The Diversity of Approaches 📊
If you're looking for "the one true way" to trade, this book will disappoint you. Because there isn't one.
Some of the wizards are fundamental analysts who study economics and company financials. Others are pure technicians who only look at charts. Some hold positions for months. Others are in and out within minutes.
Some trade stocks. Others commodities, currencies, or options. Some use computer models. Others rely on gut instinct developed over decades.
What they all have in common isn't their method—it's their mindset, discipline, and approach to risk. That's the real gold in this book.
Bill Lipschutz: The Sultan of Currencies 💱
Lipschutz turned $12,000 into $250,000 while still in college, then proceeded to lose it all in a single bad trade. Most people would quit. He learned from it and became one of the world's best currency traders.
His key insight? In currency trading, the best trades are the ones where you can define your risk clearly. He's looking for situations where he knows exactly how much he can lose but the potential gain is much larger.
He emphasizes the importance of being flat (having no position) when you're confused or don't have conviction. Most traders feel like they always need to be in the market. Lipschutz knows that sometimes the best position is no position.
One of his most powerful points: trading is about probabilities, not certainties. You're going to be wrong a lot. The key is making more when you're right than you lose when you're wrong.
Randy McKay: From Losing Everything to Millions 📈
McKay's story is wild. He lost everything early in his career—had to move back in with his father. But instead of quitting, he started over with a tiny account and eventually built a fortune.
His trading style is momentum-based. He waits for major trends and rides them. But here's the key: he's incredibly patient waiting for the right setup. He might go weeks without a trade.
McKay talks about the psychological aspect of taking losses. Early in his career, he couldn't admit when he was wrong. He'd hold losing positions, hoping they'd come back. Once he learned to cut losses quickly, everything changed.
He also emphasizes position sizing. He starts small, and only adds to winners—never to losers. This is the opposite of what most people do (averaging down on losers).
His rule: "I never risk more than 1% of my total equity on any trade."
William Eckhardt: The Mathematician 🧮
Eckhardt is the academic of the group—a mathematician who approaches trading systematically and rigorously. He was one half of the famous Turtle Trading experiment (where Dennis and Eckhardt trained complete novices to trade their system).
His big insight: most of what people think matters in trading doesn't actually matter. Chart patterns, news events, "support and resistance"—mostly noise.
What matters? Having a real edge (a systematic advantage), managing risk religiously, and executing your strategy without emotion.
Eckhardt is famous for saying: "The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance."
Translation: You can be wrong more than you're right and still make money—if your winners are bigger than your losers.
Al Weiss: The Trader Who Learned to Love Losing 📉
Weiss had an epiphany that changed his career: he needed to change his relationship with losing trades.
Most traders hate losing. It feels like failure. Weiss realized that losing trades are just the cost of doing business—like a store paying rent. Inevitable. Necessary. Nothing personal.
Once he accepted that losing was part of the process, he could cut losses quickly without emotional drama. He stopped hoping losing trades would turn around. He stopped taking losses personally.
This psychological shift was the difference between struggling and succeeding.
He also emphasizes the importance of only trading when you have conviction. He'll go long periods with no trades because he's waiting for his specific setup. Patience is his edge.
Stanley Druckenmiller: Soros's Right-Hand Man 🎯
Druckenmiller worked with George Soros and learned one of the most important lessons in trading: when you're right, you need to bet big.
Most traders, when they have a winning position, take profits too early. They're happy with small gains. Druckenmiller learned from Soros to press his winners—to make the real money when he's right about a major trend.
His approach combines fundamental analysis with technical timing. He develops a fundamental thesis about what should happen, then uses technical analysis to time his entry and exit.
One of his key points: change your mind quickly when you're wrong. He's not married to any view. If the market tells him his thesis is wrong, he exits immediately and reassesses.
Mark Minervini: The Stock Market Wizard 📊
Minervini is a pure technical trader focused on stocks with specific momentum characteristics. He's looking for stocks in strong uptrends with tight consolidations.
His secret? Incredibly disciplined position sizing and risk management. He risks tiny amounts on each trade—usually less than 1% of his account. This means he can be wrong many times and still be fine.
But when he's right, he lets winners run. He doesn't take profits just because a stock went up. He rides the trend until it breaks.
Minervini emphasizes the importance of a trading journal. He reviews every trade—winners and losers—to understand what worked and what didn't. Continuous improvement through systematic review.
The Common Threads 🧵
Despite their different methods, certain themes emerge across nearly all the interviews:
Risk Management is Everything
Every single wizard emphasizes this. They all have strict rules about how much they'll risk on any trade. Most risk 1-2% of their capital per trade. This means no single trade can destroy them.
The math is simple: if you risk 2% per trade, you can be wrong 20 times in a row and still have 80% of your capital left. You can survive to trade another day.
Cut Losses Quickly
When a trade goes against them, they exit fast. No hoping, no praying, no "it'll come back." Wrong is wrong. Accept it and move on.
The wizards aren't right more often than other traders. They just lose less when they're wrong.
Let Winners Run
The flip side of cutting losses: when you're right, don't exit too quickly. Big money is made in big moves, and big moves take time to develop.
Most traders do the opposite: they cut winners (taking quick profits) and let losers run (hoping they'll recover). The wizards do the reverse.
Trade What Works For You
Multiple wizards emphasize that you need to find a style that fits your personality. Trying to trade like someone else, using a method that doesn't fit you, is a recipe for failure.
Some people can handle the stress of day trading. Others need the longer time horizon of position trading. Some need fundamental stories to believe in. Others prefer the pure simplicity of technical patterns.
There's no right answer—only what works for you.
Emotional Control is the Real Game 🧘
Technical skill matters. Understanding markets matters. But emotional control might matter most.
The ability to:
- Take a loss without tilting
- Stay patient during drawdowns
- Not get overconfident after wins
- Avoid revenge trading
- Stick to your plan when everyone else is panicking
This is what separates the wizards from everyone else.
Several traders mention that their trading improved dramatically once they addressed psychological issues—fear, greed, ego, need for approval.
The Process Over Outcome Mindset 🎲
One of the book's most valuable lessons: focus on process, not individual outcomes.
A good trade that loses money is still a good trade. A bad trade that makes money is still a bad trade.
You can't control whether any specific trade makes money—there's too much randomness. What you can control is whether you're following your rules, managing risk properly, and executing your strategy.
The wizards judge themselves on process: "Did I follow my plan?" Not: "Did this specific trade make money?"
Over hundreds of trades, good process wins. But on any single trade, luck dominates.
Size Matters: Position Sizing 📏
Several wizards mention position sizing as one of the most underappreciated aspects of trading.
It's not enough to have a good system. You need to know how much to bet on each trade. Too little, and you don't make meaningful money even when you're right. Too much, and one bad streak can wipe you out.
Many use a fixed percentage risk model: risk the same dollar amount (as a percentage of capital) on every trade. This automatically adjusts position size based on your account size and the distance to your stop loss.
Others vary position size based on conviction, but they still have maximums they never exceed.
The Role of Luck 🍀
Interestingly, many of the wizards acknowledge the role of luck in their success.
Yes, they have skill. Yes, they've worked incredibly hard. But they also recognize that timing and circumstances played a role. They started trading in certain market environments. They caught certain moves. Things could have gone differently.
This humility is striking. These are people at the top of their field, and they're not claiming they have it all figured out. They know markets are complex and unpredictable.
Adaptation and Evolution 🔄
Markets change. What worked in the 1980s might not work now. Technology changes. Regulations change. Other participants change.
The wizards who last decades all emphasize continuous learning and adaptation. They don't just find something that works and repeat it forever. They're constantly refining, testing, evolving.
Markets are adversarial—others are trying to take your money. If you stand still, you'll eventually get run over.
What About Predictions? 🔮
One surprising finding: most of the wizards don't spend much time predicting where markets will go.
They have frameworks for thinking about markets, sure. But they're not making specific predictions like "The S&P will hit 5,000 by June."
Instead, they're looking for situations where risk/reward is favorable. Where they can define their risk clearly and the potential reward is much larger.
They're thinking probabilistically: "If I make this trade 100 times, I'll make money overall, even though many individual trades will lose."
The Counterintuitive Stuff 🤯
Some lessons from the book that go against conventional wisdom:
Being right less than 50% of the time is fine (if winners are bigger than losers)
Taking lots of small losses is a sign of good trading (you're cutting losses quickly)
Diversification might hurt returns (if you really have an edge, concentration is better)
Most news doesn't matter (the market's reaction to news matters, not the news itself)
More analysis doesn't necessarily mean better results (paralysis by analysis is real)
Simple systems often work better than complex ones (complexity creates more failure points)
The Failure Stories 💥
The book doesn't just showcase success—it includes stories of massive failures that led to lessons.
Traders who blew up accounts. Who lost everything and had to start over. Who made catastrophic mistakes.
These stories are valuable because they show that even great traders have disasters. The difference is they learned from them and came back stronger.
Common themes in the failure stories:
- Trading too large
- Not having a stop loss
- Hoping a losing trade would turn around
- Adding to losing positions
- Trading on emotion instead of plan
Can This Be Taught? 🎓
One of Schwager's recurring questions: can trading be taught, or is it something innate?
The Turtle experiment suggests it can be taught—Dennis and Eckhardt trained people with no experience to be profitable traders.
But the wizards generally agree that while techniques can be taught, the psychological discipline required is much harder to instill. Some people will never be able to cut losses quickly. Some can't handle the stress. Some need to be right too badly to trade well.
The technical stuff—reading charts, understanding risk/reward, position sizing—that's all learnable. The emotional control? That's the hard part.
Beyond the Money 💭
Interestingly, many of the wizards talk about trading as an intellectual challenge more than a path to wealth.
Yes, they've made fortunes. But what keeps them going is the puzzle of it. The constant challenge of reading markets, finding edges, adapting to change.
It's a game that can never be fully solved. Markets are too complex, too adaptive. There's always more to learn.
For many of them, trading is an expression of their personality—their competitiveness, their analytical nature, their need to test themselves against difficult challenges.
The Reality Check ✅
Schwager doesn't sugarcoat the difficulty. He makes clear that:
Most traders lose money. The failure rate is high. Markets are unforgiving. You can do everything right and still lose on any specific trade.
But—and this is crucial—those who survive by managing risk well, who learn from mistakes, who develop genuine edges, can succeed over time.
The wizards aren't lucky. They've worked incredibly hard, studied obsessively, failed and learned, refined their approaches over years or decades.
What Makes a Wizard? 🧙♂️
After reading dozens of interviews across the Market Wizards series, what actually makes someone a wizard?
Edge: They have a genuine advantage—whether it's analysis, timing, psychology, or position sizing.
Discipline: They follow their rules even when it's uncomfortable.
Risk Management: They never let one trade or one period destroy them.
Continuous Learning: They adapt as markets change.
Emotional Control: They don't let fear or greed drive decisions.
Passion: They genuinely love the challenge of trading.
Notice that "being smart" or "predicting the future" aren't on this list. Intelligence helps, sure. But discipline and emotional control matter more.
The Book's Real Gift 🎁
"The New Market Wizards" doesn't give you a system to copy. That's not the point.
The gift is exposure to how exceptional traders think. The questions they ask. The way they approach risk. How they handle losses. What they focus on and what they ignore.
Reading these interviews, you start to internalize certain principles:
- Process over outcome
- Risk management above all
- Emotional control is learnable
- There are many paths to success
- You must find what fits you
It's not about copying someone else's exact approach. It's about understanding the principles and applying them in your own way.
Still Relevant? ✨
The book was published in 1992. Markets have changed dramatically since then. Technology has transformed everything. High-frequency trading didn't exist. The internet was barely a thing.
Yet the psychological principles? Still totally relevant. Human nature hasn't changed. Fear and greed still drive markets. The challenge of cutting losses and letting winners run is timeless.
The specific techniques may evolve, but the underlying wisdom about risk, discipline, and emotional control is as valuable now as it was then.
The market wizards aren't magical. They're disciplined, focused, and have learned from countless failures. The magic is just what persistence and proper risk management look like after a few decades. 🎩