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The Little Book of Market Wizards: Lessons from the Greatest Traders – Jack D. Schwager

8th May 2020
the little book of market wizards book cover


The Little Book of Market Wizards is a book about trading. The trading does not only involve stocks, but also options, futures and other instruments. My purpose of reading this book is to see if I could get any new knowledge to apply in my investment.


Jack D. Schwager is an American trader and author of a number of widely acclaimed financial books. He is one of the founders of Fund Seeder, a platform designed to find undiscovered trading talent worldwide and connect unknown successful traders with sources of investment capital. He was a partner in the Fortune Group, a London-based hedge fund advisory firm, for 10 years. His prior experience also includes 22 years as Director of Futures research for some of Wall Street’s leading firms. He is a frequent seminar speaker and has lectured on a range of analytical topics.


The Little Book of Market Wizards contain 23 chapters with a foreword, a preface and an appendix.

The chapters are 1) Failure Is Not Predictive, 2) What Is Not Important, 3) Trading Your Own Personality, 4) The Need for an Edge, 5) The Importance of Hard Work, 6) Good Trading Should Be Effortless, 7) The Worst of Times, the Best of Times, 8) Risk Management, 9) Discipline, 10) Independence, 11) Confidence, 12) Losing is Part of the Game, 13) Patience, 14) No Loyalty, 15) Size Matters, 16) Doing the Uncomfortable Thing, 17) Emotions and Trading, 18) Dynamic versus Static Trading, 19) Market Response, 20) The Value of Mistakes, 21) Implementation versus Idea, 22) Off the Hook, and 23) Love of the Endeavour.

Each chapter consists of 1 – 9 subchapters.

The appendix is about the basics of options.


The Little Book of Market Wizards is an introduction to some insights that the author garnered across the four Market Wizards books. This book does not replace the Market Wizard series books as the author could not put everything he learned from the interviews in such a small volume.

According to the author, the two things that make a consistently profitable traders are an approach to the markets reflecting one’s unique personality and aggressive risk management. In layman’s term, we need to have an edge and employ good money management (risk control).

Once a trader has a winning strategy, it does not mean that he or she can just sit back and relax and let the strategy works its magic. This is because the world is always changing. Rules are only applicable to a market at a specified time as the world is changing. Thus, there is a need to adapt the strategy and rules as time goes by.

I will share some advice in this book that I find helpful. The author advises against taking dubious trades born out of impatience. Besides that, we should resist the temptation to make trading decisions that feel good but are wrong on balance such as holding on to a losing position because of not wanting to admit mistake. There is a need to be flexible in trading position too. Traders should not be afraid of changing position and should be able to completely change opinion when warranted.

One strategy to balance between best outcome and worst one is to avoid all-or-nothing decisions and scale in and scale out of positions, i.e. buy and sell in batches. But it is up to the trader to decide if this strategy suits his or her personality. One other thing is to trade within our “emotional capacity” (the position that we are comfortable with) as larger position tends to drive decision by fear rather than by judgment and experience.

Although this book is primarily about market speculation, I find that some of the advice can also be applicable to investing. This book makes me reflect on some of my investing behaviour that might be detrimental to my result. Hopefully I will be able to overcome my shortcomings with this new knowledge.


  1. There is no single market secret to discover, no single correct way to trade the markets.
  2. It is just a quirk of trading that you could be successful for the short term without knowing anything, and that possibility fools people.
  3. The need not to be wrong is exactly why people lose.
  4. Whenever you try to get all your losses back at once, you are most often doomed to fail.
  5. Trading mistakes cannot be avoided, but repeating the same mistakes can be, and doing so is often the difference between success and failure.


3 out of 3 stars

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