn't available I don't know that it kept more people interested originally I don't know kept that demand High keeping the prices High um in terms of future books is there anything because I know the last one wasn't that long ago yeah is there any sort of thought process of future no you know I don't have I I don't think I ever planned another book after I finish one book but eventually I got around to the point where I felt like writing one uh so I have I'm basically retired at this point and don't have any plans to do another book but I know from experience I shouldn't say I never would do another one uh I just don't plan on I think if I do if I if I ever did do another one I think I would I would probably want to title the last Market Wizard's book so force myself not to do anymore but uh yeah I'm not planning in another one well you've already had a tremendous impact on the entire industry as I've said um my last question is a bit more of a selfish question which I could obviously ask you off camera but I know there's a part of my audience who also do what I do uh which is obviously like content creation interviews and so on and so forth so what advice would you give someone like myself who's essentially trying to emulate the sort of impact that you've had in a in a slightly different way with video format but at the end of the day still interviewing and the core concept is there what would advice would you give to me to be able to try and improve or to emulate and have a career like yours yeah so I think you're already doing as I mentioned before so one of the key things I've done for myself is to um is to to we're talking about interview type Endeavors right so is is to have a conversation listen listen to what the other person's saying you know uh the worst interviewers are the ones that ask a question have a list of questions and just go on to the next question and I can hear it when I get interviewed by somebody like that I can just I can almost visualize them with a with a paper and go ticking these things off and it's I I wouldn't say annoying but it's kind of it's off-putting MH um so that it's very unprofessional it's very poor but would so I would say if you're doing interviews think in terms of conversation listen to what the other person is saying because the answers often will lead to better tangents and the questions you had to start off with uh I would say in anything I always believe in trying to do your best you know not cutting Corners you you're kind of doing it by doing this uh professional setup Studio setup and all that so you you like I said you're already doing that uh but I but a lot of people don't uh so I I think striving for excellence is is always a good is always a good thing and do something you love so like anything else if you're doing a podcast because this is something you really want to do and you want to talk to these people great but if you're doing it to try to get rich rich quick it probably is not going to go anywhere mhm so those are some of the thoughtsin I really appreciate and I really appreciate you spending time with us today uh like I said it's a truly an honor and I guess on behalf of the trading industry I know they're not there on behalf of the trading industry we would just say like to say thank you for the massive impact that you've had thank you very much everyone because it's been absolutely incredible the insights that people get to learn of from people they probably would never have heard of or had access to um you really has had that impact so again thank you Jack for being here and I don't I don't know if you do have any links but I'll any links you do give to me I'll put them in the description below for you sure um and everyone at home drop a comment with your biggest takeaway from today's episode uh there will be links in the description as I said hit subscribe and until next time everyone take care